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Employers Embrace Consumer-Driven Health Plans, Other Tactics, to Contain Health Care Costs

November 9, 2011

Six years ago, Charlotte, North Carolina-based Coca-Cola Bottling Co. Consolidated replaced its medical plan options with three consumer-driven health plans, which has helped the company maintain a slightly higher than 4 percent annual increase in the cost of providing health care to its 6,000 employees.

While that trend compares favorably with the nationwide average increase of 9 percent in the past five years, the beverage bottler, which operates in nine Southeastern states, is still working to control costs while promoting good health among its workforce, according to director of benefits Kurt Hollar.

"Sixty-three percent of our claims costs were connected to chronic conditions in 2010, and we knew that if we could help employees get a better handle on their health, significant dollars would be saved," he says

In March, Coca-Cola Bottling launched a pilot program to install on-site health clinics in its Charlotte, North Carolina, and Nashville, Tennessee, locations, working with Charlotte-based Healthstat Inc., an on-site health clinic provider. Each clinic is staffed by a nurse practitioner, and care is free.

"We want to get employees to take better care of themselves, and our sense is that as the nurses build relationships, we will have the opportunity to influence behaviors and better manage chronic conditions," Hollar says. "You can pass out all the information in the world and it has such a small impact. To really effect change, you need a different kind of program, and it should be clear that you are doing it 'for' the employees, not 'to' them."

Health management and a move to less-expensive, high-deductible plans are among the ways employers are trying to control health care costs, according to New York-based benefits firm Mercer.

Initial findings from Mercer's National Survey of Employer-Sponsored Health Plans 2011, representing 1,592 employers, indicates the average cost of providing employee health coverage will rise just 5.4 percent in 2012, while a National Business Group on Health survey of 83 of the nation's largest corporations conducted in June predicts costs will increase an average of 7.2 percent. Predictions vary, but it appears 2012 may be a better year for employers struggling to manage the cost of health care coverage.

Like Coca-Cola Bottling, many employers are moving to consumer-driven health plans. The same Mercer survey indicates that 51 percent of employers with 20,000-plus employees offered the plans in 2010, while 58 percent plan to offer them in 2012. And the National Business Group on Health survey shows that 73 percent of those employers will offer at least one consumer-driven health plan in 2012, an increase from 61 percent who offered one in 2011.

"Employers are cutting benefits and lowering premium costs by choosing higher deductible plans for employees, thereby shifting the insurance cost to employees," says Nicholas Newsad, a senior associate with HealthCare Appraisers Inc. in Castle Rock, Colorado.

According to some industry experts, they simply have no choice.

"Employees are used to excellent health care coverage and are not engaged until a major event happens," says Aaron Ginn, a community developer with Palo Alto, California-based Simplee, a personal health care management software company. "Employees don't understand their health care benefits, so employers have taken on the increased responsibility, and now they have no choice but to shift that responsibility to the employee."

However, there's a limit to how much of the cost employees can bear.

"In the Chicago area, we saw increases of 15 percent and up in 2011, and I don't see anyone forecasting decreases for 2012, and health care reform promises a 5 percent to 6 percent annual increase," says Rob Wilson, president of human resources outsourcing firm Employco USA Inc. in Westmont, Illinois. "Larger employers can use high deductible plans to save money. Others can change deductibles, copayments, coinsurance changes, and prescription drug costs. You do what you can while trying not to hurt employees who haven't had a good raise in years."

Another way to shift responsibility to the employee is by introducing a wellness program, which is what Birmingham, Alabama-based employer Baptist Health did in 2009. Today, 74 percent of Baptist Health's 4,000 employees participate in the program, and the results speak for themselves.

According to chief human resources officer Alan Bradford, tobacco use is down from 14.7 percent to 12.3 percent, desirable cholesterol levels have increased from 68.1 percent to 71.2 percent, and employees with high blood pressure have become 3.4 percent more compliant in taking their medication.

"Management of chronic conditions is huge for us, so we pay the full cost of some medications for employees who will work with a health coach," Bradford says. "We've seen a 6 percent decrease in costs as a result of reduced claims, and I believe our costs would have increased 6 percent to 8 percent annually without this program."

Lisa Beyer is a Workforce Management contributing editor. To comment, email editors@workforce.com.