December 5 , 2005
with the rising costs of health care
Katherine Hinson is director of communications
for Human Resources.
In 2003, U.S. health care spending reached $1.7 trillion—about
4.3 times the amount spent on national defense—and total out-of-pocket
spending on health care rose $13.7 billion to $230 billion.
Employer health insurance premiums increased by 11.2 percent in
2004, nearly four times the rate of inflation and marking the fourth
consecutive year of
double-digit percentage increases for all types
of health plans, including health maintenance organizations (HMOs), preferred
provider organizations (PPOs), and point-of-services plans (POS).
Emory’s own medical plan costs have risen about 11 percent
per year, with the University traditionally absorbing about three-quarters
of the cost
while trying to keep employee premium increases to a minimum (averaging less
than 3 percent per year). In all, Emory spent $46 million on its health plans
in 2004, and this number is expected to rise to $54 million this year and to
$59 million for 2006.
Policymakers and government officials agree that health care costs
must be controlled but disagree on the best way to do it. Meanwhile,
taking action to address not only their own rising costs but also the impact
on their employees.
The most successful organizations are taking a comprehensive, longer-term
approach to cost management and actively engaging employees in
the process. They look
at all aspects of vendor relationships, efficiency and cost-saving. For example,
these organizations are more likely to consolidate vendors or implement vendor-performance
standards or service levels.
Many health advocates believe that if Americans adopted healthier
lifestyles, health care costs would be more controllable. Many
organizations are requiring
employees to take more responsibility for their health care decisions—for
example, by setting a higher differential between brand-name and generic drug
Organizations also have begun to realize the importance of effectively
communicating health care costs and providing online tools to help
build a “culture
of health” among their employees. In order to understand and support
a health care strategy, employees must know the benefits of improved personal
health and what it means to be an effective health care consumer. It’s
also important for organizations to offer health risk assessments or improvement
Another method is “consumer-driven” health care—if
employees have to pay more of the costs themselves, they will shop
for the best care
at the lowest price. This approach has shown positive cost-control, especially
as it discourages non-emergency visits to emergency rooms and encourages employees
to search for cheaper generic drugs—two of the biggest costs in health
Emory has been regarded as a “healthy” place to work.
In recent years, the University alternated between cost increases
in insurance premiums
and increases in co-pays or deductibles. Emory also takes a hard look at claims
data to determine what is driving costs.
The focus on health and wellness through such programs as the Faculty
Staff Assistance Program (FSAP), the Nurse Line and the Health
give employees access to helpful medical information without incurring additional
costs. Early identification and treatment of chronic conditions helps avoid
hospitalizations for conditions that can easily get out of control.
Recent changes to our prescription drug tiers and provider networks
give employees more options to make financially responsible choices
for their health care.
Additionally, the 2006 benefit plan changes include the addition of the Health
Savings Account (HSA) and High Deductible Health Plan (HDHP), as well as
the POS network change, giving Emory employees more flexibility
in choosing coverage
that best suits their needs.