HR Pros Seek Cure For Cost Epidemic

May 6, 2002 ( - Half of the benefits/HR managers surveyed say they have experienced 'great increases' in health care expenses over the past 12 months, according to a report by BNA.

The survey found that 88% of the 424 respondents say they have experienced increases in healthcare costs over the past year, and just 38% characterized the increase as ‘modest.’  Thirteen percent said they were not sure if their costs had changed during the past 12 months.

Multiple Fronts
The vast majority of surveyed organizations (84%) have taken steps to keep health care costs in check, and 57% say they are working on multiple fronts to hold down health care expenditures. 

Among the measures taken:

  • two out of three firms reported recent or imminent efforts to raise employees’ premium contributions, co-payments, or deductibles – roughly half have increased premiums, while 40% are, or will, boost co-payments
  • 29% have pursued changes in health care plans, providers, or insurance carriers, including a number that have recently opted for preferred provider plans (PPOs)
  • 28% have pursued generic drug requirements – 34% among those with 1,000 or more workers.

Companies with 1,000 or more workers (45%) were nearly as likely to report substantial increases in health care expenses as smaller firms (52%).  Large recent hikes in medical costs were a bit more common among employers in the North Central states (57%) and the West (54%) than in Southern organizations (45%) and Northeastern establishments (40%).

Only 6% of the survey respondents have turned to gatekeeper systems to offset recent increases in health care costs, likely because many firms already had those mechanisms in place, according to the report. Gatekeeper systems control access to, and the parameters of, employees’ medical treatment, normally through a primary care physician who acts as the ‘gatekeeper.’

Other Options

Seventeen percent of the survey respondents reported other strategies aimed at controlling health care costs.  Specifically noted was a growing use of formularies and ‘tiered’ copayment structures for prescription drugs, particularly three-tier copayment systems. 

In those arrangements, the lowest copay typically is used for generic drugs, the second tier applies to preferred brand-name drugs, and the highest level is assigned to ‘nonpreferred’ brand-name medications.

Mail-order prescription plans and wellness programs were also cited, as well as the pursuit of combination efforts that allowed smaller employers to join together to increase their buying power.