Cost Sharing A Strategic Move for HR Pros

January 9, 2002 ( - Benefits managers saw increased employee cost sharing as the most successful method for controlling health plan benefit costs in 2001, a survey by the Institute of Management and Administration (IOMA) finds.

In fact,

  • among firms that employ more than 500 workers, nearly 57.9% increased cost sharing,
  • among those with fewer than 500 employees, 44.9% passed health care increases onto participants

Cost Control

Other successful cost-control strategies cited were:

  • the addition of a mail order prescription drug program, cited by 22% of the sample,
  • followed by the use of flexible spending accounts, mentioned by 20%, and
  • some form of managed care or PPO plan, cited by 20%

According to the survey, several industry sectors report success with the managed care approach to containing health car cost, among them

  • almost 30% of manufacturing firms,
  • over a  fifth of technology firms, and
  • one in five health care companies

Automated Benefits

According to IOMA, automated benefits, with clearly established cost savings potential, are still out of the reach of many small employers,

  • only 4.1% of respondents in the small-employer category listed automated benefits functions as the most successful cost-control strategy,
  • versus 21.5% of larger employers

Not surprisingly, the industry group most likely to embrace automated benefits functions was the technology sector, logically, at 21.4% of respondents. Further, technology companies were also most likely to self-insure, with 35.7% using this measure to control costs.

To cope with runaway cost increases,

  • only 6.3% cut benefits offerings last year, 
  • while a further 15.1% turned to voluntary benefits offerings, chiefly in the non-profit, technology and services sectors, and
  • one in 10 started wellness programs