Just 1.2 percent of all health plan members account for nearly a third (31%) of all healthcare spending for large employers. This data comes from a new study by the American Health Policy Institute.
Over half (53%) of that disproportionately distributed spending is tied to treatment for chronic conditions. Conditions that were the most costly included cancer and heart disease.
Left unchecked, healthcare costs for plan sponsors will only grow, according to predictions from the study, because of several key factors. Medicaid costs are expected to surpass $1 trillion per year in 2025. Also, the advancing age of the U.S. workforce means that, in the coming years, the worker-to-retiree ratio is expected to sink below three-to-one.
Additionally, by 2025, 53 percent of private sector employees who are the primary breadwinners for their families will have to spend 9.5 percent or more of their family’s annual income on healthcare. Health care bills that demand such a significant portion of income are considered “unaffordable” by the Affordable Care Act (ACA).
Speaking of the ACA, the excise tax or Cadillac Tax will start affecting average value plans, not just the expensive, “Cadillac” plans for which the tax was intended, by 2031.
To summarize, the key factors of rising Medicaid costs, an aging workforce, rising average health plan costs, and the Cadillac Tax will snowball to bring health care spending to unmanageable levels in the next 10-15 years.
But, we have the potential to turn this trend around.
The analysis concludes that both public and private sector efforts should focus on chronic disease, increased wellness program participation, and predictive biometric screening to engage plan members and turn them into “active plan participants.” These measures empower health plans to identify the highest risk members who carry the bulk of the costs. They also mobilize individuals to know their health status and engage in actions that will help them avoid or closely manage costly conditions down the line.
For the complete study from the American Health Policy Institute, click here.