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Today there is a growing awareness that business-as-usual corporate and lifestyle practices jeopardize the health of the planet and the ability of future generations to sustain a good quality of life. Awareness in turn has created a confusing array of sustainability-oriented decisions. The Greenophobe takes a skeptical, practical, informed look at a variety of sustainability topics. Explore a mix of common sense solutions and in-depth discussions that demystify how to live green and live well.

16 April 2012

Designing a Sustainable Cure for America's Runaway Healthcare Costs

U.S. healthcare spending -- in a league of its own.  Image source.

This chart highlights a scary fact.  U.S. healthcare costs are out of control.  If the $7,000 per year cost represented a household's direct annual spending, it would rival food and energy outlays combined.  

With the Supreme Court likely to strike down the individual mandate component of the Obama administration's healthcare reform plan this June, we may soon be back to the drawing board grappling for non-legislative solutions to America's healthcare cost crisis.  The overall reform plan may or may not survive.  An effective long-term solution to runaway healthcare costs could come from a seemingly unlikely place.  Rethinking environmental sustainability through the lens of human health could reduce healthcare costs swiftly and permanently while addressing the decline in comprehensive employer-sponsored health coverage.  By implementing clever programs at home and at work, we just may be able to lower insurance premiums, mitigate environmental harm and achieve a better overall quality of life.  When the bill is $1 trillion, a few percent here and there means billions of dollars in net savings.
The impacts of environmental sustainability on health care costs can be substantial if we address connections between health and sustainability at both a systemwide and personal level. 
One approach would be to delve into the connection between health care costs and what we eat by exposing the dirty secrets of the American corn monoculture and its role in subsidizing cheap unhealthy foods that lead to obesity.  For a non-food approach, we can connect the dots between transportation and health.  The way we plan our cities, buildings and residential neighborhoods contributes to mass lethargy with an immeasurably large societal price tag.  We know these connections exist.  

Precipitating action and change requires innovative ways of incentivizing positive behavior while circumventing stagnant legislation and powerful lobbies.  Easy, right?  

At face value environmental sustainability might seem altogether unrelated to the main drivers of America's high costs of care. Treating the planet better can't reduce the cost of malpractice insurance or make medical school more accessible and affordable.  What we pay physicians in the U.S. tops the list of factors explaining the huge gap between the cost of care in the U.S. compared with other wealthy countries.  Leveraging environmental sustainability to reduce healthcare costs requires us to proactively tackle the root causes of overall poor health in America.   We are used to thinking about health in reactionary terms -- like the monumental costs of providing care when someone is sick or providing government handouts to support an aging population in retirement.  In focusing on how expensive care has become, we overlook proactive opportunities with game-changing potential.  The proactive perspective says we have a chance to live better through the retirement years and to prevent the onset of many prevalent health issues in the first place.  After all, prevention is generally much more cost efficient than treatment.  This holds true for most major sustainability issues from greenhouse gas emissions to toxic waste cleanup.   

The healthcare problem exemplifies the quintessential sustainability dilemma -- endlessly borrowing resources from the future in order to address short-term needs.  The potential for meaningful change stems from the magnitude of the problem.  Individuals in America are paying more for healthcare than ever before. The collective costs are saddling the country with debt that will unfairly burden scores of future generations.  Will healthcare-related costs and debt service amount to 25% of future GDP? 50%? More? The decisions we make today on how to approach this problem will have grave consequences.  Attacking the drivers of health care costs at the environmental level, while not simple, may in the end be more effective and more feasible than trying to tinker with the entrenched layers of the health economy.  

The death of the employee health plan can be viewed more prodigiously as a mass market motivator and gateway to solutions rooted in sustainability

Traditional employee health plans that we once took for granted are now on the chopping block due to a trifecta of rising costs, corporate greed and unprecedented levels of global competition.  Once upon a time employee health plans were a presumed benefit of a decent job at a decent company.  The costs of seeing the doctor and getting tests were covered, expensive medicines magically cost just $10 at the pharmacy and if you needed a more serious form of care, you would not be forced into poverty in order to pay the hospital bill.  Today many company health plans have transformed into something altogether unrecognizable.  Individuals increasingly contribute a substantial portion of the premium.  The laws governing popular new "high deductible health plans" (HDHP's) mean annual outlays for a family plan can exceed $2,400 before any kind of coverage kicks in. 

