How To Steady Upcoming Health Cost Increases

According to a study done by Mercer in a national survey of employer-sponsored health plans, "health plan costs rose at the slowest pace in a decade last year". The study was conducted to include 2,914 employers of all sizes. "The average per-employee cost of health benefits rose just 5.5% to $8,945". Mercer anticipates 2010 to prove similar in trend. In additional studies done by Towers Perrin, they predict by studying 300 large employers that the annual cost for active employee-only coverage is $5,124, the annual cost for employee-plus-one-dependent coverage is $10,500, and the annual cost for family coverage is $15,084.

So what does this mean for employers today? Well, studies point to cost saving success by implementing health management strategies as well as making the switch to account-based health plans. One of the big factors in controlling cost was the movement of small employers into low cost consumer-directed health plans. By raising the PPO deductibles, the employers picked up savings in the premiums. In addition, there has been a large focus on workforce health. Many companies have transitioned into wellness programs such as Primarily Care's HealtheDividends program. Many employers are learning that there are real savings to be had by bettering the health of their population. "Nearly three-fourths of employers that have measured the ROI in wellness programs say they are content with the year-over-year savings, lower utilization rate or improved health risks".

Another strategy many large employers are using is using health management incentives. Employers are finding that cost can be further contained with smoking cessation, routine primary care physician visits and scheduled doctors visits with emphasis on follow up care.

Consumer Driven Health Plans have become the focus on a lot of employers over the past year. Many employers are seeing the benefit in offering this type of program. "In 2009, CDHP offerings among employers with 10-499 employees increased from 9% to 15%, Mercer's research shows". There is opportunity to save by purchasing stop loss insurance on a high deductible health plan. It allows the buyer to obtain the most premium savings possible by electing the higher deductible; however, with the insurance, if claims run well, the employer has everything to gain and it will cost no more than the otherwise fully insured renewal premium. Another development in our product line includes the coupling of a mini-med or limited medical plan with our U.S. Health Options product. If the maximum plan expense for each participant is $20,000, the employee will be able to stretch their benefit dollars much greater as we can negotiate nationally many common procedures at a price that would be paid 100% by the plan.

Towers Perrin also offers a number of other strategies to combat the rising cost of health care for employees as well:

- Employers provide employee incentives. The employees must be motivated to join health wellness programs, biometric screenings and health risk assessments in order for a real change in cost.

- Social networking - employers are implementing these campaigns as they realize it can impact employee health and well-being. Blogs are a great way to communicate and create an open forum for discussion on health awareness issues and recommendations for a healthy lifestyle.

- Use of a health advocate - helps to manage a chronic condition or serious illness. By personalizing the experience the employee is provided with lifestyle coaching and integration of disability with medical care management.

- Technology - Always a positive aspect in getting information to patients faster as well as improving health and engaging consumers. New applications play an important role in transferring personal health records and monitoring biometrics.

With these changes as indicated by the Mercer study, we are seeing the benefit of these consumer driven health plans and realizing the potential of a healthy lifestyle. Much of the cost of health care is influenced directly by the way we live our lives and the value we put on our health and wellness. The programs offer structured support when correctly implemented and utilized; however, in the end it is always the ultimate responsibility of the plan participants. Creating education and awareness about these big issues is just as important as the programs created to follow through.

For further information on AMF Risk Management Solutions' products and cost containment ideas please feel free to contact Matt McKelvey, (617)770-0917 EXT 301, mmckelvey@amfrms.com.