U.S. health care costs are escalating at an astronomical pace. The 2006 national average to maintain an employee’s medical plan is expected to be upward of $8,400.
What’s more troubling is the majority of employees supported by work-sponsored health care plans aren’t even reaping the benefits of their coverage. Approximately half of American employees require such little care that their expenses account for only 3% of employer health care spending, while 15% of the population will account for more than 80% of employer health care spending.
Clearly, traditional health care plans aren’t addressing employee demographics in an efficient and consistent manner.
As the concept of consumerism takes root, the early performance of the new consumer-driven health care plans is encouraging.
According to a report by Aetna Inc., Hartford, based on total replacement plans that incorporated a health reimbursement arrangement, the CDHP resulted in a two-year annualized trend that was two percentage points lower than the 10.3% average increase for a traditional preferred provider organization plan over the same period.
On average, the typical employer who offered a CDHP as an option experienced a rate increase at renewal of just 5.3%.
The 2004 Mercer National Survey of Employer-Sponsored Health Plans shows that CDHPs had the lowest costs of all medical plans for large employers on a per-employee per-year basis, providing more than $800 in savings per employee.
The results have to do with many facets of the plans, and the plans are still in the early stages. However, the power of consumerism is clearly one of the driving factors in CDHPs’ ability to control costs.
United Healthcare, the health insurance unit of UnitedHealth Group Inc., Minnetonka, Minn., found CDHP participants displayed a 15% to 18% reduction in emergency visits, that 94% were using generic drugs when generics were available, and that 55% of the members reported being more likely to think twice about going to the doctor for minor health care needs.
In addition, Aetna says 83% of its CDHP members were more conscious of health care costs.