How to Cut the Cost of Health Care for Good


Companies that have successfully made the paradigm shift and drastically reduced their health care spending did so by making a commitment and taking a series of steps. The commitment involved a willingness to work with their employees to address a problem that both employer and employee alike confront.

The steps they took involved a willingness to work methodically through the issues that all companies face. Here is an overview of the 10 steps necessary to get health care costs under control:

  1. Understand why health costs are rising: You can only begin to make a long-lasting difference in your company’s health care expenses when you understand what is behind the increase and take steps to control it. Find out more about the following cost drivers and what you can do to address them:
  2. a) Aging workforce: The demographic shift in the US as the Baby Boom generation ages is one factor in rising costs. An aging population generally requires more health care than a younger demographic.
  3. b) Medical advances: Scientific breakthroughs that prolong life and cure diseases are a wonderful thing. But they come at a great cost, including increased demand for expensive drugs and procedures.
  4. c) Detereoration of health: The human body needs physical activity. But since the Industrial Revolution, people have become more sedentary, and their diets include more fat and calories. Modern life also includes increased stress levels, which negatively affect health.
  5. d) Third party payer system: The way health care is funded in the US isolates the consumer from the cost of the product. Consumers have no incentive to use benefits in an economical fashion since they don’t directly pay for it.
  6. Find out where you stand now: To move forward, you’ll need to understand your company’s current status on effectively managing health care costs. You can use this online assesment tool to gain valuable insight on your current situation and a baseline from which to measure future progress.
  7. Experience the paradigm shift: Harness the power of the 80/20 principle to cut your health care expenses without reducing benefits or shifting costs. When you understand which minority of efforts are linked to the majority of results, you can focus your health care cost control efforts in the most productive way.
  8. Address health risks: Health care cost containment measures that don’t address the impact of health risks are doomed to fail. For various reasons, most wellness programs currently in use are ineffective. Research what works and what doesn’t.
  9. Offer employees incentives: Forging a partnership with employees is a key element in achieving real cost reductions. You can encourage employees to make healthier lifestyle choices at no cost to your company. When that happens, you save money, they enjoy better quality of life and productivity rises. It’s a win-win-win situation.
  10. Design a benefits plan that gets results: The way you fund your health benefits makes a big difference. Find out how to design a plan that will reinforce your partnership with employees and set the stage for long-term savings.
  11. Measure your success: It’s important that you can quantify your results, since you cannot manage what you do not measure. When you’ve gained the active participation of 80+% of your employees in health risk reduction measures, you are likely to see a steady drop in medical claims. In three to five years, you are likely to save 30% or more or your health care cost.
  12. Avoid legal problems: As a business leader or HR professional, you know there are hundreds of employment-related regulations. Make sure you remain in compliance as you get control of health care costs.
  13. Create a Strategic Health Care Cost Management Plan: This plan will guide you as you communicate and implement your cost control strategy. A successful plan must include a results-oriented workplace health promotion program, smart benefits design and powerful incentives to engage employees in the effort to control costs and improve health.
  14. Get help from the experts: Take advantage of professional help so that your implementation gets the best possible results. Other companies have successfully implemented a strategic plan that saved them 30% or more on health care expenses. The blueprints and best practices exist, so you can take advantage of prior experience rather than reinventing the wheel.

Of course, there are details about each step that you need to thoroughly examine and understand before you can successfully implement this new approach at your company. That level of detail is beyond the scope of this report.