Research demonstrates that lowering the cost of health insurance could boost profits for businesses.|Trending-Topics

According to a new research paper from Rice University's Baker Institute for Public Policy, negotiating lower health insurance premiums could help Fortune 500 companies increase profits while maintaining high-quality coverage for their employees.

According to the Kaiser Family Foundation, employers provide the majority of Americans with health insurance coverage, covering 50.3% of the population. The paper says that health insurance premiums paid by employers have increased faster than wages and inflation for decades.

According to the authors, "any factors that alter the affordability of employer-sponsored insurance can have significant consequences for the many employees who depend on it."Employers may be able to expand their businesses by spotting opportunities to reduce the price of health insurance coverage while maintaining or improving the quality of these benefits thanks to their one-of-a-kind position of control over the plans that employees have and their ability to negotiate with insurance companies.

Employer-sponsored insurance (ESI) spending could be cut by $1,373 per employee per year, according to the research team, based on a combination of data from a variety of sources, resulting in an average annual profit increase of 31.77 percent for Fortune 500 companies.

According to Marah Short, a scholar in health economics at the Baker Institute and co-lead researcher on the study, lowering ESI costs would benefit all industries, but labor-intensive industries could benefit more than capital-intensive industries.

She stated that capital-intensive businesses devote more of their total compensation to health insurance, possibly due to the presence of a greater number of high-skilled, high-wage employees who anticipate better insurance and other benefits. According to the report, it is also possible that high expenditures on equipment and similar items simply outweigh labor costs in capital-intensive industries, reducing the perceived benefits of decreasing ESI spending.

Hospitality and food service are two labor-intensive industries that could experience the greatest potential profit growth, according to Short. However, these companies regularly and quickly switch out workers with a range of ages, financial situations, and dependents. Value-based plan designs may result in decreased health care expenses for these employees. Short co-authored "Estimating the Potential Profit Gains to Lower Employee Health Care Costs for America's Largest Companies" with Vivian Ho, chair in health economics at the Baker Institute, professor of economics at Rice and Baylor College of Medicine, Alan Beltran Lara, and Cindy Nguyen, interns at the Baker Institute.