Continuing to believe that runaway healthcare costs are one of the most important problems confronting all employers today, I periodically post on what I find to be promising developments as we struggle with this issue.

Click over and read on for a comment on the impact of the problem from the union perspective, followed by several stories on employers and insurers making headway in understanding and addressing healthcare costs.

Fellow Blogger Phillip Wilson, of Laboring Away at the Institute writes: “Health care costs and unemployment”

Referencing a Milwaukee Journal article, “After SBC fight, health care tops labor’s list of worries; Union leader says costs impede hiring, push jobs overseas” (By JASON GERTZEN), Phillip says:

This is so true and shockingly it comes from a prominent union president, Morton Bahr of the Communication Workers. Bahr argues that high health care costs are a “deterrent to job creation,” and that employers are expanding operations much more slowly (and outsourcing more often) to avoid paying additional health insurance costs.

Next, from Pacific Business News: “HMSA sees results from generic-drug ads”(by Kristen Sawada)

The Hawaii Medical Service Association saw an increase of more than 20 percent in the sales of generic prescriptions — and millions of dollars in savings — since it began an ad campaign promoting generic drugs. . .

HMSA’s campaign, which started last November, features print and TV ads, indoor billboards, direct-mail ads, work-site promotions and incentive programs for doctors.

The insurer wouldn’t disclose the amount spent on advertising, but estimates a twentyfold return on investment for every dollar spent on the campaign. . .

“We’re trying to destigmatize generics because in certain product categories generic is an inferior product, but in medications that’s just not true,” Berthiaume said. “Consumers being aware that there’s out-of-pocket savings to them is a very potent driver to this.”

Drug companies spend an estimated $2.5 billion annually on direct-to-consumer advertising of brand-name medicines for chronic conditions such as high blood pressure, diabetes, cholesterol and anti-depressants.

To counter multimillion-dollar campaigns, health plans nationwide have increased efforts to promote generic drugs to members. Read more

Now, from The Business Journal of Kansas City: “Health insurers use modeling to predict, prevent high costs” (by Lola Butcher)

Your insurance company is building a crystal ball.

It knows — or soon will — whether you are about to become a high-dollar health care case, and it may already be taking steps to help you avert that fate.

Such is the power of predictive modeling, sophisticated computer techniques that use historical data to try to predict the future.

Common in industries such as transportation and environmental management, predictive modeling has come to health care in the past few years, and its power to transform the way health care is delivered is beginning to emerge. . .

Health insurers are using many models, both proprietary and off-the-shelf, for a wide range of purposes, from anticipating costs to identifying who is most likely to become disabled.

One thing everyone is trying to do is identify who’s about to get sick and work to stave off that illness and the expensive claims that come with it. Read more

And, from workforce.com: “All Aboard; Beset by rising insurance costs, Union Pacific employs semi-tough love to improve the health of its mostly middle-aged, blue collar workforce. While some companies take a no-prisoners approach, UP chooses to nudge, encourage and prod its employees to good health. And it’s saving millions.” (by Andy Meisler)

Union Pacific is one of the best examples of a large American company that has successfully balanced the health of its employees with the need to boost its bottom line.

Union Pacific estimates that during 2001, the last year for which a figure was calculated, its wellness program saved the company $53 million. That’s because more than 34,000 of the company’s 47,000 employees have voluntarily availed themselves of a free health-risk-assessment survey offered by the company. In 2003, 10,416 employees took the HRA and 6,642, prompted by health risks thus uncovered, enrolled in preventive health-education or disease-management programs. From 1990 to 2001, costs attributed to “lifestyle” factors such as smoking and alcoholism have dropped from 29 percent to 18.8 percent of the company’s total health-care bill. Among the employees who have taken advantage of the project, rates of high blood pressure, high cholesterol, smoking and excessive alcohol consumption have been significantly reduced. . . Read more (there’s much more)

The New York Times: “Health Care Costs Are a Killer, but Maybe That’s a Plus” (By STEVE LOHR)

The American health care bill, the government estimates, will be $1.79 trillion this year, or $6,167 per person. By all accounts, there is plenty of waste and inefficiency in health care, ranging from unnecessary clinical tests to the bureaucratic sea of paper used to handle bills, claims and patient records.

If a miracle were to rid the system of all such inefficiency, the total costs would be reduced by 10 percent to 20 percent, health care economists estimate. But the main reason health care spending is rising is that modern medical technology has steadily made it possible to do more for more people. Hips and hearts can be fixed, while the ravages of schizophrenia and depression can be moderated.

The technological marvels of medicine, of course, are little comfort to most of the 45 million Americans who are not covered by health insurance. Yet among the insured majority, millions of people are being treated for physical and mental ailments that went untreated or undetected years ago. . .

A pill can be seen as a delivery vehicle for a chemical technology. In the rise of high-tech medicine, the pharmaceutical business has probably been the biggest single winner, becoming one of the most profitable industries in the world.

The industry faces a backlash today not only because of its high profits but also its marketing tactics, including pharmaceutical company payments to doctors - a practice that has prompted government investigations and some criminal charges. Opinion polls show the public has about as dim a view of pharmaceutical companies as they do of tobacco companies.

Despised certainly, but perhaps worth it. In a working paper for the National Bureau of Economic Research, a nonprofit research group, Frank Lichtenberg, an economist at Columbia University’s business school, has concluded that 40 percent of the increased longevity in 52 countries over the last 20 years can be attributed to new drugs. The cost in pharmaceuticals for an extra year of life was on average $5,000 a person, according to his research. . .

“Having longer, higher-quality lives is a luxury that we as a society can increasingly afford,” he says, “What’s wrong with that? What would you rather be spending it on? More plasma TV’s?” Read more

We do need to reevaluate our priorities a bit; I think the last statement really helps put things in perspective.

St. Louis Post-Dispatch: “Blue Cross chief warns of impending peril” (by Jerri Stroud)

The health care industry needs to get its house in order before the government imposes a system that no one will like, the president and chief executive of the Blue Cross and Blue Shield Association, Scott Serota, said Wednesday at a meeting of health care professionals at Washington University’s School of Medicine.

“We have a window of opportunity,” Serota said. “We have to step through it” or else face a system where consumers have to line up and wait for care as they do under single-payer systems in Canada and Britain. . .

Serota faulted the insurance industry for doing a poor job of helping customers understand where the money they spend on health care goes. Surveys show that consumers think that a little over half of the health care dollar goes to care, about a fourth goes to administration and a little less than a quarter is profit.

“People refuse to believe that 88 cents on the dollar goes to medical benefits,” Serota said. And when they hear that profit is only 2 percent to 3 percent, they wonder why anyone would invest in the business.

The industry also needs to develop products that will attract uninsured families who have chosen to forgo insurance premiums in hopes they won’t need care, Serota said. Families with incomes of more than $50,000 make up about 20 percent of the uninsured.

Solutions for low-income working people also are needed, as well as education for the 15 million people who are eligible for or enrolled in government programs but who don’t know that they have or can get coverage, Serota said. Read more

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Workforce Management’s critique of striking grocery workers

Wal-Mart CEO on health care, exporting of jobs, legal system


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