Many cities in the United States face a looming crisis, at least in terms of how much health care costs drain a local economy rather than sustain it. This economic drain occurs in all levels of a local community, from a single employee up to a large health care system. This drain stifles economic development, and employers must figure out how to provide benefits for employees without stifling profits.
The vicious cycle of health care costs and the drain on local economies started in the early 1990s. Out-of-pocket costs to consumers began to skyrocket, and state governments began to spend more and more on health care. Unfortunately, that meant less money for education, roads and infrastructure. Adding to the burden of state and local governments is the fact that hospitals and health care systems can be the largest employers in some cities, yet the industry's labor productivity, or the amount of product produced by one hour of labor, has remained the same for 20 years.
Investments Versus Increased Costs
Instead of becoming more efficient and reducing labor costs versus profits, like every other sector of the U.S. economy, the health care industry has not lived up to its potential. Consider the following brief scenario. A company's health insurance costs continue to escalate as the firm tries to keep employee costs down to manageable levels. At some point, companies stop doing this because it's simply not cost effective, which means employees pay more for health insurance.
The increased health care costs drain the company's profits and put less money in the hands of consumers. This means companies have less money to invest in the local economy, and people spend less at local stores. Instead of driving economic investment, health care stifles it. Communities, instead of dealing with carbon emissions, have to solve the health care "emissions" crisis before it reaches a tipping point.
Cities must take the initiative to find ways of fixing the looming crisis of health care costs. Benefits packages and health care systems can migrate to a value-based primary care package. Instead of paying for the fee-for-service model, which tends to lead to an overabundance of unnecessary medical tests, value-based primary care customers pay a periodic subscription fee. This creates a more efficient health care system that only gives patients what they need by providing a continuous care model rather than relying on a visit-by-visit model.
Transparency is another way to bring down health care costs. Patients should know how much procedures and visits cost ahead of time, and health care systems can use these costs to learn how to streamline care and make improvements.
Communities must rethink health care and invest in other initiatives to keep costs down. A hotel chain owner in Orlando, Florida, kept his health care premiums under 50 percent, and he reinvested the money he saved into educational initiatives that improved graduation rates and spurred more economic development. "Buy local" initiatives can encourage businesses to contract with doctors and providers directly rather than paying an extra percentage for out-of-town middlemen who negotiate health insurance costs.
Much like Portland, Oregon, and its fight against carbon emissions, cities must fight against "emissions" from health care costs. Local communities may not be able to afford to wait for state and federal help.
Photo courtesy of Medisave UK at Flickr.com