America’s Medical Care Crisis

Over the past decade health care insurance costs have climbed steadily. This is taking a toll on the bottom-line of corporations, cutting into profits, limiting growth and forcing a reevaluation of the employee benefit system. According to a projection by McKinsey & Co., at the present rate, by 2008 health benefits will eclipse profits at the average Fortune 500 organization. Employers, through private health care insurance corporations, are the leading provider of medical services in America. In 2004, 59.8 percent of Americans were covered by a organization-based health care insurance program, accounting for 88 percent of all private health care insurance. Yet the increasing costs of Medical Care, ever-rising prescription prices and a steady rise in chronic illnesses have brought the corporate society to a breaking point. For many corporations the increasing burden has become too difficult to carry. Over the past five years health care insurance premiums have raised an average of 11.6 percent annually, more than four times the average rate of inflation and employee earnings over that time.3 Not surprisingly, this exponential growth in costs has caused the number of corporations offering Medical Care services during that time to drop from 69 percent to 60 percent.4 In addition, in 2005, health care insurance premiums jumped 9.2 percent, more than three times the rate of inflation – and that was the lowest increase in the past five years. In this environment corporations need to find innovative ways to stem the increasing costs of Medical Care coverage. Seemingly, the easiest strategies to accomplish this goal would be to lower benefits coverage or pass on arising burden to employees and retirees. Greater than 80 percent of corporations have chosen one or both of these cost saving measures in the past few years and almost half of all sizable corporations are likely to increase the amount employees pay in 2007.5 However, these approaches do nothing to mitigate the primary causes of increasing costs, one of which is a population that needs increased healthcare. To make a lasting and substantial impact on costs and overall health, corporations need to look beyond a old-school reactive-based approach.