Daily Q&A: Oklahoma CEO says savings are key to controlling employer health costs in Obamacare

Daily Q&A: Teah Corley, chief executive of PremierSource, explains the difference between cost savings and cost shifting.
by Paula Burkes Modified: April 29, 2014 at 5:00 pm •  Published: April 28, 2014
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Q&A with Teah Corley

As health care costs increase, employers face budgeting choices

Q: If the Affordable Care Act was intended to make health care affordable, why are employer-sponsored health plans continuing to see such significant increasing cost trends?

A: Several reasons. First, fully-insured employers are starting to see the effects of insurance companies passing along the insurance industry fees that were originally assessed to them, and it’s showing up in the form of fixed costs. Where the health care inflationary trend is projected at 6.5 percent for 2014, we are seeing as high as 5 to 6 percent in additional increases tied specifically to the insurance industry fee pass-throughs. In addition, both fully-insured and self-funded employers are starting to see increased costs on the claims side, resulting partially from meaningful-use requirements placed on health care providers by the Affordable Care Act. Health care providers have seen reduced Medicare reimbursements with increased technology requirements. They are being expected to do more with less. This results in an environment ripe for waste, fraud and abuse as health care providers struggle to keep up.

Q: As health care costs continue to rise, employers seem to be looking for ways to shift a greater portion of costs to employees. Is that a good strategy for companies that want to control plan costs?

A: Employers need to understand there is a major difference between cost shifting and cost saving. Cost shifting simply reduces employer costs temporarily while increasing employee costs. Unfortunately, that strategy doesn’t address the underlying and ongoing challenge of controlling costs for both the employer and the employee. While cost shifting provides a relatively easy, temporary fix, the best strategy is one that focuses on true long-term cost savings.


by Paula Burkes
Reporter
A 1981 journalism graduate of Oklahoma State University, Paula Burkes has more than 30 years experience writing and editing award-winning material for newspapers and healthcare, educational and telecommunications institutions in Tulsa, Oklahoma...
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