Most Plan Sponsors Say Health-Care Costs Are 'Out of Control'

June 29, 2004 ( - The vast majority of plan sponsors in the Northeast say health-care costs are "out of control," but few are taking steps to rein these costs in.

Nine out of 10 (92%) health-care decision makers surveyed by Harvard Pilgrim Health Care said their cost for health-care has gotten out of hand. Yet, only 35% are considering taking any additional action to address the situation.

Rather, the 200 Northeastern-based plan sponsors polled looked to employees to help reduce health-care spending, and ultimately, help control costs. Harvard Pilgrim found 82% of employers feel that employees should take a more active part in their own health care decisions.

Additionally, almost all surveyed agreed that employees should have actual prices available to them when they choose their health plan and use medical services. With this information, m ore than 60% of those surveyed said that they believe their employees would think more about controlling their health-care costs if they had information about less expensive alternatives and knew the true cost of medical services.

Pointing to these results in a speech to the Greater Boston Chamber of Commerce, Harvard Pilgrim Health Care CEO Charlie Baker said that employees and health plans need to help employees understand how expensive health care is and why. The two groups can do this by helping employees become more involved in selecting health benefits that meet their needs and supplying them with critical cost and quality information to use when they select or use a doctor or a hospital.

“When you give people the proper information to make their decisions, they take a more active role in their own health care,” said Baker. “We all need to create an attitude adjustment concerning health-care costs.”

To help foster this new attitude, Baker said plan sponsors need to create a new environment around health-care costs, that includes:

  • using “fixed dollar” contribution policies to make the financial consequences of employees’ choices apparent to them
  • offering employees health plan choices and asking them to seriously consider what is best for them
  • making consumers aware of the costs of medical services and procedures
  • arming consumers with information on performance and encouraging consumers to start making comparisons based on costs and quality.

Using similar strategies, Baker said Harvard Pilgrim has been able to reduce the firm’s health benefits cost increase from 15% to under 10%.