Watson Predicts Greater Employer Use of HDHPs in 2007

December 29, 2006 (PLANSPONSOR.com) - The most prominent trend in health care in 2007 will be a greater move toward high-deductible health plans (HDHPs) paired with some type of reimbursement account, with one-third of employers saying they plan to adopt that arrangement, according to consultant Watson Wyatt Worldwide.

However, Watson Wyatt said in a press release few employers are replacing current plans completely with HDHPs.

“The move to consumer-oriented health care programs will continue, and it will evolve to include more than just high-deductible health plans and health savings accounts,” said Ted Nussbaum, director of group and health care consulting at Watson Wyatt, in the release. “Employers will take these efforts to the next level by targeting strategies at specific segments of health-care users and using data on provider quality to help employees effectively control health care costs.”

The consulting firm also predicts more employers will offer Web-based tools to help plan participants tailor their benefits choices and choose the best provider by sifting through online report cards grading that rate the quality of care.

Other health benefit trend predictions include:

  • Moving beyond mandatory generic prescription drug plans – As more popular prescription drugs come off patent in the next three years and their prices are reduced, employers will loosen their requirements that employees use generic drugs whenever possible.
  • Greater integration between health care and absence management programs – Coordinating such programs will grow in popularity as employers seek to improve employee health and productivity.
  • More on-site clinics in the workplace – To ease access to appropriate health care, more and more companies will open on-site clinics.

Watson also offered the following predictions for retirement benefits:

  • Plan design assessments. As the Pension Protection Act (PPA) and pension accounting rules (FAS158) are implemented, companies will consider new options, including taking another look at cash balance plans or other hybrid models.
  • Investment strategy reviews – The move to approaches that better hedge long-term pension liabilities will continue. More employers will also consider alternative investments such as private equity, hedge funds, infrastructure and real estate.