Employers Embracing Health Management Programs, Consumer-Directed Health Care

March 17, 2005 (PLANSPONSOR.com) - A new survey from Watson Wyatt and the National Business Group on Health shows that the use of health management and consumer-directed health care programs in on the rise, helping to reduce costs to the employer.

The study found that the median increase in health care costs was 10% in 2005, down from 12% last year; Watson Wyatt attributes this to a greater focus on health management and consumer-directed health care programs. Also, many employers (38%) were below their health budgets last year, which was double that of 2003. Only 18% said they were over budget, down from 41% in the previous year.

Almost seven in ten (69%) employers are using disease management programs, which is a 50% increase over last year. Also, the number of employers adopting lifestyle behavioral change through health plans has doubled to 40%; 32% now also offer obesity reduction programs, up from 14% in 2004.

The companies that did the best at controlling costs were usually the ones who quantified the problem and looked at solid evidence to solve it, according to the study. There is also a large gap between the best and worst savers, with the best limiting cost increases to a two-year average of 5%. For the worst, this figure topped 15%.

Health Savings Accounts (HSAs) also seem to be gaining momentum, although they are still only offered by 8% of employers. However, in 2006, 18% plan to offer them, and 47% are considering such a move. Employers are fairly unanimous (75%) in agreeing that the new health accounts will engage employees in their health management, while 60% also agree that they expand employee options. However, 49% are not convinced that they will actually save money.

The study also discovered the employers are more willing now than in previous years to absorb health care cost increases, with 41% saying they would do this, up from 29% last year. Nationalization of health plans is also on the rise, with 49% of employers saying that they have moved to such plans, away from regional ones. This is up from 29% last year.

The study was conducted by Watson Wyatt and the National Business Group on Health of 555 employers with over 1,000 employees.