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SIGNIFICANT STATISTICS FROM RECENT MEDICAL COST LITERATURE
Author: David Reis, 847-818-5033
- Per Foster Higgins, the average 1995 employee contribution per month for single medical coverage was $38 (approximately 22% of total cost), and the average contribution for family coverage was $139 (approximately 34% of total cost).
- Per Business Insurance December 9, 1996, Employers can expect 1997 HMO rate increases of 1-6%. Preferred provider organization rates are expected to rise in the range of 7-12%. According to a Peat Marwick survey, nationwide HMO premiums decreased 4% from the spring of 1995 to the spring of 1996. Premiums for point-of-service and conventional plans rose 1.2%.
- Per the 1996 CibaGeneva Report on Member Satisfaction Within Managed Care, About 55% of HMO members and 45% of those enrolled in point-of-service plans said they were either extremely or very satisfied. At the other end of the scale, more than 14% of those in HMOs and 21% of POS enrollees said that they were not pleased with their health plans. Members’ relationships with their primary care physicians had the greatest effect on their opinions of their medical care. The single largest factor shaping the opinions of both HMO and POS plan members about the quality of their physicians was the explanations of diagnoses and treatments. This factor was closely followed by the interest their doctors showed in getting to know them.
- CCH’s 1996 Unscheduled Absence Survey revealed that unscheduled absences remained stable this year at an average of 2.8% of the workforce on any given day. One of the most common reasons employees take time off is to care for young children. According to the Small Business Administration, over half of the nation’s employers prohibit employees from using paid sick time to care for sick children. As a result, parents must lie to avoid losing a day’s pay.
- According to a Watson Wyatt study, companies that manage disability plans aggressively (eliminating overlapping coverage between workers’ compensation and disability plans, using early return-to-work programs, etc.) show disability costs of 2.7% of payroll vs. 5.4% at companies that don’t manage disability aggressively.
- A large short-term disability management firm in California (Matrix) noted the following statistics for their book-of-business: 65 cases/1,000 employees, 9.5 weeks/case, and 4.3 days/employee.
- According to the Midwest Business Group on Health, 1/2 of the total dollars spent on health care in the US can be attributed to seven chronic diseases-three of these diseases alone (asthma, ulcer and diabetes) are responsible for 1/4 of the total health care expenditure. A Robert Wood Johnson Foundation study found that the chronically ill represent 80% of hospital days and 83% of prescription drug use. 2/3 of physician visits and 55% of emergency visits are made by this group.
- According to a 1989 RAND report, depression was not detected by primary care physicians in 40-50% of cases. According to 1995 Foster Higgins data, mental health and substance abuse are 4% of total health care spending for the average employer.
- The Wall Street Journal reported on 10/24/96 that, according to two recent studies, 37-54% of emergency room visits are for conditions that don’t require immediate treatment.
- Kwasha Lipton Group estimated the replacement cost of work/life related turnover for a 7,000 employee company as $10,867,000. The estimate was based on studies that show that 10-12% of employees report actively looking for a less pressured job. Kwasha assumed 1/4th of such job seekers leave, and used estimated turnover costs of 150% of an exempt employee’s salary and 75% of a nonexempt employee’s salary. First Tennessee Bank noted that supervisors considered supportive of work/life balance by subordinates retained employees twice as long as the bank average.
- Per Solutions, February, 1997, Sears combined reengineering with consolidation of its HR centers, reducing its HR staff from 573 to 125, and lowering its HR costs by 74.6%. When IBM implemented its U.S. payroll service center, it also reengineered processes. The HR staff was reduced by 58%, the IS staff by 43%, and the number of systems being maintained was reduced from 12 to 2.
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