Human Capital & Careers

Is There a Doctor in the Company?

To make rising employee heath-care costs more palatable, companies get creative.
Marie LeoneFebruary 21, 2007

U.S. health care spending is expected to double to $4.1 trillion over the next decade, up from $2.1 trillion in 2006, according to a government report released on Wednesday. That means by 2016, nearly 20 cents of every dollar spent will go toward hospital stays, prescription drugs, and other health-related services, says a new report by economists from the National Health Statistics Group who published their findings in the journal Health Affairs.

While healthcare spending growth is expected to remain relatively flat at 6.9 percent from 2006 through 2016, consumer out-of-pocket spending on health care services is estimated to increase by 43 percent during that period, rising from $251 billion in 2006 to $441 billion by 2016, according to the Office of the Actuary at the Center for Medicare and Medicaid Services.

With out-of-pocket expenses soaring, corporations are keen on finding ways to mitigate some of the costs that are sure to burden employees, say preliminary results of a new study from Watson Wyatt Worldwide and the National Business Group on Health. To be sure, companies are continuing to invest in on-site medical clinics, call-in medical help lines, and employee health appraisals to help control health care costs, according to the survey which is slated to be released in mid-March.

The survey, which polled 573 large corporations representing an aggregate 11 million full-time employees, finds that while employee health care costs remain high, they have become more predictable in recent years. Indeed, 82 percent of companies polled said their health care costs came in at or below budget in 2006, as did 84 percent in 2005.

“The rate at which health care costs are increasing may be stabilizing, but it is still three times higher than the annual rate of inflation overall,” noted Ted Nussbaum, director of group and health care consulting at Watson Wyatt, in a press statement. “While investing in education programs, communication, and infrastructure will not change behavior overnight, it will produce returns in the long run,” he added.

According to the study, corporations are becoming creative about improving employee health. For instance, more than three-quarters (78 percent) of the companies in the survey offer a nurse line for answering medical questions, and 72 percent offer health-risk appraisals. A little less than half (42 percent) are instituting programs that focus on reducing obesity among employees, and 23 percent have opened on-site clinics at some locations to offer employees easy-access to health care services. Fourteen percent have opened on-site pharmacies.