Roughly three-quarters (73%) of employers say their health plans are not meeting expectations in terms of reducing insurance costs, and nearly two-thirds (64%) of employer respondents to a new survey say that current efforts being made by health plans are ineffective in reducing costs, according to a report from competitive intelligence firm Provizio.
And little wonder. Employers interviewed reported that the primary action that health plans were taking to reduce overall health costs for their customers was the education of employees. According to 28% of the respondents, health plans’ major initiative to reduce costs was aimed at launching education campaigns for their customers’ employees on the rising costs of healthcare. The second-most common tactic, according to employer respondents, was providing more self-directed options.
Not surprisingly, nearly half (45.4%) of company executives say that their health plans should do more to contribute to lowering healthcare costs.
Not that they are waiting for that result. A full 73% have already launched a variety of internal short-term and long-term initiatives of their own to reduce costs of health insurance and to decrease costs passed on to their employees, according to interviews with 58 executive sources from 42 US based companies. Among the alternatives already underway:
- 46% of employers are consolidating the number of health plan vendors
- 45% reported engaging in other strategies, including health education and corporate wellness programs
- 27% are passing the increased costs onto their employees
- 27% of employers are launching their own disease management programs
- 9% of employers are investing in technology to automate certain benefit features and make information available to employees without human interaction.
Half of the companies in the study reported hiring consultants to develop and execute programs to reduce future health care costs. The consultants’ primary role is to help the company negotiate contracts with health plans, according to the report.
Using weighted averages, Provizio said employer respondents reported healthcare cost increases of 15.9% in 2002, leading employers to expect 19.7% increases this year.