A wake-up call for corporate America

Abstract

Background A 2002 Hewitt Associates (Hewitt) survey of 700 large and medium employers pointed out that “Nearly all employers (99%) report being ‘significantly or critically’ concerned about health care costs, while 75% are concerned that employee dissatisfaction with health care benefits is impacting attraction, retention and engagement.”1 The Washington Business Group on Health–Watson Wyatt employer survey reports that only 18% of employers are “very confident” of their ability to manage current increases in health care costs. 2 Put another way, 82% don’t know what to do. Little more needs to be said about the corporate concern caused by increases in health care costs and the uncertainty generated by the chaotic nature of today’s workplace. To explore these and similar issues, the Health Enhancement Research Organization (HERO) 3 facilitated an invitation only, 2-day meeting of corporate management personnel, large health management provider organizations, and selected health/education institutions known to have particular interest in employee–executive health evaluation. Medical Directors and other corporate managers who participated represented Motorola, Prudential, Dow Chemical, British Petroleum, Merck & Company, Rohm & Haas, Deere and Company, Union Pacific Railroad, General Mills, Abbott Laboratories, Marathon Ashland Petroleum, Caterpillar, Delta Airlines, and DaimlerChrysler. Joining this group were six large health management provider organizations. In addition, there were benefits and health executives/managers from The Mayo Clinic, New York Presbyterian Hospital, Intermountain Health Care, APS Health Care, the University of Alabama at Birmingham, and the University of Tennessee. A total of 45 organizations were represented. There was general agreement among this expert group that the kinds of opinions expressed in the above surveys are valid. More specifically, the group expressed concerns about underestimates of annual increases in health care costs and how to get control of the situation. There was also apprehension about how the 3-year economic downturn has affected corporate operations. Based on these and similar factors, the group concluded that a need exists for a “position paper” that objectively identifies workplace health-related problems; attempts to more accurately define near-term, mid-term, and long-term health care cost increases; and provides suggestions for solving some of the problems by presenting the case for optimizing employee health as a method to reduce health care utilization and moderate cost increases. This is an attempt to address this request. Health Care Costs According to a Mercer Human Resources Consulting (Mercer) survey of 2900 employers, the cost of health care increased 14.7% in 2002 and now accounts for over 14% of the gross domestic product. 4 In 2001, the delivery of health care was a $1.45 trillion business, which breaks down to $3.6 billion every day, or $1.5 million per hour. 5 This converts to about $5200 per capita, based on the US Census Bureau’s 2001 population estimate of 279 million. It is estimated that approximately 237 million of these Americans are enrolled in a health care plan. Employers provide coverage for 68% of this insured group. Medicare and Medicaid cover an additional 23%, and 9% are self-pay or self-insured. 6 The purchase of health care is a convoluted process. The employer (government or private) usually purchases a product they do not use directly and often know little about. In some cases, they have little control over quality standards and a limited ability to monitor delivery. Employees (the patient), who pay only a small, but increasing portion of the purchase price, are often intimidated by the system and always want the gold standard treatment if they or the family are ill. Most incredible, the health care plan establishes a fee structure that provides little opportunity for the payers (employer and employee) to directly negotiate prices. Over the years, this unorthodox system has created an environment in which the providers and health care plans have assumed the position of driving the system instead of the payers, which is usually the case in our market economy. This lack of control and knowledge by the purchasers may be unprecedented in the US economy. The Chaotic and Challenging Workplace Although it is becoming increasingly important, the spiraling cost of health care is not the only problem facing employers and employees. For many corporations, the workplace is anything but tranquil. The market value of the average publicly traded company is 50% less than it was just a few short years ago. 7 Several years ago, who would have thought that major airlines would be in, or near bankruptcy? The evaporation of the high-tech phenomenon shattered the dreams of many. Hundreds of thousands have been laid off while those who remain are expected to assume extra workloads. Stock prices have plummeted with little encouragement that t