Healthy Employees, Lower Premiums: How to Get the Health You Pay For
The Problem / Why Participate?
Rising health care costs are threatening corporate viability and putting American businesses at a competitive
disadvantage. In the last decade, annual health insurance premium increases ranging from 3% to 13% have consistently
outpaced inflation and the growth in workers’ earnings. There was a limited reprieve from double digit increases for
some companies in 2012 (premiums increased 4% nationally); however, the rate of increases remains uncertain, extends
beyond what most businesses can afford, and impacts workers’ wages. And while health care costs are increasing, and
the system that is charged with keeping employees and their families healthy is strained, the overall health of Americans
is declining. The indirect costs to employers of poor health (absenteeism, presenteeism, and disability) are two to three
times higher than direct medical costs.1
Employers have tried a range of strategies to lessen the impact on their employees and their bottom line of skyrocketing
health premiums. These strategies have included increasing the share of premiums employees pay, redesigning health plans to incentivize use of higher quality and lower cost health care and shifting costs to employees through increased
copayments, deductibles, and coinsurance. Some employers have developed incentives that engage the employee in
improving their own health and many employers have turned to wellness programs to improve workers’ health and
subsequent costs. Health plans and providers have adopted new approaches to improve quality and lower rates,
focusing on more organized care, disease management, and, more recently, patient centered medical home approaches
to delivering care.
As employers contend with the effects of the recession and slow economic recovery, many are building upon this
foundation of experience in benefit design and shifting their focus to explore new approaches that transform the system
working to keep employees and their families healthy. They are partnering with leaders from health plans and health
care providers to move beyond incremental change in an ambitious drive to re-think the role of each sector and
ultimately change the shape and size of the system.
In this system of new expectations, health care would be purchased with visibility into cost and quality of services and
products, with information about providers’ trends in cost and quality, and with strategic focus on cost and quality. As
one physician leader commented, “[Employers] can influence insurers and work with doctors and hospitals to change how health care is
delivered and paid for. The end result of such teamwork would be lower health insurance premiums for the businesses’ employees and an
overall reduction in the cost of … health care services.”2
What You’ll Accomplish / About Healthy Employees, Lower Premiums
Healthy Employees, Lower Premiums is an innovative initiative to lower premiums without any adverse impact on
employees. It is a system-wide initiative aimed at redefining the expectations of each sector in the system, without overrelying on any one relationship. We are altering the dynamic of competing interests to identify and capture cost
reduction opportunities, simultaneously bringing together and building capacity among employers, workers, unions,
health plans and health care providers.
During the October 23rd and 24th session, participants will contribute to refining the expectations of each sector and
learn how they might begin to change the dynamics in their regions. We welcome forward-thinking businesses of all
sizes to join health plans and health care providers in lowering health insurance premiums and improving health, while
maintaining workers’ trust and commitment to good health. The session will be particularly useful for individual
employers, health care providers and health plans that are looking for new approaches to transformation and for
regional teams starting this transformation work together.
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About the Institute for Healthcare Improvement
The Institute for Healthcare Improvement, IHI, is a leading innovator in health and health care improvement
worldwide, convening and collaborating with the visionary leaders to spark bold, inventive ways to improve the health
of individuals and populations We have a long history as a trusted champion for health care improvement —
convening a committed community of improvers to test new ideas, explore new models of care, and find better ways
forward.
1
Michael E. Porter, Elizabeth O. Teisberg, and Scott Wallace; What Should Employers Do about Health Care? Working Knowledge July 16, 2008.
Loeppke R, Taitel M, Haufle V, Parry T, Kessler RC, Jinnett K.; Health and productivity as a business strategy: a multiemployer study. J Occup Environ Med. 2009 Apr;51(4):411-28.
2
*Manoj Jain, MD. Employers have clout to reduce health costs.The Commercial Appeal, July 8, 2012. www.commercialappeal.com
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