Lowering employee healthcare costs

Employers are partly responsible for the rising cost of healthcare in the United States, consulting executive Wally Gomaa said at the 2012 Employer Health & Human Capital Congress.

The expert also told attendees that there are at least some avenues available to those seeking to lower costs, Employee Benefit News reports. One major cause that contributes to various medical problems is a tendency toward obesity, according to Gomaa, because it leads to diabetes.

Noting that per person sugar consumption in the nation has gone from an average of 115 pounds per year in the mid-1980s to 205 pounds in the late 2000s, Gomaa suggests that employers need to encourage health in their employees or they will see the consequences when the time comes to pay for their health insurance benefits.

Gomaa stated that the average corporate cost of treating an employee with type 2 diabetes is $22,500, compared to $1,700 for a healthier worker. He also pointed to organizations with high obesity rates as those which suffer from low productivity, suggesting the indirect effects of employee wellness also have their cost.

Private and public employers alike may wish to encourage healthy behaviors and habits, supporting their employees to avoid a harmful cost trajectory. In particular, Gomaa states that one employer in the Midwest experienced a 35 percent drop in employee hospitalizations and a 30 percent decrease in pharmacy utilization after implementing a program to encourage employee health.

Federal government saves on pension costs as employees pay

Payroll tax cut legislation recently passed by federal lawmakers included a provision increasing employee contributions to pension plans for government workers who are hired after the end of this year.

New employees will pay 2.3 percent more of their salaries toward their pensions, compared to the 0.8 percent currently paid. The measure will save the government an estimated $15 billion, about half the cost of the unemployment insurance benefits extended by the same bill.

Advocates for public employees are objecting on the grounds that pay freezes have already saved the federal government more than $60 billion at their expense in the past two years, according to The Associated Press.

In discussing the measure, lawmakers and others have cited a Congressional Budget Office report that assessed federal employee compensation compared to the private sector. Public employee unions note that some federal workers, particularly those with a professional or doctorate degree, earned about 23 percent less than their private sector counterparts. In contrast, those with less education were better-compensated than comparable Americans working for private employers.

With state and local governments dealing with similarly strained finances, many lawmakers and officials have looked to cut compensation or reduce staffing in order to save. American Federation of Government Employees national president John Gage told Pensions and Investments that further measures threaten to reduce public employee compensation further at a time when workers are not in a position to afford such a change.

MO district sees healthcare cost growth slow

Staff and teacher benefits may be reduced by effective wellness programming, which can decrease insurance claims and costs.

Missouri's Hannibal School District is a possible example of such results, according to the Quincy Herald-Whig. Officials say that the amount public employees will pay for their health insurance benefits will only increase by 2 percent this spring, an increase far below that needed last year.

The district offered a pair of health plans last year, one with a higher deductible and one with higher premiums. The high-deductible base plan required participants to pay 7 percent more, while the other required payments more than 18 percent higher compared to the previous health plan.

District Business Manager Dana Ruhl told the school board the improvement is due to a strong performance of the self-funded pool, according to the Hannibal Courier-Post. The stability is the result of broad participation, according to Ruhl. He noted that in previous years, increases have ranged from 8 to 20 percent.

Another possible explanation is that wellness programming, which the district has chosen to focus on more heavily, helped decrease the number of claims made during this school year.

 
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