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Tulips and health care costs

By Jay MacDonald ·
Tuesday, May 17, 2011
Posted: 9 am ET

Like tulips, health care spending reports pop up this time every year. Unlike tulips, they've been a little hard on the eyes lately.

The Thomson Reuters Healthcare Spending Index for Private Insurance reports that the cost of health care for individuals covered by employer-sponsored health insurance rose 5.8 percent in 2010, a dip from the 6.6 percent growth rate in 2009, but still discouraging. Employer-sponsored plans account for 25 percent of all U.S. health care expenditures.

Hospital costs showed the steepest gain at 7.9 percent, while the cost of physicians rose 4.9 percent and drug prices moved up 1 percent.

Nearly a quarter (24 percent) of employer health insurance costs are devoted to the diagnosis and treatment of behavioral risk factors, including obesity, lack of physical activity, tobacco use, alcohol use and poor nutrition.

"As we investigate the individual drivers of health care cost increases, it becomes clear that there's an opportunity for employers to intervene with programs designed to address unhealthy behaviors," says chief research officer Gary Pickens.

So how are employers faring on the health insurance front? Not very well, judging by the Ninth Annual Study of Employee Benefits Trends conducted by MetLife.

"This year's findings reveal a workforce that has grown more dissatisfied and disloyal, to the point where one in three employees hopes to be working elsewhere in the next twelve months," the MetLife report begins.

Yikes! Small wonder they're sitting around smoking, drinking and eating pizza.

MetLife's findings suggest that employers may be increasingly out to lunch when it comes to their rosy view of a smiley, happy workforce. The study finds that while business leaders are understandably consumed with the bottom line these days, their failure to offer a robust benefits package may undermine their performance in the years ahead.

"Bolster employee loyalty and satisfaction or economic recovery may arrive with unanticipated setbacks for retention and productivity," the study suggests.

If there's a bloom to savor in this bouquet of thistles, it may be health care reform. "A surprising finding is that most employers expect non-medical benefits and retirement offerings to become more important components of the benefits strategy in the wake of health care reform. This bodes well for employees given study findings about their desire for income protection and retirement security," the study says.

In other words, employers are counting on cost savings from health care reform to enable them to provide more of what employees want, such as better wages and retirement plans.

Granted, it's a small tulip in a vast bleak wasteland. But as the economy strengthens and health care reform begins to deliver on its economic promises, the prospects for more tulips next year gets better every day.

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