Tackling Rising Healthcare Costs: Cost-control Strategies In European Health Insurance – As people begin to age, they usually face more health risks. Managing genuine risk requires a process of identifying, assessing and mitigating these risks. It is a defensive strategy to prepare for the unexpected.
The basic methods for risk management—avoidance, retention, sharing, transfer and loss prevention and reduction—can be applied to all aspects of an individual’s life and can pay off in the long run. Here are five of these methods and how they can be used for health risk management.
Tackling Rising Healthcare Costs: Cost-control Strategies In European Health Insurance
Avoidance is a method of reducing risk by not participating in activities that could result in injury, illness, or death. Smoking is an example of such an activity as avoiding it can reduce health and financial risks.
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According to the American Lung Association, smoking is the leading cause of preventable death in the U.S. and claims more than 480,000 lives every year. Additionally, the U.S. Centers for Disease Control and Prevention states that smoking is the No. risk factor. 1 for lung cancer, and the risk only increases the longer people smoke.
Life insurance companies reduce this risk in the end by raising premiums for smokers compared to non-smokers. Under the Affordable Health Care Act, also known as Obamacare, health insurers can increase premiums based on age, geography, family size and smoking status. The law allows a surcharge of up to 50% on premiums for smokers.
Retention is the acknowledgment and acceptance of risk as a given. Typically, this accepted risk is a cost to help offset greater risk up front, such as choosing to choose a lower premium health insurance plan that carries a higher deductible. The initial risk is the cost of having to pay more medical expenses that have to be borne by yourself if health problems arise. If the issue becomes more serious or life-threatening, then health insurance benefits are available to cover most of the cost above the deductible. If the individual does not have a serious health problem that requires any additional medical expenses for the year, then they avoid the payment due, reducing the greater risk altogether.
Risk sharing is often implemented through employer-based benefits that allow companies to pay a portion of insurance premiums with employees. In essence, this shares the risk with the company and all employees who participate in the insurance benefits. The understanding is that with more participants sharing the risk, premium costs should shrink proportionately. Individuals may find it in their best interest to participate in risk sharing by choosing employer health care and life insurance plans whenever possible.
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The use of health insurance is an example of risk transfer because the financial risk associated with health care is transferred from the individual to the insurance company. Insurance companies assume financial risk in exchange for a payment known as a premium and a documented contract between the insurer and the individual. The contract states all the stipulations and conditions that must be met and maintained for the insurance company to assume the financial responsibility to cover the risk.
By accepting the terms and conditions and paying the premium, an individual has successfully transferred most, if not all, of the risk to the insurance company. Insurers carefully use many statistics and algorithms to accurately determine premium payments that match the coverage requested. When a claim is made, the insurer verifies whether the conditions are met to provide contractual payment for the risk outcome.
This risk management method tries to minimize losses, rather than eliminate them completely. While accepting risk, it remains focused on keeping losses contained and preventing them from spreading. An example of this in health insurance is preventive care.
Health insurers encourage preventive care visits, often without co-pays, where members can receive annual checkups and physicals. Insurers understand that detecting potential health problems early and administering preventive care can help minimize medical costs in the long run. Many health plans also provide discounts to gyms and health clubs as another preventative and mitigation way to keep members active and healthy.
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Risk management is the process of identifying and mitigating risk. In health insurance, risk management can increase revenue, reduce costs, and protect patient safety.
When dealing with healthcare, risk management benefits both patients and insurance companies. Patients benefit by avoiding harmful habits, transferring risk to insurance companies, and preventing future health problems through preventive care. Insurers benefit because people who avoid risk and take care of their health are healthier and cheaper patients.
Five common strategies for managing risk are avoidance, retention, transfer, sharing and loss reduction. Each technique aims to address and reduce risk while understanding that risk is impossible to completely eliminate.
Managing risk from a health perspective can pay off over time, thanks to lower premiums, fewer expenses and better health in the long run. Health insurance companies benefit from risk management strategies as well, allowing them to maintain their profits and increase their profits.
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More and more organizations find themselves competing fiercely to attract and retain the talent they need to accelerate growth and performance. While money won’t solve all of today’s complex talent problems, compensation remains a critical differentiator — albeit for some roles more than others. What options are there outside of the vicious cycle of compensation matching? Download Guide: Reinventing Your EVP for a Post-Pandemic Workforce Jessica Knight, Vice President, Research, at , says progressive organizations win by rejecting incremental solutions. “In the same way the pandemic forced organizations to rethink their skepticism about remote work, today’s labor market is pushing executives to rethink their approach to attraction and retention. They are considering bolder moves on compensation/benefits, talent sourcing and role design in the face of aggressive compensation offers from competitors. Watch now: 3 HR Leaders on How to Win the War for Talent Your talent risk profile should drive your approach Matching compensation can be unaffordable in the long run and cause inequity issues in a demoralizing workforce. But the success of a disruptive approach, which offers more than just compensation, will depend in part on the risk of your particular talent. Almost half of organizations report significant concerns about turnover in the coming months. Remote and hybrid work arrangements have expanded options for many workers — beyond the basic economic incentives to move jobs. Brian Kropp, Distinguished Vice President, Research, at , predicts that companies need to plan for year-over-year turnover rates that are 50% to 75% higher than they are accustomed to. To understand how these trends affect your organization specifically, consider: Scale. Do you face competition for a few targeted roles or across broad segments of the organization? nature. Is it a temporary talent shortage or a more systemic attraction or retention challenge that organizations must address long-term? Context. How differentiated is the option you are considering compared to options already offered across your organization’s specific locations? The four disruptive strategies Money is always a key factor in talent strategy, and it can be very effective in finding and retaining certain talents in certain situations. Financial services firms, for example, seem likely to use bonuses as a retention tactic for 2022. But there are other strategies to consider. Many organizations are increasingly trying to inject flexibility and humanity into employee value propositions (EVPs). And mixing and matching strategies related to compensation and non-compensation provides more options for you to address the specific talent challenges you face. No. 1: Pay to play through compensation and benefits Examples include signing and other bonuses, base salary increases, decoupling of salary and location, and tuition reimbursement. This strategy responds directly to market rates for labor and offers a quick return on investment for roles that must be filled immediately. They also provide a clear and tangible employer branding message. The downside is that these tactics can be expensive to implement — and you could still find yourself matched or outmatched by competitors. These incentives can also create fairness issues if existing employees feel treated unequally compared to new hires or those who are incentivized to stay. No. 2: Pay to play through time and workload Shorter or flexible workweeks for equal pay, guaranteed maximum workload and pay adjusted to workload are just a few ways to provide a lasting and highly differentiated position in the market. They can also improve employee productivity and sense of well-being — and help reduce attrition due to burnout. The challenge is that competitors can easily follow suit, and these policies are difficult to dial back into line without creating new engagement and retention problems. It may also involve significant change management effort and cost,
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