The healthcare industry is economically motivated to take a reactive stance on care.  So far it has punted escalating costs to employers and individuals.  To find solutions, we must look beyond what we expect industry and legislators to do on their own.  Skyrocketing billings for insurance, medicine and pharma do not continue to flourish at double digit growth rates if more people are healthy.  If you read past page two of the glossy pamphlets promoting health plans with upbeat names such as "Humanis" and "Prospidien" you will notice that today's health plans are costly opt-in insurance products, not the fringe benefits we once considered them to be.  Within the slick marketing jargon you'll notice telltale phrases such as "empowering individuals to take more responsibility for health choices."  This is simply a backhanded way of saying that individuals and families are responsible for more costs and receive fewer benefits.  Employers save money and mega healthcare firms get richer. 

Greed is only one reason for the cutbacks in employer-sponsored health benefits.  Many companies have no choice but to switch to high deductible plans and ask employees to contribute more toward premiums.  Healthcare costs can be outside the financial reach of many small and medium-sized businesses.  Large corporations compete in global markets against firms in countries where healthcare is provided for free by the government.  In such economies every aspect of care costs less.  The need to compete globally leads to fiscal belt-tightening here in the U.S., at the expense of the middle class and the uninsured.  It is the firms most affected by this upward cost pressure that have the most to gain by addressing health care costs through a sustainable enterprise approach.

Greening lifestyles and workplaces through sustainable employee benefits programs is a fresh concept that holds tremendous potential to restore the quality of traditional workplace benefits, reduce costs and promote measurable environmental impact

The intersection between sustainability and health starts with a familiar concept called "wellness"

Today some companies and insurers embrace wellness of health plan participants as a hybrid between employee benefits and healthcare cost reduction.  Subsidized health club memberships, free smoking cessation programs and educational initiatives are common.  By expanding existing notions of wellness, companies can actively promote the connection between environmental sustainability and health without substantial investment.  For starters, consider some simple workplace perks with a high health and environmental ROI:   
  • priority bike parking -- or bike-friendly offices
  • healthy, local and organic food choices for meeting catering and in on-site cafeterias
  • on-site fitness facilities or employee discount deals with local facilities
  • company sponsored sports teams or activity-based community service outings
Companies looking to attract top talent and reduce their footprint can taking a leadership position in support of these types of activities.  Leaders in this movement will ensure sustainability initiatives are ingrained in company culture.  Changes to policies can only go so far.  To take off, wellness initiatives must be part of the management vernacular at every level in a company.  Linking participation rates to management performance evaluations and resulting compensation would provide the necessary momentum.  

Workplace perks fall into the "nice to have" category.  Another category of less-developed but equally important sustainable health tie-ins build upon everyday activities to promote improved health.   Take for example the process of getting to and from work.  There is a natural link between sustainable transportation and exercise.  Exercise leads to wellness.  Wellness reduces health care costs.  Imagine a workplace where there are built-in incentives to encourage walking or biking to work -- or using the stairs instead of the elevator.  Sustainable buildings could be laid out differently to encourage movement between and across floors.  Forget discounted transit cards and preferred parking.  The daily health benefits of exercise have real cost savings for healthcare providers and individuals.  

Not everyone would be able to take advantage of benefits tied to transit.  Some people live too far from the office, for example.  That should not stop companies from incentivizing physical activity and transit efficiency.  The transportation sector accounts for a huge share of global emissions.  The daily commute and workplace travel play a significant part.  Policies and incentives need to stay in place over the long term in order to have a shot at signalling voluntary behavioral changes.  If programs endure and become widespread, individuals will make different decisions on where to live and what types of investments to make in personal transportation options.    

Green buildings for homes, schools and offices are another proven way to promote both physical and mental well-being.  It's a fact that green buildings including those built to LEED specifications create healthier more productive workplaces that people enjoy coming to.  At a macro level, when buildings use less energy they require fewer fossil fuels to create electricity.  This improves overall environmental quality through cleaner air.  Companies will benefit from triple bottom line impacts that we look for when evaluating successful sustainability initiatives.  Real estate values go up, energy consumption goes down, employees are happier and more productive, and top talent is drawn to the appeal of a sustainable workplace. 

