November 01, 2005

This Seasons Market View Concerning Consumer-Driven Health Plans

When it comes to this fall's open-enrollment period, the catchphrase is "consumer-driven" health care. The trend embraces benefit options that allow employees to tailor their insurance coverage: Young, healthy workers may opt for minimal coverage and pay less, for example, while workers with families or chronic conditions may pick another kind of policy and pay more.

Health care premiums comprise a growing percentage of corporate spending, leading employers—large and small—to search for new ways to contain costs. “In 2006 about a quarter of large employers will offer consumer-driven health plans”, said David Stacey, a senior health-care consultant at Lincolnshire-based Hewitt Associates. “That's up from 5 percent to 15 percent three or four years ago”, he said. "Freedom of choice" among health-care providers, "that's what has fueled the market and its changes in recent years”, said Joel Shalowitz, director of the health industry management program at Northwestern University's Kellogg School of Management.

While health maintenance organizations (HMOs) have for years covered employees for less than preferred provider organizations (PPOs), which offer broader coverage, HMOs often restrict choices, which has limited their popularity. "There's been a complete sea change," said John Goodman, president and founder of the National Center for Policy Analysis, which advocates private alternatives to government regulation and control.

Employers now are beginning to add high-deductible health plans, personal health care spending accounts, such as Health Savings Accounts (HSAs) and Health Reimbursement Accounts (HRAs). They are also providing tools to help employees make more informed decisions while affording them the opportunity to make tax deferred contributions.

In California, the rise in healthcare costs continues to be an on going issue for most small and large employers. Employers have been forced to learn more about various insurance alternatives that will help them to control their health care costs. Orion Risk Management assists our clients in making these difficult decisions.

For more information regarding “Consumer Driven” health plans, please contact Orion Risk Management and a highly skilled staff member will be able to assist you with any questions you may have.

Please contact your local Orion Risk Management office for more information.