Shifting Costs to Employees is a Quick-Fix, Without Adoption
of Consumer Driven Health Plans
By Denise Angleman, Senior Vice President, Employee Benefits
Over the past five years, employers’
health care costs have been spiraling upward at double-digit
rates. As a result, employers of all sizes are finding it difficult
and financially challenging to continue to fund their health
insurance plans at the same contribution and plan benefit level
as they did in prior years. To maintain their benefits programs,
employers are shifting more of their health care costs to employees
in addition to cutting back their plan of benefits.
Unfortunately, cost shifting is a short-term solution that
does not address the root of the employer’s health care
problem. As health care costs continue to increase at an unsustainable
pace, the costs shifted to employees get bigger with each
passing year and cause financial strains to the employee.
Consumer Driven Health Care: Reducing Costs Over
the Long Term
Consumer Driven Health Care is a strategic, multi-pronged
solution designed to help employers manage and ultimately
reduce escalating health care costs by providing employees
with greater control, knowledge and choice in their health
care decision-making. It is a proactive solution to reduce
overall healthcare consumption as costs are shared between
the employer and employee.
Who can Participate?
Companies of all sizes can participate in Consumer Driven
Health Care. It is not necessarily a substitute to traditional
plan offerings, but with proper planning and strategy, it
can be easily integrated into an employer’s medical
plan offering as a viable plan option.
What is a Consumer Driven Health Plan?
Consumer Driven Health Plans are high deductible health plans
(HDHP) that are typically tied to an employee and/or employer
funded health savings account. The accounts are designed to
cover the employee deductibles and other out of pocket medical
expenses. While employees pay a higher deductible, their premium
contributions – and those of the employer – are
lower. Health Savings Accounts (HSAs) are the most common
type of savings accounts tied to an HDHP because they are
tax-exempt and the savings account can be rolled over year
The success of Consumer Driven Health Care in reducing health
insurance costs over the long-term lies in employee-empowerment.
As employees have a better understanding of their health care
needs and treatment options, they will become smarter shoppers
of health care. In an effort to help plan participants make
better decisions, HDHP insurance providers are offering more
comprehensive information on their websites, such as pricing
and quality information in the following areas: pharmacy/prescription
drug, physician, x-ray/lab and hospital. Insurance providers
are also increasing their staffing in the Disease Management
and Health Management arenas in order to better educate the
healthy participant as well as to provide “coaching”
to a participant that may be undergoing treatment in one of
their designated “disease” groups.
Wellness and Lifestyle Management as Part of the
Many employers today recognize that employee behavior is a
key driver in managing claims. Employers are beginning to
implement their own health and lifestyle management programs
that include counseling and incentives for those employees
that adopt healthy lifestyles and proactively manage chronic
conditions. Insurance brokers who specialize in Consumer Driven
Health Care can help employers develop, communicate and implement
lifestyle management plans, monitor claims activity and analyze
savings results over periods of one, three and five years.
By making health care management part of the corporate vision,
employers can systematically reduce health care costs over
the long-term while helping their employees make wiser health
care decisions. Employers can take baby steps by offering
a HDHP as part of their traditional plan mix and phasing in
wellness programs as part of the bigger picture.
For more information on consumer driven health care, contact
your NIA Employee Benefits Specialist or
Denise Angleman at email@example.com
or 201.845.6600, Ext. 1259.