What You Need to Know
We don’t need to tell anyone that healthcare costs are continuing to rise year after year at staggering double digit rates. These costs are taking a bigger bite out of a company’s profits than ever before. Employers and their brokers have done many things to try to get these increasing costs under control but can’t seem to get any further reductions. The reason? Plan participants are using more health care services than ever before and these services cost more. Statistics prove that behavior accounts for 50% health plan cost inflation.
Current plan designs create a disconnect between participants and the real cost of care.
Most have a credit card perception of their health plan as this is the model we built with HMOs. With minimal deductibles and low co-pays, participants don’t know the real cost of care. Current copaid plan designs don’t provide participant’s incentives to take charge of their own health and make good healthcare purchasing decisions. To put the brakes on the spiraling cost of healthcare, employers must take aggressive action to curb over utilization and uncontrolled healthcare spending by its participants. An important movement is taking place in America today that is designed to change this by changing behavior. This movement is called consumer directed healthcare (CDH) because it puts some of the financial control in the hands of those that use it – plan participants.
CDH is also a strategy that rewards those that spend wisely while taking care of those who really need care. Empowering participants encourages them to make better decisions about their own health and the health of their family. For the first time, participants are being asked to become educated consumers and to make decisions about health care purchasing as they would any other financial decision in their life.
We Help Employers Reduce Healthcare Expenses
Recent changes by the federal government have paved the way to create new benefit plans that provide significant incentives to participants and employers to change the way healthcare is purchased. Consumer directed programs such as Health Reimbursement Arrangements, Healthcare Savings Accounts, and even revised flexible spending accounts are creative and effective ways to help employers reduce healthcare expenses.
In traditional plans, participants are incented to spend all of their healthcare plan dollars or see it disappear. By allowing plan participants to create equity through ownership of plan dollars they don’t use, healthcare behavior is changed. This changed behavior ultimately reduces overall costs. Implementing a consumer directed healthcare strategy involves more than simply offering an HRA or HSA plan to your employees. Consumer directed healthcare represents a fundamental shift in the way employers provide benefits to participants and in the way participants choose to use healthcare services.