Health care benefits are a significant expense for employers. In 2015, the annual premiums for employer-sponsored family health coverage reached $16,834, according to the Kaiser Family Foundation. And the average worker paid $4,823 toward the cost of their coverage and health expenses.
However, health benefits continue to be a key driver in the acquisition and retention of talent. Towers Watson reports that 46 percent of people say health benefits were an important factor in their decision to work for an employer and 55 percent believe benefits are a good reason to keep working for an employer.
It’s a tricky balance for employers but health care transparency benefits both you and your employees. As health systems reveal more procedure prices, consumers are able to shop around for health care the same way they shop for cars, computers and appliances.
What does this mean for employers?
The health care costs that employees are responsible for are increasing, which is forcing them to become more savvy shoppers. When provided with tools to do so, employees are choosing lower-cost options for planned procedures.
The savings add up for the employee, and the business pays a lower shared amount with the health plan as a result.
Why transparency in health care matters
Prices for the same health care procedure can vary by hundreds, or even thousands of dollars depending on where it’s performed. That’s because different facilities charge different prices for the same services. In Michigan, the price of a colonoscopy can vary from $1,170 to $3,275 and a knee arthroscopy ranges from $2,360 to more than $10,000.
Even more surprising: there’s no correlation between cost and quality in health care.
Consider generic drugs. The FDA requires generic drugs to have the same quality and performance as brand-name drugs, yet generics are available at a fraction of the price. The same goes for health care procedures. People are overpaying because they are unaware of the price discrepancy and available options.
How health plans can help
Health plans are empowering their members to lower their annual health care costs by providing access to information. For example, Priority Health’s Cost Estimator shows members their predicted out-of-pocket costs for hundreds of the most common procedures, based on their health plan and deductible. This allows members to plan for their health care expenses and even choose a lower-cost facility.
A tool like this is especially important for employees with a high-deductible health plan since they’re on the hook for paying 100 percent of their medical costs until they reach their deductible, which can be thousands of dollars depending on their health plan.
When employees have access to cost information, they can make informed decisions that benefit their budget and your bottom line. If your health plan isn’t transparent about costs, it may be affecting your business more than you realize.