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Slimming Down Health Care

With HMO rate increases higher than those of PPOs and POSs, plan sponsors are switching to other health care options.

By Beth Karlin | Updated on November 03, 2008

Savvy corporations are trimming health care costs by putting their plans on a fitness regime–and that goes for their employees, too. It takes discipline on everyone’s part, but it’s worth it, says Hewitt Associates in a new study that reveals diligent monitoring of health plan expenses keeps costs relatively stable in the 6% to 7% range despite higher insurance rate hikes. Average health care outlays at large companies rose about 6% to $8,331 per person in 2008, up from 5.3% a year earlier, but less than the 7% to 9% Hewitt estimates employers will spend without shifting costs to participants and diligently managing plans. Hewitt projects an average 6.4% increase in 2009 to $8,863.

What are the smart companies doing right? Segal Group Inc. calls it total health management (THM), in which data analysis plays a major role. Plan sponsors are mining data to identify a plan’s cost drivers and, based on that information, developing multi-year programs to bring those costs down, Segal says in its 2009 Health Plan Cost Trend Survey. The human resources and consulting company recommends a six-pronged strategy to achieve effective THM: analytics, planning, design, selection, management and outreach.

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