CDHC HELPING TO STABILIZE HEALTH INFLATION

The annual rise in group health plan costs, a major component of health care inflation, has stabilized according to Financial Week. The 6.1% rate is still way too high, but it is coming down:

It is a big improvement from just a few years ago, when annual health plan increases were rising by double digits and employers despaired about their seeming inability to bring costs under control.

The rate has held steady for three straight years and there are signs that the annual growth rate will actually decrease next year. 

The easing of health-care inflation is likely to continue. In 2008, survey respondents expect costs to increase an average of 5.8% …

What’s behind this improvement? Employee wellness programs and that bête noire of single-payer advocates—Consumer Driven Health Care:

Some employers are going beyond health management programs to offer consumer-driven health-care plans …

Why? CDHPs are substantially less expensive than other alternatives:

HSA-based plans cost an average $5,679 per employee … By contrast, preferred provider organization plans cost an average $7,352 per employee …

And the higher deductibles associated with CDHPs are causing employees to be more circumspect about how they utilize health care services:

That cost difference “lends support to the theory that the account feature encourages more careful employee spending,? according to the survey.

In other words, CDHC is doing exactly what its proponents promised—driving down the cost of health plans for employers and reducing general demand for health care.

Trackbacks & Pingbacks 1

  1. From Trusted.MD Network on 30 Dec 2007 at 9:46 pm

    Consumers Holding Down Health Care Inflation…

    No one spends your money quite as well as you do…

    (hat tip: HCBS)…

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