Transit, healthy eating options and green buildings have the potential for greatest impact on health care cost savings while moving sustainable workplace initiatives higher on the agenda.  Within each of these categories, there is a need for creative programs, new management metrics and possibly even technologies that track and measure impact.  It is one thing to implement a wellness program and quite another to realize actual reduced health care costs.  For both insurers and companies that sponsor wellness initiatives, this will mean devising new ways of quantifying employee participation in programs that improve health.      

For sustainable benefits programs, there's no time like now

As long as healthcare costs remain higher in the U.S. than nearly everywhere else in the world, cutbacks in employee benefits will continue.  The middle class in America is becoming poorer than ever.  Pensions have all but disappeared.  A declining number of companies match employee 401(k) contributions and those that do will kick in just a fraction and attach lots of strings.  Salary growth has not kept pace with the increased costs of both saving for health today and for retirement tomorrow.  Add to the mix surging food, education and energy costs and the picture becomes even more bleak.  

Sustainable benefits programs are not just a good idea, they are inevitable.  The form that they take in the healthcare marketplace will depend on which parties embrace the potential for cost savings.  If insurance companies take the lead, we will see them prioritize measures aimed at the costliest health problems including smoking and obesity.  Programs would likely leverage emerging technologies such as location-based tracking using mobile devices for measurement and reporting.  Imagine using cell phone location data to track physical activity levels or time spent at the pub each month.  Healthcare providers would directly capture some of the financial benefits before passing savings on to companies and individuals. 

If employers or their consultants take the lead, technology and some degree of tracking would still play a role in quantifying benefits but to a less insidious extent.  Employers could negotiate lower health insurance premiums and capture other direct benefits such as reduced costs of employee absences, higher productivity and brand value.  Firms are likely to focus on the same costly health issues that plague the insurance system but they would be free to layer on other value-based priorities which enhance brand value for the company within its unique market context. 

Other applications for a "sustainable benefits" model that engages employees in the workplace

Health is just the first of many applications for a sustainable approach to workplace benefits.  To tackle other issues such as energy efficiency, employers might offer on-paycheck loans for home improvements that help employees increase home values while decreasing monthly utility costs.  Some home energy efficiency improvements such as lighting change-outs and air sealing have a same-year payback and can result in hundreds of dollars per year in savings.  While utility savings do not equate to a salary increase for workers, it is at least something at a time when employees are more likely to receive nothing.  Like initiatives that lower healthcare costs, employers should find energy loans attractive.  They are eventually repaid and generate positive cash flow for employees without drawing down company net earnings.  Companies might even find clever ways to account for energy savings achieved by employees at home.  Environmental improvements by a large network of staff could legitimately augment a firm's enterprise sustainability progress.  

Sustainable benefits programs would result in improved quality of life for participants, a cleaner environment and reduced costs for the individuals or corporate entities that pay.  Maintaining the status quo on healthcare in America is unacceptable any way you look at it.  If we stay the present course, even the debt service on our collective healthcare costs is a staggering multibillion dollar drain on the economy.  It is time to reinvent workplace benefits so that they look more like the benefits we once knew and less like costly opt-in insurance products.  Promoting health through environmental sustainability is a minimally invasive way for employers and insurers to take an active role in health care cost reduction.  

1 comment:

  1. Great article on possible non-legislative solutions to America's healthcare cost crisis!

    As you spelled out, there are many links between improved health (and thus lower healthcare costs) and environmentally sustainable food, transportation, buildings, etc. I fully agree with you that sustainable benefits (or “wellness”) programs would result in improved quality of life, a cleaner environment, and reduced costs for the individuals or corporate entities that pay.

    In my opinion, we are already seeing some shift in individual behaviors and corporate programs. Many people are already leading “greener” lives and are increasingly expecting and nudging friends and employers to do so. Also, companies are beginning to realize that they increasingly need their employees to adopt “greener” behaviors if they are going to achieve their sustainability and business goals. But we will need far more momentum from the non-legislative solutions if we are to counter the influence of power political lobbyists.