Dear HR Executive:
Back in January, we suggested that health insurers and providers, feeling threatened by the prospect of a public health plan, might start to moderate employee health insurance costs.
Sure enough, industry leaders are now pledging $2 trillion in cost reductions over 10 years. So what will that mean for your benefits costs?
It means they’ll be going up.
Because the industry isn’t really pledging to cut employee health insurance costs – only to reduce the rate at which those costs will go up. Currently, health spending is projected to rise by 6.2% a year for the next decade. The “voluntary effort” aims to reduce that growth rate by 1.5%.
Even that modest goal has left many experts dubious -- including the President’s own budget director, Peter Orzsag. He welcomed the health care industry’s participation in the reform effort. But he pointed out that while they may have signed the pledge card, they’re a long way from sending a check.
So far, the pledge is short on specifics. Industry groups say they’ll offer more details by June on how they will cut employee health insurance costs. They will almost certainly be promoting electronic medical records – which can help reduce duplication of care and unnecessary testing. And they will embrace comparative effectiveness research, which will help identify the most effective (and cost-effective) treatments. But these are long-range efforts, and you won’t see any impact on your benefits costs anytime soon.
Still, with the threat of a government-sponsored health plan still lurking in the wings, insurers and providers are worried about their public image. It might be a good time for to reach out to your health plans and see what they’re prepared to do right now to help you rein in costs.
Editor, HR Café Training Center