Consumer-Driven Health Plans Gain Steam

Wednesday, April 01, 2009
By Steve Twedt, Pittsburgh Post-Gazette

The employers who are most successful at containing health-care costs are doing it without raising workers' premiums.

Instead, they're using cash incentives to entice employees toward consumer-driven health plans, such as medical savings accounts and health reimbursement arrangements, said Ted Nussbaum, director of Group and Health Care Consulting North America for Watson Wyatt Worldwide.

"Employees may pay as much as 50 percent less" for premiums than those enrolled in more traditional point-of-service or preferred provider plans, he said.

Consumer-driven plans typically entail a tax-exempt account for paying certain health expenses, with a high deductible component for coverage in case of a major medical problem. In most cases, both the employer and the employee may contribute to the account, and unused money can be carried over to the next year.

By giving employees a more direct stake in their use of health care, employers benefit, too, with an average 1 to 2 percent smaller cost increases year to year, said Mr. Nussbaum, speaker at yesterday's Pittsburgh Business Group on Health conference on emerging trends in the health benefits arena. "The best performers are consistently driving their costs lower," he said.

Although companies' health-care cost increases have slowed from 14.7 percent in 2002to 6 percent in 2008, they are still twice the inflation rate and an ever-present concern for businesses.

In a 2008 survey of almost 500 companies, Mr. Nussbaum said nearly 10 percent fewer employers say they're confident they'll be able to offer health benefits for the next 10 years than the previous year, "the first time that's happened in 14 years. And that's a substantial drop."

One major driver in rising health-care costs is prescription drugs. Jack Bruner, CVS/Caremark executive vice president for strategic development and marketing, told the gathering of business executives that one problem is simple patient compliance. Nearly one-third of original prescriptions for chronic conditions never get filled, he said, and 70 percent stop refilling scripts the first year, he said.

The reasons may vary from concerns about the ongoing cost to not understanding how long they're supposed to take the medication.

Mr. Bruner said CVS can help patients through on-site counseling and automated renewals. Taking a medication as prescribed, for as long as prescribed, may prevent more serious -- and more expensive -- health problems later.

While cautioning that "there's no silver bullet that does everything," Mr. Bruner offered several suggestions that together might save up to 20 percent in pharmaceutical costs. They include accelerating the move to generic drugs, careful monitoring of expensive specialty drugs and early identification of health risks.

One commonly cited rule of thumb is that every 1 percent increase in generic drug use translates into a similar-sized reduction in pharmacy costs.