Scott MacStravic, Ph.D.
The idea of either forcing employers by law to offer insurance to employees, or enticing them through tax incentives to do so, has been growing of late. Governments are realizing that lack of health insurance is a major issue among voters, and that uninsured patients end up costing tax money in far too many cases. They may force cost-shifting by providers, or force workers into Medicaid and other social programs, both of which end up costing taxpayers, and limiting the discretion politicians have over government spending, as the amounts earmarked for entitlements keep increasing.
But there is one reason for employers requiring or attracting employers to pay for employees’ health care. Employers gain far more from better health among their employees than do insurers, either government or commercial examples, from better health among their beneficiaries and members. Moreover, in many cases, employers hang on to their employees far longer on average than do insurers (though Medicare is an exception), so have a longer period to prospectively justify and retrospectively demonstrate the value of making their employees healthier, as long as they can overcome the traditional financial myopia of managers, shareholders, and Well Street analysts.
Particularly for low-turnover employers, though not for employers who pay minimum wages and treat employees like entirely replaceable and indistinguishable cogs in their production wheels, enticement makes sense, but so do the natural consequences of healthier employees to their bottom lines. Insurers gain only lower covered sickness care expenditures, their “medical loss” amounts. And commercial insurers may find that reducing their medical loss amounts will make it tougher to maintain their profit amounts, since they will be dealing with lower amounts of money if covered expenditures decrease, so their clients will watch insurers’ profit ratios relative to lower outlays.
Employers can gain two or three times as much from healthier employees – in lower absenteeism and presenteeism, higher productivity, loyalty and recruitment success, even customer satisfaction and quality – than they derive from lower sickness care costs alone. And because they have the most to gain, they have the greatest foundation for investing in employee health, as well as a built in daily relationship that insurance plans lack.
Large employers, and particularly those who are self-insured have easily the best opportunities. They enjoy the potential for qualities and economies of scale due to larger numbers of employees eligible for proactive disease and risk management. And many who have large numbers of employees in the same locations can sponsor onsite wellness, risk and disease programs economically. By contrast, insurers are essentially “condemned” to relying on remote contacts with their members, which tend to be less effective.
Moreover, such employers can use group approaches to assessments, monitoring and communications/coaching, enabling further economies that otherwise are only available to personal providers, who will often lack economies of scale. They can promote onsite peers helping peers, in either mentor or shared “buddy” arrangements, in addition to the services of professional providers and coaches. A growing number have onsite health care facilities and staff that can greatly increase the convenience to employees and reduce time lost for themselves.
Ideally, employers would be more generous in supporting provider-offered proactive health services than are commercial insurers. Medicare, fortunately, is starting to recognize the value of and cover some proactive health services. Since it covers mainly retired rather than active employees, hence only saves on sickness care expenditures, CMS may not be as generous as should employers. On the other hand, since Medicare beneficiaries generate far higher sickness care costs than do employees, on average, it may be that it can afford to be even more generous. Only time can tell – both whether it can afford to be, and turns out to be as generous as is necessary.
Of course, the other half of the problem requires that providers, particularly primary physicians, join in the proactive health movement, to ensure that employers and government payers get the returns they will expect from their investments, while ensuring that providers survive and remain in practice. Whether they work for proactive health vendors, or operate their own proactively focused practices, we need clinical professionals in proactive health, just as much as in reactive sickness care, and payers have to recognize their role in making clinical professions attractive and rewarding enough to maintain our health care infrastructure at levels commensurate with need.
If there were a single-payer system operated by the federal government, it would have both economies of scale and the potential for a long-term appreciation of the advantages of healthier citizens. It would lack both the added labor cost reduction reasons to invest, however, and any real continuous relationship with consumers. A system where employers can optimize their financial advantages while employees optimize their health advantages seems preferable for at least the employee population. Governments and individual insurance may be needed as the “safety net” for the unemployed, but as long as employers have the most to gain, and can track the ROI from investments in healthier employees, they should be kept in the game.
In theory, at least, employers might gain enough in non-sickness-care expense reductions to justify their promoting their employees’ health, without participating in traditional sickness care insurance. But many, because of short employee tenure and low appreciation of employee value are likely to not gain enough, so the “natural” advantages may not be enough to promote and maintain their health investments. Under such circumstances, requiring them to pay what will be higher taxes for supporting traditional sickness care would serve them right. It could also create an “evolutionary” dynamic where employers who choose to invest in their employees’ health will be more likely to survive and “reproduce,” thereby eliminating the problem of non-contributing employers.
