by Rachael Pfenninger, director of strategic execution, American Mold Builders Association
According to an article published by the American Medical Association in 2020, healthcare spending in the US increased by 4.6% in 2019 – a percentage that was on par with 2018 growth and slightly faster than what was observed in 20171. What is most remarkable, however, isn’t that healthcare spending is increasing – it’s that of healthcare spending around the world, the US is the worst performer. In fact, the United States accounts for more than 40% of all global health spending, and today, has seen healthcare spending hit almost 20% of total US GDP2.
While startling, this information doesn’t necessarily mean that Americans are using more healthcare than other countries. Rather, healthcare users in the United States are simply paying more per interaction.
These statistics are reflective of recent information collected by the American Mold Builders Association in its 2022 Health and Benefits Report, where manufacturers continued to report rising costs. Of the 90 mold manufacturers that participated in this benchmarking effort, over four in five received some increase in their health insurance costs in 2020 and received another increase again in 2021 – percentage increases that were difficult to swallow, especially given that respondents reported that the provision of health benefits now represents an average of 16% of corporate overhead.
Similarly, survey respondents also felt the pinch in increasing average costs for participating employees – while the average cost of medical benefits per participating employee in 2020 was $9,866, that cost rose to $10,015 in 2021.
These numbers are significant, especially because only 1% of survey respondents reported that they don’t currently offer health insurance to their employees. This makes the challenge of healthcare costs a largely universal one, felt equally by mold builders regardless of annual sales revenue or employee count. In fact, when looking at average enrollment of participating employees across annual sales ranges, nearly all revenue ranges had average enrollment of at least two out of three employees (the only exception being companies under $3.49M).
Although it may seem like there is no end in sight to these continued year-over-year increases, many manufacturers are exploring other cost containment methods. Of the options provided, the most popular cost control strategy identified by this survey’s respondents was the use of an employee contribution-oriented health savings account (HSA). This method – utilized by 54% of respondents – was followed by another 46% who have moved to a high-deductible health plan. Other popular methods of cost containment included the following: an offering of flexible spending accounts, a Section 125 plan, an HSA contributed to by the company, shifting premiums to employees, implementing wellness plans and/or participating in captives.
In addition to the cost control strategies cited above, this survey data also pointed to another, less easily identifiable opportunity – the willingness of executives and their teams to educate themselves on how their dollars are being spent. For example, when asked how much of their current medical spending went to Rx, only one in four mold manufacturers were able to provide the information. Of all the Rx cost containment strategies identified, the second highest percentage of respondents – 50% – simply chose “Unknown.” And finally, when asked whether the company has a resource that provides long-term, strategic guidance related to health benefits renewal, only seven out of 10 respondents replied with certainty that they know where they’re headed – meaning the other 30% rely on little to no strategic guidance at all.
Although the cost of healthcare is a challenge in and of itself, the data in this report also points to other bottom-line impacting information; specifically, what companies can offer to actively address growing workforce challenges. For example, 35% of mold builders offer an EAP (employee assistance program), followed by 32% who participate in profit sharing (a motivating business model that can empower and drive one’s workforce). Other benefits focus specifically on time management, family balance and/or healthy living; for example, while 36% of respondents provide flex time, 20% also offer maternity leave and unpaid paternity leave. There is also a strong focus on education, training and the development of one’s career path, which is clearly illustrated by the 64% of respondents who offer tuition reimbursement.
In none of these cases are 100% of this survey’s respondents providing the benefits listed above – which means that for any individual facility, adding any as an offering could be a significant employee benefit that not only drives down healthcare cost, but creates a healthier – and happier – workforce.
To benchmark healthcare policies related to both medical and ancillary benefits, gain a better understanding of cost control strategies, explore workforce opportunities and more, visit www.AMBA.org to review and purchase the AMBA 2022 Health and Benefits Report. n
AMBA members interested in decreasing healthcare costs also are encouraged to visit www.AMBA.org to learn more about the captive solution offered by AMBA’s leadership and the First Resource team.
Mold Manufacturers Miss Opportunities to Reduce Healthcare Costs
In AMBA’s 2022 Health and Benefits Report, only 15% of mold manufacturers reported offering reimbursement for fitness and/or other healthy activities. An equally small percentage identified the implementation of wellness planning as a cost containment strategy utilized by the company.
For manufacturers seeking to reduce their healthcare costs, this can be one area where it may be wise to reconsider their policies. According to the CoreHealth Workplace Wellness blog, “3 Studies Show Wellness Companies Can Reduce Healthcare Costs,” the author argues that, “Unhealthy behaviors are associated with increased healthcare costs…. According to the CDC, 11.1% of healthcare costs in the United States are related to inadequate physical activity. In 2018, the United States spent $3.6 trillion on healthcare. Inactivity, therefore, is responsible for $333 billion ($3 trillion x 11.1%) in healthcare costs.”
By promoting healthy behaviors – such as physical exercise, nutrition, mental health and others – employers can help support employees reduce their chances of chronic disease and overall health risks, thereby lowering the company’s overall healthcare costs – making those reimbursements well spent.