HR Pros Seek Cure For Cost Epidemic

May 6, 2002 (PLANSPONSOR.com) - Half of the benefits/HR managers surveyed say they have experienced 'great increases' in health care expenses over the past 12 months, according to a report by BNA.

The survey found that 88% of the 424 respondents say they have experienced increases in healthcare costs over the past year, and just 38% characterized the increase as ‘modest.’  Thirteen percent said they were not sure if their costs had changed during the past 12 months.

Multiple Fronts
 
The vast majority of surveyed organizations (84%) have taken steps to keep health care costs in check, and 57% say they are working on multiple fronts to hold down health care expenditures. 

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Among the measures taken:

  • two out of three firms reported recent or imminent efforts to raise employees’ premium contributions, co-payments, or deductibles – roughly half have increased premiums, while 40% are, or will, boost co-payments
  • 29% have pursued changes in health care plans, providers, or insurance carriers, including a number that have recently opted for preferred provider plans (PPOs)
  • 28% have pursued generic drug requirements – 34% among those with 1,000 or more workers.

Companies with 1,000 or more workers (45%) were nearly as likely to report substantial increases in health care expenses as smaller firms (52%).  Large recent hikes in medical costs were a bit more common among employers in the North Central states (57%) and the West (54%) than in Southern organizations (45%) and Northeastern establishments (40%).

Only 6% of the survey respondents have turned to gatekeeper systems to offset recent increases in health care costs, likely because many firms already had those mechanisms in place, according to the report. Gatekeeper systems control access to, and the parameters of, employees’ medical treatment, normally through a primary care physician who acts as the ‘gatekeeper.’

Other Options

Seventeen percent of the survey respondents reported other strategies aimed at controlling health care costs.  Specifically noted was a growing use of formularies and ‘tiered’ copayment structures for prescription drugs, particularly three-tier copayment systems. 

In those arrangements, the lowest copay typically is used for generic drugs, the second tier applies to preferred brand-name drugs, and the highest level is assigned to ‘nonpreferred’ brand-name medications.

Mail-order prescription plans and wellness programs were also cited, as well as the pursuit of combination efforts that allowed smaller employers to join together to increase their buying power.

SURVEY SAYS: Advice

May 17, 2001 - Yesterday we noted the dilemma of plan sponsors and providers alike -- why don't participants -- at least large numbers of them -- take advantage of investment advice? Realizing that the reasons can be as diverse as the individual participants themselves, our readers were --as usual --most generous in the response.

Nearly 22% chose a category we didn’t even offer (and we provided EIGHT), which we have summed up as either too lazy and/or not enough time to plan for retirement. Granted, those can be very different motivations, but overall the sense was that individual participants are not making –or taking — the time to attend to this very important area.

A close second opinion (19%) suggested that participants don’t know HOW to use online investment advice. However, we should also note that an number of readers suggested that this was not because they hadn’t been shown how — in some cases multiple times.

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Just behind was 18% who felt that when it comes to investment advice, people were typically going to be more comfortable dealing with people –people they trusted, rather than relying on online tools.

A surprisingly large 14.5% opined that participants weren’t using advice because they didn’t know they had access to advice, and more than 10% said that participants really didn’t have access to advice, either because their employer didn’t offer it, or because the participant lacked convenient access to the Internet.

Nearly 8% said the cost was too high, 5% said it was because participants didn’t think they needed advice and the remaining (roughly 4%) said that participants had been paralyzed with too many choices (another “original” option).

EDITOR’S NOTE: Each week we are treated to a large number of thoughtful, insightful — and occasionally entertaining –responses. We try to share some of these with you most weeks, but this meager space wouldn’t begin to provide a true sense of this week’s contributions. But, thanks to the Web, we are able to post a large number of those responses for your enjoyment and enlightenment (unattributed to protect the “innocent”). You can check them out at http://www.plansponsor.com/content/magazine/may2001advicesurvey .

You’ll no doubt be happy to know that the cover story in the May issue of PLAN SPONSOR, “Filling the Seats”, focuses exactly on the issue of participant advice. You’ll want to check it out at http://www.plansponsor.com/content/magazine/FillingTheSeats–not to mention the rest of the magazine and a series of items you’ll find ONLY on the web at http://www.plansponsor.com/content/magazine/mayissue .

Thanks again to all who participated in our survey –if today’s survey or the postings inspire you, drop us a note at editors@plansponsor.com

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