Health insurance costs employers billions

It is a common ailment: people are often amazed at how much time and effort it takes to manage their health benefits. Now, a new study from Stanford University has put a price on the problem: the time employees spend on problems with health insurance is about $ 21.6 billion a year. In addition, the indirect costs can be even more dramatic as employee turnover, absenteeism, and lost productivity even exceed the cost of illness.

The central theses

  • New research quantifies the effects of health care – or administrative burdens – “sludge” on employees.
  • The study found that people who spent more time on the phone with their health insurance company were less satisfied with their employer and were more likely to be stressed, missed work and felt burned out.
  • Employee surveys show a clear trend towards simplification and online self-administration of health services.

Calculate the loss of time

Researchers from the Stanford Graduate School of Business teamed up with polling experts from Gallup to assess how much time people have spent talking to health care administrators on things like settling claims, debating coverage, and obtaining prior approvals to speak. The average phone call? 32.57 minutes. And more than half the time, those conversations took place at work.

The effect of these encounters was not all good. Those who spoke to a welfare recipient the previous week were 35% more likely to be absent from work, 14% less engaged and 10% less satisfied with their job. The estimated statewide annual cost of these additional absences was $ 26.4 billion – on top of an estimated $ 95.6 billion in lost productivity, the study found.

So far, most research on health care frustrations has focused on the paperwork for doctors and hospitals, says Jeffrey Pfeffer, Thomas D. Dee II professor of organizational behavior at Stanford and lead author of the study. “Our new twist, which nobody has looked at me before,” he says, “is the waste of time by employees and the measurable effects of this time on stress, burnout, increased absenteeism and decreased job satisfaction. ”

These interactions with health insurers are on average lengthy and have a significant impact on work ethic.

Simplification of the administrative burden

Administrative friction in healthcare – the “mud” as it is called – is a major pain point. In fact, administrative complexity is the single largest source of healthcare waste, even greater than fraud or inflated pricing, according to a study published in the Journal of the American Medical Association.

This complexity seeps through everyone, so it is perhaps not surprising that a recent survey by the International Foundation of Employee Benefit Plans found that only about a third of employees (34%) had a high or high understanding of their health benefits, while around half (52%) have a medium understanding and 15% a rather low or very low understanding.

So what could help consumers? According to recent research by the Employee Benefit Research Institute, almost all employees feel confident they can make informed decisions about their benefits. But around four in ten say that they would like more guidance due to the COVID-19 pandemic and the economic crisis, and most would like this additional help in the form of online resources such as a performance portal or a digital decision-making tool.

In fact, nearly six in ten people say they would ultimately prefer a single website where they can review and manage all of their services, according to the latest Global Benefits Attitudes Survey by consulting firm Willis Towers Watson. The majority of Generation Z workers said they would like their questions about benefits answered via online chat.

What employers can do

Social benefits make up around 30% of personnel costs for private employers, However, Pfeffer claims that there has been little study or action on how the so-called sludge associated with access to these benefits robs employees’ time and affects attitudes. That should change, he says.

The study concludes that organizations should select benefit managers, in part, based on their ability to minimize the amount of time employees spend with them.

“Companies say they offer health insurance to attract and retain talent,” he says, “but they offer a benefit that is managed in a way that often doesn’t feel like an accomplishment.”

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