Company Health and Wellness : The U.S. Healthcare Crisis

During the past several years healthcare insurance premiums have risen at a steady pace. This is taking a toll on the bottom-line of organizations, cutting into profits, limiting growth and forcing a reevaluation of a once sacred employee benefit system. According to a projection by McKinsey & Co., at the present rate, by 2008 health benefits will eclipse profits at the average Fortune 500 business.

Companies, through private medical insurance corporations, are the leading provider of medical services in the U.S.. In 2004, 59.8% of American citizens were covered by a employer-based medical insurance program, accounting for 88% of all private medical insurance. Yet the growing costs of Health Care, ever-increasing drug prices and a steady rise in chronic illnesses have brought the corporate society to a breaking point.

For many companies the growing burden has become too difficult to bear. Over the past five years health care insurance premiums have increased an average of 11.6% each year, more than four times the average rate of inflation and employee earnings over that time.3 Not surprisingly, this growth in costs has caused the number of companies offering Health Care services during that time to drop from 69% to 60%.4 In addition, in 2005,  health care insurance premiums jumped 9.2%, more than three times the rate of inflation – and that was the lowest increase in the past five years.

In this environment corporations need to discover innovative ways to mitigate the rising costs of Healthcare coverage. Seemingly, the easiest strategies to accomplish this goal would be to lower benefits coverage or pass on agrowing burden to staff members and retirees. More than 80% of corporations have chosen one or both of these options in the past few years and almost half of all large corporations are likely to increase the amount staff members pay in 2007.5

Nonetheless, these approaches do nothing to address the fundamental causes of rising costs, one of which is a population that requires increased medical care. To make a long-term and substantial influence on costs and central health, corporations need to look beyond a antiquated reactive-based approach.