A recession could have wide-ranging effects on how U.S. employees use their health care benefits, predicts Edward Kaplan, senior vice president and national health practice leader at The Segal Co., an HR consultancy.
Kaplan sees a labor market that even in a downturn remains challenging for employers, who generally don’t want to burden their workers with more health plan cost increases. “Employers want to hold on to their best talent, and they are ready to battle the major health plans over threatened rate increases,” he says.
Kaplan also foresees a number of potential, sometime countervailing outcomes that HR benefits managers should be prepared to encounter—and which highlight why communicating with employees now to address their concerns may be in order.
A Gamut of Tests, Just in Case …
For instance, the threat of layoffs or increases in cost-shifting could give employees an incentive to flock to medical providers sooner rather than later. “In past recessions, we saw some people use more medical services, drugs or dental work because they worried about losing their jobs and benefits,” Kaplan says. Fearful employees may also seek to have their existing illnesses defined as disabilities, which could then lead to an increase in long- and short-term disability claims.
Employees could seek to have existing illnesses
defined as disabilities.
“Health plans and employers should also be on guard for a possible rise in health care provider abuses," Kaplan warns. "When the economy contracts, providers may be ordering additional tests for patients or providing extra services in an effort to boost their revenue.”
Or Forsaking Care
Working against a surge in doctor visits, however, is that today's employees typically face higher co-pays and more co-insurance costs than in the past, and they may not feel they have the necessary income to pay for extra services or drugs.
But while it's desirable that employees not seek unnecessary or gratuitous medical services out of fear regarding loss of coverage, if they go too far the other way and forsake needed care in order to save out-of-pocket expenses, that, in turn, could lead to a rise in admissions for expensive, later-stage diseases, Kaplan points out.
Again, benefit managers may want to ensure that workers don't have unfounded fears regarding their job security and health care coverage. And if layoffs are in the cards, be frank about COBRA and its costs but also educate employees that seeking necessary care while being wise consumers of health services is the best course of action for their physical and financial well being.
Other actions that health plan sponsors can take in this environment, according to Kaplan, include:
- Tighten health plan membership rolls through eligibility audits (see Tips for Auditing Dependent Eligibility).
- Monitor employee use of health care services via data mining.
- Audit disability and medical provider claims for overlap, waste, inefficiency.
- Negotiate "tough" with health care providers and insurance carriers.
- Review vendor contracts and interview alternative health care providers.
Stephen Miller is manager of SHRM Online's Compensation & Benefits Focus Area.