Monday, February 22, 2010

With or without reform, how will employers control health care costs?

The Employee Benefit Research Institute held a forum last December on the future of employment-based health benefits. Representatives from many of the key stakeholders in employment-based health insurance-- employers, insurers, and consultants--contributed their perspectives. EBRI’s communications director Stephen Blakely offers a nice summary of the highlights of the forum.

Now, recall that when the forum took place on December 10, the Senate was debating its version of reform, and enactment of a final package in January seemed likely. (That seems like a lifetime ago: today the President released a repackaged proposal as part of his effort to secure passage.) Even then, though, Blakely says, some forum attendees expressed their disappointment that the legislation under debate focused mostly on solving the problems of covering and financing health insurance, rather than on the problems of health care delivery, and—key for employers—the cost of health care.

Given that disappointment, large employers and their benefits consultants engaged in a lively debate on how to control costs.

Do wellness programs work? Yes, says Beth Umland, head of Mercer’s health and benefits research unit. While controversy persists, “data is starting to accumulate that show that these programs actually are cost effective.” Among those employers that have tried to measure the ROI for wellness programs, “about three-quarters say it’s been very successful,” Umland continued. Pam French, director of benefits for Boeing, Inc., also endorsed the value of wellness programs.

Taking the opposing view was Bruce Pyenson, a consulting actuary with Milliman. Disease management and other wellness programs don’t work, he said. “The theory that you can spend more now to save money later in health care is just wrong. If you want to spend less in health care, you should spend less in health care,” according to Pyenson.

Should employers provide insurance?  David Guilmette of TowersPerrin warned that large employers, seeing no end to rising costs, are privately discussing pulling the plug on employer-provided health benefits. He quoted one Fortune 500 CFO as saying: “This is pretty straightforward—we’ve got to get out because the economics are compelling for us to exit.”

So what’s holding the big employers back? According to Guilmette:
  • No employer wants to take the big (bad) publicity hit by being the first employer to make such a radical decision.
  • Some employers worry about a permanent rupture in the employer-worker bond, one that would put the employer at a competitive disadvantage when better economic times return.
Interested in learning more about managing health care costs? If you're a subscriber to CCH Employee Benefits Management, go to ¶18,010. Not a subscriber? Go here to learn more.


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