The Rising Cost of Benefits in America - Essay Example

Historical View Although the costs of healthcare have consistently risen over the last twenty years, the recent increases pale in comparison to tremendous spikes during the 1980s. According to Weatherly (2004), “[p]er capita health care spending increased by 156% from 1980 to 1990, while spending from 1990 to 2000 increased by less than half that amount” (p. 2). It seems strategies have changed today, from the 1980s, when employers absorbed a vast majority of cost increases. The recession of 1991 set employers back, yet health maintenance organizations (HMOs) had a stronger presence, providing economic relief to a certain extent.

During that period, HMOs are reported as being a major factor in the decelerated rising costs. Today, employers are faced with a once more weakened economy and steep costs associated with providing benefits. The present difference is the extreme competition within many industries, which makes it hard for organizations to pass costs onto their customers. Consequently, the employee responsibility is increasing, causing them to absorb more of the cost, reducing their overall income (Weatherly, 2004). . Major consulting groups, the mass media, and healthcare experts have expressed similar research findings; according to Weatherly (2004), “health care costs are a critical or significant concern to the overwhelming majority of CEOs, Chief Human Resource Officers (CHROs) and other business leaders” (p. 2). Weatherly (2004) reports on surveys conducted among HR leaders and healthcare experts throughout the country, which convey a single ideology—employees and employers, when working together, can reduce the cost of healthcare.

Specifically, “depending on the specific health care specialty area, between 83% and 96% of employers believe that employer and consumer decisions can have a significant or moderate impact on cost” (Weatherly, 2004, p. 2). Healthcare benefits have been the topic of heated discussion in recent months. Many Americans have voiced concern over the dire situation that the country is currently facing. Weatherly (2004) estimates organizations spend $300 billion each year on providing health insurance for current employees, their dependents, and retired employees.

Until 2011, a majority of employers did little to reduce benefit plan coverage and counteract the rising costs. As of 2004, plans offered by employers were relatively stable. Innovative benefit strategies and revamps of overall design were rare to non-existent (Weatherly, 2004). Innovative Strategies Recent reports by HR leaders to assist in offsetting the rapid increase in costs include premium cost shifting from employers to employees, raised deductibles, prescription programs (generic and mail-order), and increased cost-sharing with patients.

As mentioned, healthcare costs are expected to climb another 8.9 percent in 2011 and experts expect annual increases into the near future