A recent article in Health Payer Intelligence identified the top 5 conditions that drive employer healthcare spending. Those 5 are asthma, diabetes, hypertension, back disorders, and mental health/substance abuse. Any medical insurance product or program costs are basically in 3 buckets: administrative, medical, and pharmacy. Administrative costs can be, but shouldn't be, influenced by the conditions within the group of a specific. That issue aside, those conditions drive the spend of a health plan through medical services (physician, facility, diagnostics) and/or prescribed medication (pharmacy - Rx).
Check out "Why Rising Healthcare Costs Are Below the Surface" for a broader look at what causes rising premium or healthcare costs.
Acute (short-term) conditions generally don't drive premium or long term spend. For example, a plan member/employee breaks their arm. They may have an emergency room visit, surgery, a few medical appointments, and maybe some post-surgical treatment. It is a one-time episode that is incurred and paid, but not really driving of long term spending. These things will happen, and insurance is there to keep medical care available and not bankrupt the employee. However, the individual with chronic hypertension requiring regular medical care, including physician and pharmacy incurs far greater spend year over year. And if the group has multiple employees with this condition, the costs stack up for both the employer and the employee.
Three important questions for business leaders:
1. Do you know what is driving your benefits spending?
2. Do you have cost containment strategies to influence spend on those conditions?
3. Are the conditions or treatment influencing administrative costs?
If the answer is "no" to these questions, the health plan may be a rudderless boat subject to the changing tides. Many of these conditions and the associated costs can be influenced, contained, and sometimes even eliminated with the right strategy and resources in place.