Businesses can take advantage of telehealth services to mitigate the rapid rise in health insurance compliance costs.
LOS ANGELES – With the employer mandate still intact and healthcare reform provisions, such as the Cadillac tax, expected to continue taking effect in the coming years, many businesses are searching for ways to curb their skyrocketing health insurance costs. The Cadillac tax, a 40% non-deductible excise tax on employer-sponsored health insurance plans with high-cost benefits, is expected to go into effect in 2018. According to The Advisory Board Company, an estimated 50% of large employers may have to contend with this tax, which will significantly raise the cost of employee health insurance.
In light of these challenges, businesses should consider taking advantage of telehealth services to mitigate the rapid rise in health insurance compliance costs while, at the same time, boosting their employee health and morale.
Telehealth as an alternative to conventional healthcare
Virtual doctor consultations and mobile-health applications are becoming increasingly acceptable as more businesses and healthcare providers adopt this innovative and cost-effective method of healthcare delivery. Telehealth encompasses the remote provision of health-related services and information via telecommunication technologies, such as videoconferences and the internet. Online doctor visits, like those offered by Doctor on Demand, MDLive and Teladoc, are also gaining popularity among employees. Providers typically use telehealth consultations to treat common ailments, such as colds, eye conditions and sore throats.
IBISWorld estimates that the average price for telehealth services is about $40 per consultation in 2015. Although either the employee or employer can be solely responsible for service costs, consultation fees are often split between both parties. One of the key determinants of consultation fees is whether or not an employee is insured. Insured employees can often receive video or phone appointments with a physician at no additional cost or at substantially lower prices than uninsured employees, which might have to pay the full price for online consultations.
Alternatively, employers can pay for services on a subscription basis. Under this model, telehealth providers charge employers the same amount per participant on a monthly or annual basis regardless of how often their employees use the service. This model allows employers to pay for telehealth membership separately from their health insurance plans. For example, smaller organizations can pay anywhere between $200 and $300 in annual membership fees per employee. Employers can also purchase telehealth services as an add-on to their existing health insurance plans. In this instance, employees contribute an additional fee of about $1 or $2 per month to cover the expense. When employees receive consultations at lower prices or at no additional cost, they are more likely to seek consultations for preventive care or minor ailments, which can help employers reduce the costs associated with employee absenteeism and illness. For example, according to a Teladoc case study, large retailer Rent-A-Center saved more than $1.3 million over the course of one year by using Teladoc’s services.
During the next three years, more states are expected to require private health insurance carriers to reimburse telehealth service providers the same as they would providers of in-person consultations, and more health insurance companies are planning to expand their coverage for telehealth services. As demand for telehealth services picks up in light of looming physician shortages, technological breakthroughs and changing regulations, prices are projected to increase at an annualized rate of 2.6% in the three years to 2018. IBISWorld advises businesses to consider procuring telehealth services soon in order to help limit potential cost growth as healthcare reform provisions continue to take effect in the coming years.