Self-insured employers have a huge stake in the health and well-being of employees. As such, they should be looking for cost-effective ways to contain rising costs such as developing a comprehensive chronic condition management strategy.
More than half of Americans get their health insurance from their employers. Of these employers, about 60% are self-insured. Self-insured employers take on the risk for medical coverage for their employees, assuming the burden of rising health care costs by paying claims rather than paying a fixed monthly rate. Overall, approximately 1%–2% of members drive 30%–35% of annual claims with an average claims cost of $122,000.
Why Self-Insured Employers Need a Solid Chronic Condition Management Strategy
According to the CDC, six out of 10 Americans are living with at least one chronic disease. Employees with chronic conditions are costly to employers. This is through direct health care costs like doctor visits, prescriptions, trips to the ER, and indirect costs like lost productivity, absenteeism, and early retirement.
Implementing a good chronic condition management strategy will help your employees lower their out-of-pocket health care expenses, will facilitate healthier lifestyles, will improve employee satisfaction with your benefit offerings, and will help you directly control the rising costs of health care.
The 2012 RAND Wellness Program Study showed that lifestyle management and chronic condition management programs reduced the average health care cost by about $30 per member, per month. Of that total, 87% of the costs savings was due to chronic condition management. In fact, employees participating in the condition management program generated savings of $136 per member, per month. This was largely driven by a nearly 30% reduction in hospital admissions. All this goes to show that while lifestyle management programs are valuable, there must be a chronic condition management component in order to achieve maximum success.
Helping High-Cost Claimants
According to Mercer’s National Survey of Employer-Sponsored Health Plans, on average, the sickest 6% of an employer’s population represents 47% of the total allowed medical and pharmacy spending. As such, employers must contain health care costs for those “high-cost” claimants. By focusing on employees with chronic diseases like diabetes, heart disease, depression, or cancer, employers can identify high health care utilizers as well as who could potentially be a high utilizer. They can then promote enrollment in chronic disease management programs. These programs encourage employees with chronic diseases – and those trending toward these diseases – to participate in guided education and interaction with highly trained experts. Employees who are actively engaged in chronic disease management programs experience a leveling of health care expenses, they are less likely to miss work, and they are overall much happier and healthier.