Boeing Frontiers
May 2003
Volume 02, Issue 01
Top Stories Inside Quick Takes Site Tools
Special Feature

How to ground skyrocketing health care costs?

Being smart consumers is key

Imagine this scenario. Let's say you knew your car insurance or grocery bills were increasing at least 15 percent per year for the next three years. Would you take steps to reduce costs by: changing the deductible, shopping around, switching to a midsize car or less expensive food items, or reconsidering your use/consumption? Probably. Smart consumers use a variety of techniques to manage their costs.

Boeing currently spends $1.73 billion per year on health care benefits for actives and retirees.

Using the word "consumer" in relation to health care may seem odd, but the concept is critical to slowing the growth of these costs. The company projects that its health care costs will increase at a rate of 15 percent-per-year for the next few years. These increases have a direct impact on the company's competitiveness and financial health.

So to address these increases, the company, its employees and their families will need to work together as consumers. First, the company—as a major purchaser—is working to lower the rate of increase through supplier management and quality initiatives. Second, employees and their families can help address cost increases by becoming more proactive "consumers" of health care.

What is Boeing doing?

"Just as our business units are applying 'lean' techniques, we are looking at similar strategies with health insurance carriers, hospitals, doctors and support services," said Greg Marchand, senior manager, Health and Welfare Operations. "There are many opportunities for improvements across the health care system." Some initiatives include:

Out-of-pocket costs• Plan Evaluation: The company evaluates health plans for cost, quality, efficiency, service and access to providers. Boeing negotiates performance expectations and eliminates inefficient plans.

• Purchasing Leverage: As a provider of health and group insurance benefits coverage for more than 600,000 active employees, retirees and their dependents, the company uses its size to negotiate the best rates available in each market.

• Wellness and Prevention: The company promotes health and well-being as another way to reduce long-term health care costs.

• Quality Initiatives: Studies show that medical mistakes cause unnecessary direct and indirect costs, as well as physical and emotional harm. Boeing is a member of The Leapfrog Group (a national coalition of 130+ organizations focused on reducing preventable medical mistakes)—to encourage hospitals and doctors to improve patient safety and increase public access to data.

Involving people in their health care

Actions you can take
• Research physicians and hospitals before an illness or injury occurs.
• Comparison shop for medical goods and services. The Leapfrog Group web site lists other consumer-oriented health care resources.
• Ask about alternatives.
• Ask about medical outcomes and how often a health care practitioner has successfully done whatever procedure is being considered.
• Ask for generic drugs whenever possible.
• Use the mail order drug program when taking a prescription on an ongoing basis.

"People have been 'insulated' from the true costs of medications and health care," said Laurette Koellner, Chief People and Administration Officer and member of the Office of the Chairman. "In fact, Americans have been paying a smaller percentage of their total health care costs over the last 30+ years. The burden of rising costs has been shouldered by employers."

Boeing strives to keep employee cost sharing competitive with the market. Many companies currently have their employees pay 25-35 percent of their total health care costs. Having employees share in the monthly premiums is a tough decision, but it is one that most employers made long ago.

As the ultimate "consumers" of health care, employees and their families can have a significant impact on costs by the choices they make every day. These actions impact the company's annual expenditures and help slow the growth of health care costs for employees and their families as well.



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