Monday, December 30, 2019

Can Location Impact Healthcare Costs?

As U.S. employers continue to struggle against rising healthcare costs, they are turning to new methods to try and reverse those trends. One of the best ways to understand why costs are rising for your employees is to analyze their specific health data. If a company has not already started to do this, then they are blindly making decisions related to healthcare-- which is not an advisable option.

There are many factors that can contribute to the overall health of your company’s employees-- and these can vary widely from organization to organization. But were you aware that where a company is based as well as the location of where the employees live can also have an impact on their health, but the types of healthcare decisions they make (or do not make)? In this article we’re going to delve into how location can play a larger impact than most employers realize when it comes to the cost and quality of healthcare services.

map of US
Depending on your geographic location, healthcare quality and cost can vary greatly.

Health Rankings Vary By State

According to the United Health Foundation’s 2018 rankings, Hawaii is the healthiest state-- followed by Massachusetts, Connecticut, Vermont, and Utah. These same states also ranked in the top five in 2017. The most challenged state in 2018 was Louisiana, followed by Mississppi, Alabama, Oklahoma, and Arkansas. But what is this institute considering when it makes these rankings and how does this have an impact on healthcare quality and cost?

Tobacco use

Although declining nationally, smoking still remains prevalent in the Southern states as well as in rural locations. An average of 17.1% of adults are still smoking, and this is still considered the most preventable cause of early death, including by second hand smoke. Non-smokers outlive smokers by an average of 10 years, so it is difficult to understand its continued use.

Smoking can add additional healthcare cost if it is something a company’s employees are still doing. It would benefit everyone if employees were given the opportunity to have assistance with quitting smoking provided from their employer’s healthcare system. Organizations can only gain that kind of insight by analyzing their employee’s health data and deciding to act on it. 


The nation’s obesity rate rose 5% in the past year and is one of the most serious factors affecting the rise in healthcare costs for employers. Obesity continues to be a leading cause for chronic conditions such as cancer and diabetes, and can be one of the most expensive parts of a managing a healthcare system.

Having a program that aims to assist employees tackle their obesity issues-- or prevent them altogether-- is a way to save a considerable healthcare cost. When a company is aware that obesity is a real issue with it’s employees, it can restructure its healthcare services to better serve its employees. Perhaps there is a way to encourage more active activities outside of the office, or ways to add healthier food to the work environment. These are ways to encourage healthy lifestyle choices of employees and to ease some of the burden that obesity can place on an employer’s healthcare cost.

Chronic Disease

Closely related to obesity is the rise of chronic diseases among Americans in every state. Cardiovascular death rate has increased over the past three years, and more than 30 states have not seen their cancer death rates improve. This is indicative of a national trend of obesity, and has caused a significant increase in employer healthcare cost. 

With chronic diseases is the chance for employees to be prescribed specialty drugs, which are expensive and designed to treat very specific conditions. This has also contributed to the rise in health costs and depending upon the geographic location, can also vary in price.

Poverty rates

Unfortunately depending upon your state, there can be health disparities which can arise from poverty and lack of education. Nationally there are 18.4% of children in poverty in the U.S., which leads researchers to conclude that there are many employees who are struggling to provide access to food, healthcare, and housing to their children. Poverty rates according to the 2018 report shows that New Hampshire has 10.3% children in poverty while Louisiana has 28%. 

Health insurance

Closely tied to poverty levels is having access to affordable health insurance, which is critical for ensuring that employees receive both preventative and critical medical care. Individuals with no health insurance do not have reliable access to care programs and tend to have more unmet medical needs. These unmet needs can develop into much larger problems that require costlier treatments. States with higher amounts of uninsured people have a greater number of people who are delaying doctor visits and other preventive care measures.

one dollar bills in a pile
Employees are expected to pay more towards their benefits programs, as well as more out of pocket.

Health Insurance Premiums and Cost Sharing

In addition to health rankings by state and the specific factors influencing that data, another component that varies by location and can impact healthcare cost is the price of insurance premiums. What American employees pay for insurance premiums depends upon the state again, and can vary widely. On average, U.S. premiums were $1,808 in 2017. The highest insurance premium cost was in Maine at $2,305 and lowest was Hawaii at $863. 

There is also a disparity between states in regards to the amount of employee contribution to a single coverage premium in 2017. The average worker contribution in 2017 was 22.2%-- the highest amount paid by employees was in Alabama with 26.2% and the lowest amount in Hawaii with 11.2% contributed.

Copayments contribute as well

As with other aspects of employer healthcare costs, there is also an increase in the amount of copayments that are expected after a doctor or specialist visit. In addition to paying more for their healthcare out of their paychecks, employees are also expected to pay out of pocket for upfront expenses such as copays. While copays to general practitioners has stayed rather level, they were on average $26.50 in 2017. What is surprising is the increase in the copays expected for a specialist visit, which in 2017 was averaged to be $41.97. 

Because of the shift into more employee cost sharing for healthcare benefits, many people have simply postponed doctor or specialist visits. This was discussed earlier when analyzing why some states have a higher proportion of people who do not have insurance, also do not have easy access to preventative care. Cost can be a contributing factor as well, and if an employee cannot afford the copay to visit a doctor, they will simply delay it. According to the Kaiser Family Foundation, employees in Texas were the most likely to delay care, with 19.6% of people putting off going to see a doctor due to cost.

Delaying preventative care measures such as this can lead to more serious conditions in the future, and will end up costing the employee and employer more in the long term. By finding a better way to employees to access this kind of care would ease the burden of possible healthcare costs and keep employees healthier.

Quality of Care

Geography can also play a role in the quality of care received by employees. Because there is a wide variety of healthcare facilities that vary from state to state, there is going to be some disparity of care. By analyzing the type of care (whether it is preventative or chronic), the setting of the care (hospital or nursing home), and clinical areas (such as chronic diseases like cancer and diabetes) you can gather an overall picture of the quality of care in an area. According to the Agency for Healthcare Research and Quality, Delaware was ranked as having the best overall quality care available.

The quality of care is extremely important, and in some states, it might be limited. This can make it difficult for employees to get access to the specific healthcare that they need, which can create more burden on an employer healthcare system. In order to understand if this issue is affecting employees, it is best to go straight to the healthcare data and see what insights can be seen from its analysis.

The location of a company and its employees can have an affect on not only the healthcare decisions the make, but the quality and cost of that healthcare. In some states it can cost more to have access to healthcare than in another, which is why if an organization is trying to reduce healthcare cost and waste, it should consider doing an in depth analysis of the healthcare data of their employees.

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