Companies Cope With Rising Medical Costs

November 14, 2002 ( - Faced with often-substantial hikes in their health-care insurance costs, employers are grappling with a variety of potential alternatives.

Among those alternative approaches are attempting to renegotiate a better deal with providers, changing providers, or deciding to simply bite the bullet and increase their contribution, according to a 2002 benefit plan survey by C&B Consulting Group of Syosset, New York.

According to the survey, 56.4% of respondents said they went back to the bargaining table to try to cut health-care costs increases, while 50% said they swapped carriers, 51.3% said they stepped up their plan contributions and 40.3% consulted with an outside advisor.

Medical plans suffering the greatest price hike were open access Point of Service (POS) plans with 17.5% hikes, indemnity plans with 14.5% increases, and HMOs with 13.3%%

Just under eight out of 10 respondents had fully insured medical plans, 14% were self insured, and the remaining had some combination of both, according to the survey.

Companies listed a variety of strategies for coping with increases in prescription drug coverage:

  • increased copays, 60.5%
  • promoted mail order, 41.7%
  • utilized a three-tier drug plan, 37.1%
  • implemented a deductible, 18.3%

Respondents also indicated that they utilized a variety of programs to communicate benefits information to their employees:

  • meetings, 86.8%
  • letters, 81.4%
  • e-mail, 66.9%
  • payroll stuffers, 53.3%
  • personalized benefit statements, 44.3%.

The survey covered 275 New York metro area companies with about 90,000 employees.