Benefits May 10, 2001

Fortune 500 Firms Fight "Fares"

May 10, 2001 (PLANSPONSOR.com) - Fortune 500 employers are getting tough on health care costs, squeezing suppliers, dropping carriers and cutting their level of contributions to better manage the burgeoning costs.
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The survey, “Corporate Health Care Purchasing Among Fortune 500 Firms” published in the May/June issue of Health Affairs, notes that in 1994 the level of employees in indemnity plans ranged from 0% to 100%.  However, by 1999 the distribution of indemnity enrollments was 20% or less for the vast majority of the Fortune 500.

80/20 “Rule”

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Average employer contribution levels dropped just 2% since 1994 to a 82% in 1999.  However up to a third of employers now pay 80% or less of premiums for this coverage.

But, as employers pass more costs along to employees, workers are leaning toward cheaper health plans.  The study’s authors acknowledged that the future impact of this development was unknown.

According to the article:

  • 93% of surveyed Fortune 500 companies reduced the number of contracting carriers, and not one company added more carriers than it dropped.
  • 83% of Fortune 500 companies said they weighed quality in the selection of health carriers
  • less than a third (32%) set specific standards for “clinical quality” in their contracts
  • 86% set requirements regarding improving customer service.

Among Fortune 500 respondents to the survey:

  • 36% of employees were enrolled in health maintenance organizations;
  • 32% of employees were enrolled in preferred provider organizations
  • 20% of employees were enrolled in point-of-service plans.

Researchers conducted telephone interviews with officials at 408 Fortune 500 firms.

The Health Affairs article, “Corporate Health Care Purchasing Among Fortune 500 Firms,” is available free at http://www.healthaffairs.org

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