Survey: More Employers Adopting Consumer-Directed Health Programs

WASHINGTON, March 17--With health benefit costs still rising at double-digit rates, more employers are adopting health management and consumer-directed health care programs to help control costs. And some employers keep increases remarkably low by getting employees involved in health care decision making.  These are among the major findings in the 10th annual survey of large employers conducted by Watson Wyatt and the National Business Group on Health.

The survey found that health care cost increases moderated this year, from a median increase of 12 percent last year to 10 percent this year. Additionally, more employers are doing a better job budgeting for health costs.  Nearly four of 10 employers (38 percent) reported that their costs were below budget last year, nearly double the 20 percent in 2003.

Conversely, fewer than one in five respondents (18 percent) were over budget last year, down from 41 percent in 2003.  A total of 555 employers with at least 1,000 workers participated in the survey.

"Employers are realizing that to get to the root of the health care cost problem, they must take a more active role in managing the health of their employees," says Helen Darling, president of the National Business Group on Health.  "Programs that focus on managing specific diseases and help workers make lifestyle behavior changes aimed at weight management, exercise and smoking cessation can go a long way toward slowing rising costs over the long term."

Nearly seven of ten respondents (69 percent) are using disease management programs through a health plan this year, a 50 percent increase over last year.  Similarly, the number of employers adopting lifestyle behavior change through a health plan doubled to 40 percent this year.  Additionally, 32 percent offer obesity reduction programs, compared with just 14 percent in 2004.

The survey found that employers that are doing the best job of controlling health care cost trends have a much greater focus on health management than those with higher cost increases.  They also tend to set their health care strategy on quantitative analysis and rely on evidence to confirm their approach to health care benefits.

The best-performing companies - those with a two-year average cost increase in the lowest quartile - kept cost increases to a remarkably low  5 percent over a two-year period.  Conversely, poor-performing companies - those with a two-year average cost increase in the highest quartile - experienced a 15 percent increase.

"This year's best-performing companies are succeeding across the board -not only doing a better job at managing costs, but also improving employee satisfaction and increasing individual accountability," says Ted Chien, global director of group and health care consulting at Watson Wyatt.  "These successful companies are more willing to try different approaches and are much more likely to be early adopters of many tactics.  They also hold off drawing conclusions about their effectiveness until there is evidence of results."