NCPA - National Center for Policy Analysis

Using Employees And The Internet To Control Health Plan Costs

May 4, 2001

Employers are concerned about rising health care costs, which are expected to increase by 13 percent in 2001, and are searching for new ways to reduce costs.

The consulting firm Towers Perrin surveyed benefits managers at 200 organizations representing large companies with at least 5000 employees. Among the results of their survey, "Facing Health Care Challenges in an Era of Change," conducted in the last quarter of 2000:

  • Employers view consumerism -- meaning increased individual responsibility, choice and decision making in health matters -- as essential to controlling costs.
  • Eighty-three percent of respondents indicated that they have or are considering "encouraging consumerism" as a cost-control measure.
  • They hope educated, empowered employees will make more conscientious, informed and cost-effective decisions about spending on their own health care.

However, only a small percentage of the companies surveyed are considering a defined contribution approach that would shift management of health plans from employer to employee. Under a defined contribution strategy, the employer would provide each employee with a predetermined amount of money per year and allow the employee to use this money to purchase health coverage from one of several plans.

Employers with a high percentage of their employees (50 percent or more) with Internet access at work are significantly more likely to consider consumerism important than those whose employees lack workplace Internet access.

And more than half of the respondents said they would consider ending health plan sponsorship if costs continue to rise or if changes in tax law made it more favorable for individuals to purchase their own health care coverage.

Source: "Facing Health Care Challenges in an Era of Change," May 1, 2001, Towers Perrin.

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