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January 30, 2003

Survey: More employers are considering consumer-driven health plans

A growing number of employers concerned about rising health-care costs are contemplating new consumer-driven health plans, a new study by a health-care consulting firm shows.

Nearly half of employers surveyed by Hewitt Associates said they may try to deflect rising health-care costs by offering employees consumer-driven plans with health reimbursement arrangements (HRAs).

These plans, which are intended to replace or supplement traditional health-care plans, would let employees become more involved in making health-care decisions, Hewitt Associates' release says.

Hewitt said its survey of 500 companies shows that employers can absorb an 8 percent increase in health-care costs over the next five years.

But the survey shows that companies expect a 15 percent increase in 2003. This reflects a 7 percent gap between what employers can pay and what they will have to pay, Hewitt said.

Ninety-four percent of participating companies reported that senior management is "critically concerned" about how health-care costs are affecting corporate costs. Ninety percent of companies interviewed reported concern about the affect of these costs on employees.

The survey also showed that:

Business Council members predicted such changes in health insurance coverage in a 1999 survey on health care issues conducted by The Council. That survey showed that New York employers want lawmakers to enact policies to contain health-care cost.

Respondents to that survey said that health-care costs, left unchecked, would change health benefits and increase health costs borne directly by workers. Nearly three in ten respondents predicted that unchecked cost increases would produce a fundamental change in the nature of employees' health insurance benefits.

There is not an easy way to solve the rising costs faced by employers, said Jack Bruner, national practice leader of Hewitt's health management practice.

"But major hikes are forcing companies to take a closer look at the health care system and identify areas where change is needed," he said.

For information on the Hewitt Study, see www.hewitt.com. Results of The Business Council's study are at www.bcnys.org/whatsnew/19991206srvy.htm.