Health Cost Containment Measures Taking Hold

November 18, 2009 (PLANSPONSOR.com) – A new Mercer report on annual health care cost hikes says the 2009 annual increase of 5.5% to $8,945 was the lowest in 10 years.

A Mercer news release said employers predict that 2010 medical plan costs will rise by about 9% in 2010 if they make no design changes, and by about 6% if they make plan changes or swap out plan vendors.

The study shows a broad-based employer embrace of wellness plans carried out in a variety of forms – from health risk assessments to disease management programs to behavior modification programs. Those efforts are apparently having an impact.  Medical plan cost increases in 2009 were about two percentage points lower, on average, among employers with extensive health management programs than among those employers offering limited or no health management efforts.

Nearly three-fourths of employers that have measured the return on their investment in health management programs say they are satisfied with the year-over-year savings, lower utilization rates, or improved health risks.  However, only about a third of all large employers have formally measured ROI.

“Small and large employers used different strategies to keep cost growth down in 2009,” said Beth Umland, Mercer’s director of health and benefits research, in the news release. “Small employers moved employees into low-cost consumer-directed health plans and raised PPO deductibles. We saw relatively little cost-shifting among large employers – what jumped out was a real increase in their use of programs and policies designed to improve workforce health.”