NCPA - National Center for Policy Analysis

CONSUMER-DRIVEN HEALTH PLANS TAKING HOLD

December 29, 2006

Unbridled health-care costs are partly responsible for the fact that the number of uninsured in the U.S. now tops the population of Spain.  It is also why many companies are turning to "consumer-directed" or "consumer-driven" health plans, says Brett Brune in the Houston Chronicle.  Thus:

  • A recent Mercer survey of 3,000 U.S. employers showed that the number of consumer-directed plans tripled in 2006.
  • They reduce the annual cost per employee by about $1,000, compared with a managed-care plan such as a PPO or an HMO, Mercer's data show.

According to Steve Swanson, a principal at Mercer Health & Benefits, smaller employers have been the first to catch on, mainly because they tend to be the most affected by health care cost increases.

But larger employers are beginning to take notice now as well.  Houston's largest, the Houston Independent School District, has offered two consumer-directed options for the last three years, with excellent results:

  • Before the consumer plans were added, HISD's annual heath benefit cost per employee was about $5,500.
  • At that time, it had predicted the annual health benefit cost per employee would rise above $7,000 in 2005.
  • But as a result of the change to consumer-directed plans, cost per employee was only about $5,770 this year.

Source: Brett Brune, "'Consumer-driven' plans take hold at smaller companies," Houston Chronicle, December 17, 2006.

 

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