Washington-area employers are offering a greater number of health care plans that give employees a larger stake in the cost of their medical care than companies across the country, a new survey shows.
The move to “consumer-directed” health plans did not, however, slow down an increase in health care costs as Washington-area companies saw their costs increase nearly 7 percent this year, a shade above the national average, according to the survey conducted by the international consulting firm Mercer Health and Benefits.
Mercer surveyed 3,000 U.S. companies nationwide, and the company says the results represent about 600,000 employers and more than 90 million employees.
Nationally, employers’ health care costs increased by 6 percent this year, ending a three-year run in which employers were able to reduce the growth rate. Health care costs reached a 12-year high in 2002 when such costs rose nearly 15 percent from the previous year. Last year, health care expenses also increased about 6 percent.
Employers are choosing alternative approaches to shifting the cost of health care to the employee such as consumer-directed health plans and preventative programs.
Some Washington and Baltimore businesses are giving workers the option of enrolling in a consumer-directed health plan, which allows workers to place money in tax-preferred accounts that must be used for medical expenses. The plans, known as health savings accounts and health reimbursement accounts, have low premiums but high deductibles, which the employee pays for.
The employer saves money on health care costs when the employee becomes a better shopper. Better consumers are more likely to use nurse-advice lines before calling for a doctor appointment and more likely to seek a generic drug, said Tracy Watts, a principal with Mercer.
Of the 71 companies surveyed in the area, 17 percent are offering at least one type of consumer-directed health plan. Nationally, 6 percent of the country’s employers are offering such a plan, up from 2 percent a year ago.
In Los Angeles, for example, employers have yet to make the transition to consumer-directed health plans. The typical employer in that city has more than 50 percent of its employees enrolled in a health maintenance organization, which offers employees a network of health care providers from whom to choose.
“Moving from an HMO to a consumer-directed health plan is quite a chasm for the average employee to leap,” Ms. Watts said. “Therefore, you will not find a high percentage of employers [in Los Angeles] currently offering a consumer-directed plan option.”
In 2006, out-of-pocket expenses for employees, such as deductibles and co-payments for prescription drugs, declined. Those costs grew rapidly in the 1990 and early 2000s as employers looked for ways to curb escalating medical costs.
“There was so much cost shifting to the employee over the years that that strategy has peaked,” Ms. Watts said. “There is less evidence of cost shifting in 2006 than in the past three to five years.”
Employers also are beginning to take advantage of programs that offer health-risk assessments to workers such as free health screenings. The percentage of large companies, those with 500 or more employees, that offer preventative health screenings nearly doubled over the past three years, according to the survey.
“These benefits are no longer being buried in an employee newsletter,” said Helen Darling, president of the National Business Group on Health. “Employers are now paying for services like health coaches.”
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