Cost Contagion

Cost Contagion

“Cost-related barriers to care” is a nightmare of a phrase for many employees and their families. When a person needs medical care and can’t afford it, incredible strains are placed on households. Now, new data indicates that companies are feeling the stain as well, in the form of significantly lost productivity and absenteeism costs.


Employers Catch Heavy Costs

When an employee experiences a cost-related barrier to care, they’re much more likely to miss work. On average, individuals that can’t afford care have 70% more sick days than employees with no barriers.

Lower-income workers feel the squeeze the most. Across the country, about one in three workers with family incomes less than $35,000 a year experienced a need for healthcare but couldn’t afford it.

Workers with higher incomes experienced less barriers to care overall but incurred similar rates of absenteeism when care was delayed or foregone due to costs.

That’s according to a study from the Integrated Benefits Institute (IBI), a nonprofit health and productivity research organization. The IBI used nationally representative data collected by the Centers for Disease Control and Prevention (CDC) between 2007 and 2017 for its analysis. The data focused on roughly 50,000 employees.


How Bad is the Bleeding?

To quantify the absenteeism figures more accurately, an employee who experienced a cost-related barrier to care had an average of 1.9 more lost workdays per year than an employee who experienced no barriers to care. This represents a 70% increase in lost work time from a baseline of 2.7 days, which is the amount of sick days any given worker uses in a year.

While an extra 1.9 days might not seem like much, this absenteeism places heavy costs on companies. Losses linked to absences cost U.S. employers roughly $1,685 per employee per year, according to the CDC. This amounts to almost $225.8 billion annually in the United States.

Other sources place that figure even higher. Several years ago, global workforce performance and safety firm Circadian estimated absenteeism costs to be roughly $3,600 annually for each hourly worker and $2,650 for salaried employees.

“More and more studies show that even people who have jobs with health benefits cut back on necessary healthcare services due to the out-of-pocket costs of high deductibles, copayments, and coinsurance. The finding that unaffordable care was associated with almost two additional full days of absence, even after considering health status age, sex, and race, really drives home the point that productivity losses are eating away some of employers’ savings from increased cost sharing,” said Brian Gifford, PhD, IBI research director, and the study’s lead author.


High Deductibles Hurt

The presence of health insurance isn’t always enough. Barriers to care were encountered by both insured and uninsured workers, though at different rates. More than 50% of uninsured employees experienced a cost-related barrier to care compared to about 20% for insured employees, the IBI found.

Many lower-income workers who do have insurance have higher-deductible plans because of the lower monthly premium. When an illness comes around, those high deductibles hurt. The IBI found that enrollees in a high-deductible health plan (which was defined as being $1,100 or higher for an individual plan, or $2,200 or higher for a family plan) were 75% more likely than low-deductible enrollees to experience a cost-related barrier to care.

The bottom line is that higher-deductible plans ultimately mean more days away from work. The study’s authors said, “Enrollment in a high-deductible plan was associated with more lost workdays, even when holding constant factors such as barriers to care, age, health status, and paid sick leave benefits. No other plan design element (FSAs, HSAs, and coverage for prescription medications) was significantly associated with lost workdays.”

Ancillary benefits like health savings accounts did not lower the risk of running into a cost-related barrier for people with high deductibles, but there were a few other options that were shown to help. Things like flexible spending accounts and coverage for prescription medications helped reduced the risk of experiencing cost-related barriers to care.


What Do Experts Recommend?

IBI researchers included recommendations from health and productivity experts for how employers should design their policies to balance coverage costs against access to beneficial care. They said priority should be place on prevention, healthy living, and cost-effective care.

To achieve this, employers are advised to develop a data-based understanding of their workers needs for care to gain a full financial picture of the impact of their cost sharing strategies. Additionally, they recommend leveraging an array of benefits to promote greater access to care.


More Access, More Savings

In the end, it’s clear that barriers to healthcare affects companies greatly. And while it may seem like an added expenditure to increase access to treatment, ultimately it has the potential to generate significant savings on the back end. Healthier employees make stronger companies, and thus promoting access to care is likely a more affordable option for companies than not.

Category Features, Health