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Large Employers Now Use DM To Cut Their Costs

MANAGED CARE January 2004. © MediMedia USA
News and Commentary

Large Employers Now Use DM To Cut Their Costs

MANAGED CARE January 2004. ©MediMedia USA

Employers are adopting disease management programs in a big way to slow the pace of health care premium increases, according to a survey of 3,000 businesses.

This is just one of the elements of an unexpectedly positive report by Mercer Human Resources that shows that health care premiums in 2003 did not grow so much as experts had predicted they would.

Premiums increased 10.1 percent last year rather than the 14 percent that had been projected, according to the "Mercer National Survey of Employer Health Plans." Respondents indicate that because they are making employees pay more, they have been more successful at reining in costs than they expected.

"Employee contributions, especially for family coverage, rose sharply in 2003," says the study. "Over the past three years, many employers had shielded employees from steep health rate hikes by passing on only a portion of the increase. While the dollar amount deducted from employees' paychecks rose, their share of cost as a percent of premium actually fell from 1999 to 2002."

In 2003, employers made a bigger cost-shifting effort. For HMOs, the average employee-only contribution rose from 31 percent of premium to 35 percent, and the family contribution rose from 50 percent to 57 percent.

For PPOs, the family contribution rose from 53 percent to 58 percent. This was in a year where pay increases averaged only about 3 percent. Despite the promising numbers, such cost shifting can't continue, warns Blaine Bos, a Mercer health benefits consultant. "Employers know that simple cost shifting is a temporary solution at best, with some serious downsides — namely, unhappy employees."

Respondents expect costs to surge in 2004 by 13 percent.

"That's why they're starting to invest in disease and health management, and in plan designs that encourage consumerism," says Bos. "They don't expect to see a return right away, but they're banking on the logic of giving employees a more central role in their own health care decision-making."

Larger employers are attempting to change the way workers interact with the health care system. The survey states: "There was a significant increase in employers offering disease management programs — outreach to individuals with diagnosed chronic conditions."

DM asthma programs, for example, were offered by 43 percent of businesses with 500 or more employees in 2003, up from 34 percent in 2002.

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