When I was a resident physician, I cared for a woman I’ll call “Rhonda.” Rhonda had uncontrolled high blood pressure. She’d been prescribed a generic hypertensive, but she wasn’t taking her medication. When I asked her why, Rhonda said she couldn’t afford her co-pays. I couldn’t believe it. Rhonda worked as a phone operator at the same hospital where I treated her. The notion that an employee of a world-class academic medical center couldn’t afford healthcare boggled my young mind.
Now I know better.
One of the unspoken secrets about the healthcare industry is that employers in the sector often offer ungenerous, and sometimes downright poor, health benefits to their employees — especially to those who earn the least. Having worked at healthcare companies throughout my career, I’ve always felt that our employees resemble the proverbial cobbler’s kids, walking around barefoot. To be clear, the problem isn’t the quality or comprehensiveness of the benefits offered, but the high cost of accessing the coverage itself.
Mirroring National Trends
Many people I meet outside of healthcare think that people who work for healthcare companies get very cheap healthcare coverage from their employers. It turns out that’s not true. According to the Mercer National Survey of Employer-Sponsored Health Plans, 2019, healthcare workers’ healthcare benefits tend to mirror those offered to employees in other business sectors. “When you look at it as a broad category, it’s remarkably similar to the national average,” says Joe Kra, Mercer’s Northeast Health Leader. “Similar in what employees need to pay for coverage, similar in terms of the total cost of coverage, similar in terms of the plan value.”
One quasi-exception is the hospital sector. On average, hospitals charge their employees less to enroll in coverage and frequently offer a “domestic tier” of coverage, which reduces costs for employees who receive care within the hospital’s own system. But if you look at the coverage for all other care providers that don’t fall in the domestic tier,” cautions Kra, “it is comparable to the national average.” Of course, averages don’t always provide a full picture. Rhonda worked for a hospital and sought care inside its walls; she still couldn’t afford her co-pays.
Mercer’s numbers do not include employees of health insurers. Nevertheless, my anecdotal experience is that health plans tend to offer their own employees the same products they offer their large group customers. Kra says his experience reflects the same trend. “Health insurers need to lead the market with the products they are pitching,” he says. Offering their own employees those products is a way of building credibility with their customers, he adds.
The problem with those products is that they’re as expensive for healthcare employees as they are for everyone else. A just-released report from the Kaiser Family Foundation shows that the average annual premium for employer-sponsored family health coverage was $21,342 in 2020, with workers paying an $5,588 toward the cost of their coverage. Those costs have risen 22% over the last five years and 55% over the last ten years—a key reason health spending by families covered by large employer plans increased twice as fast as those workers’ wages. A recent RAND Corporation report puts the total cost of healthcare at about 20 percent of household income.
(Paradoxically, low-wage workers who receive employer-sponsored health benefits actually pay more for them than higher-wage earners — both in real terms and as a percentage of their earnings)
It’s essential to note that not everyone who works in healthcare even gets health benefits. Of the 18.5 million people who are employed in the sector, more than three million do not receive insurance benefits from their employers. (1.7 million are insured through Medicaid; 1.4 million have no health insurance at all.) Typically, people in this cohort work in nursing homes or as home health aides. Alarmingly, they are most likely to be women and women of color; 1.7 million female health care workers and their children live in poverty.
The Imperative to Buck Trends
Cost containment in the American healthcare system is a complex subject worthy of long-form discussion. Suffice it to say that responsibility for the high price of healthcare lies with many parties. Nevertheless, from my point of view, healthcare leaders have an obligation to make their core products affordable to all of the people they employ. There are several reasons for this:
- Pricing your own employees out of your life-saving product makes little moral sense. This argument is magnified in the context of the heroism displayed by healthcare workers amidst the COVID19 pandemic.
- Providing good health benefits to employees makes economic sense. A myriad of studies have demonstrated that healthy workers are more productive. Just consider the case of Rhonda, whose switchboard was being monitored by someone else while she waited for me to check her escalated blood pressure.
- The affordability of care is unequivocally linked to outcomes, and our mission as healthcare leaders is to improve outcomes. When care is too expensive, people go without insurance and avoid or delay necessary care and medications. This, in turn, not only causes them to become sicker, but also to seek out expensive, last-resort care in emergency departments and hospital wards, fueling a stubborn cycle of illness and expensive treatment that drives costs higher and puts care even further out of reach of the people who need it most. No wonder a 2017 study found that lower-wage workers had higher hospitalization rates, more avoidable admissions and more emergency department visits than higher-wage earners.
A Small Step
Just a few months ago, I took over the leadership position at SCAN Health Plan, a non-profit health system that provides Medicare Advantage health coverage to older adults. Soon after I joined the organization, I worked with my human resources team and our outside insurer to reconfigure the cost of our employer-sponsored health plans so that employees now have at least one zero-cost option, where they pay nothing at all toward their premiums for employee-only coverage. In addition, we reduced the cost of our other offerings by as much as 36 percent and limited the annual increase in cost of our most expensive PPO plans.
We were able to achieve these changes by negotiating with our insurer and through cost-absorption. In the latter case, we don’t see the additional expense as a burden. That’s because we believe that our employees should never have to forego care because they can’t afford to access it. Put simply, we make excellent care affordable to our 220,000 members, and we’re determined to do the same for the people who make that possible.
I’m not writing this to toot my own horn or promote my company. Rather, my objective is to show other healthcare companies across the various sub-sectors that it should be a strategic objective of theirs to provide excellent, affordable care to their employees. Of course, they should have the same objective when it comes to their patients and customers. My hope is that perhaps, by committing ourselves to reducing the healthcare cost burden on our employees, we’ll discover both the motivation and means to lower those costs for everyone.