As health care costs continue to rise, employers who provide health insurance benefits to employees will face soon tough choices. They will either need to raise their own prices – and risk driving away customers – in order to make up the difference, or they will choose to restructure employee health benefits to keep their profit margins healthy.
Health care costs are rising for a myriad of reasons, including:
- Our population is growing tremendously
- The large Baby Boomer generation is aging
- Higher demand for health services
- The number of people who qualify for Medicaid is growing, placing a greater burden on public resources
- The number of providers is becoming more limited
- Pharmaceutical research costs are rising; therefore drug prices are increasing
With the cost of health insurance rising, many business owners will be forced to make changes to their employee plans in order to prevent their own expenses from getting out of control. Most will choose to either increase deductibles (which usually results in lower premiums), lowering benefits amounts, or a combination of both tactics. The challenge will be to keep costs low for themselves and employees, without making such drastic changes that disgruntled employees look for work elsewhere.
One trend that may emerge is the creation of health care packages that give power back to the employees. Business owners will partner with health insurance companies to create several different health care plans. Employees will be allotted a certain amount of money to spend on health care, and they will each be allowed to select a policy from a menu of options. In this way, health care plans may begin to function similar to a 401(k).
Such a move will put the power back in the hands of workers, who can select a plan based on their own family’s needs. Workers who find themselves facing these choices will need to analyze deductibles and co-pays carefully, and balance those factors with their own tolerance for risk.