By A.I. Miguel
It is widely believed that approximately 80% of the United States’ healthcare dollars are spent on 20% of the people. Our healthcare system is set up to treat ailments, not prevent them. Year after year, businesses are being crippled by double digit healthcare premium increases for their employees. How do you fix healthcare problem in the US? Simple, give people a financial incentive to be healthy.
Currently, an employer pays the same annual healthcare premium for each employee. Rates are not tailored to the employee’s health status or lifestyle choices. If you could make the employee pay for a percentage of his healthcare (if he/she chooses not to maintain a healthy lifestyle), AND the insurance companies would agree to charge a rate based on each individual’s health (not the group’s health), the net cost of healthcare would likely come down.
Here are examples of 4 employees:
Employee A, Albert, a person of “Average” Health in today’s society.
Albert’s annual rate under the current program is $7000, all of which is absorbed by his employer. He does not smoke, use drugs, or drink alcohol in excess. He is only slightly overweight, which in today’s society is the norm. Semi-annually, he will visit his Primary Care Physician (PCP) for a mandatory physical. The doctor will looks at factors such as blood pressure readings, body fat content, cholesterol readings, etc. Albert receives a grade “Acceptable-high end of range” from his doctor. This rating means that Albert’s health is within, but at the top end of acceptable ranges. In other words, he could do better.
Under the new proposed program, the Albert’s of the world would pay 10% ($700) of that $7000 annual premium. Whether or not the employer would make up the difference by paying Albert an extra $700 in salary is at the discretion of the boss, but either way, if Albert could save that $700, he would think twice about that 2nd desert, or instead of driving the ¼ mile to the store, he may consider walking, in order to get to the grade of Bonnie(below).
Employee B, Bonnie, a person of “Good” Health in today’s society.
Like Albert, Bonnie does not does not smoke, use drugs, or drink alcohol in excess, but unlike him, she is not overweight. She eats healthy food, and gets regular casual exercise by walking before work in the morning. After her semi-annual visit to her PCP, her result came back as “Acceptable-middle area of ranges”.
Under the new proposed program, the Bonnie’s of the world, would not pay any part of the annual premium. Due to her better health choices, her employer would benefit also, by only paying $6000 per year for her coverage.
Employee C, Cliff, a person of excellent health.
Like Albert and Bonnie, Cliff does not use tobacco, drugs, or excessive alcohol. He stays in great shape by getting regular exercise and eating healthy. His Body Mass Index (BMI) is very low, and blood pressure readings are very good. His doctor gives him a grade of “excellent” after the semi-annual physical.
Under the new proposed plan, not only will Cliff not pay any part of his healthcare cost, the insurance company will reward both him and his employer for his good health choices. His employer will only have to pay $5500 for his annual coverage, and the insurance company will send Bob a check for $500.
Employee D, Doug, a person of poor health.
Unlike the other 3 employees, Doug is in terrible condition. He uses tobacco, drugs, drinks excessively, and is obese. Exercise is foreign to him, and junk food IS his diet. He is constantly visiting doctors to treat the ailments brought on by his poor health choices. People that live this type of lifestyle are most likely to need high-cost emergency healthcare (i.e. heart attack visit to a hospital emergency room). As you could imagine, the results of Doug’s annual physical were dismal, receiving a grade of “Poor”.
Under the new proposed plan, the insurance company may charge a “high-risk” rate of $14,000 for this employee. Doug’s employer will only have to pay $7000 (the same as slighty out-of-shape Albert above), but Doug will also have to pay an equal amount. The result is that Doug will be paying 50% of his new $14,000 annual healthcare premium. If you think that is excessive, remember that 20% of the populace uses 80% of our healthcare dollars.
To conclude, this proposed plan could be a long-term win-win-win for all the parties involved. The employees have a financial incentive to maintain a healthy life-style. The employer’s maximum rate per employee is capped at $7000 per year, and could be lower depending on the lifestyle choices of their employees. Insurances companies get to charge more money to the high-risk people, who will most likely need high-cost healthcare.