Health care economic factors and the effects of benefits plan design changes

Article Abstract:

The increase in medical costs has caused the providers of health benefit plans to reevaluate their programs. Medical benefits costs have increased from 5 percent of the total payroll in 1980 to 13 percent in 1990. Cost shifting and cost sharing are the most popular methods being used to reduce medical costs. Employer-provided health benefit plans, which in the past provided free medical care, are changing to include cost sharing, thus, making the employees more sensitive to the costs of medical care. A recent study showed that greater utilization of medical services occurred in health plans that were free than in those that required copayments by the employees. It is perceived that free health care results in the overutilization of medical services that have no benefit for the patient. As a result, many health plans have been changed so that they require copayments by the employee and provide limited coverage for certain medical procedures. Under the limited coverage plans, the costs of experimental procedures are not covered, and only those procedures that are designated as medically necessary are reimbursed. Utilization management (UM) is another technique that is becoming popular for controlling medical care costs. Recently, many companies have experienced an increase in the utilization of both inpatient and outpatient services. The reason for this is unclear. UM can be used to review the necessity for hospitalization, the length of stay, discharge planning, and case management; these factors can be compared with the national or regional norms for a given diagnosis. Another method of reducing costs is to place a limit on the amount of money paid for a given medical service. This has become popular for mental health services, which consume almost 10 percent of the total funds allocated for health care. In conclusion, the increase in medical costs has caused many employers to change their health plans, requiring copayments, restricting coverage, and placing limits on the amount paid. These changes may affect the use of certain medical services, but should not significantly effect the health of middle-class Americans who are employed. (Consumer Summary produced by Reliance Medical Information, Inc.)

Statistics, Occupational health services, Employee benefits

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Health care cost inflation and employer cost management

Article Abstract:

Management of the costs of health care aims to reduce cost without sacrificing quality, and efforts in that direction are particularly strong in the current economic climate, in which approximately 12 percent of the US gross national product goes for health care. An explanation of selected cost management strategies is presented. The health care services market does not work, to put it bluntly; reasons for its failure include the inability of consumers (patients) to accurately evaluate what they buy. A first step in controlling cost inflation is developing measures of quality. This inflation is driven by several factors, including uncertainty about treatment effectiveness and the spread of private health insurance, which, in turn, owes much to corporate tax policies. A brief review is presented of the supply of and demand for physician services and new technology in determining costs. Cost management often tries to move the risk associated with uncertain treatment efficacy from the insurer to the patient or the care provider. To contain cost increases, insurers have promoted cost sharing, utilization review, and packaging of provider services (changing from fee-for-service reimbursement to payment by diagnosis or by patient). These are evaluated. Preferred provider organizations (PPOs), which use specified physicians who charge lower fees for PPO services, have grown in number. PPOs generally offer a limited choice of providers, negotiated fees, and utilization review (UR); if they are sponsored by care providers, their UR programs are usually less stringent. Approximately half of all PPOs are provider-sponsored. Whether these organizations are effective in controlling costs remains to be determined. However, the issue of quality of care must be addressed. If quality is not monitored, the health care system will either waste resources or deny patients access to care. (Consumer Summary produced by Reliance Medical Information, Inc.)

Usage, Evaluation, Medical care, Quality management, Medical care quality, Control, Preferred provider organizations (Medical care)

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The cost effectiveness of health promotion programs

Article Abstract:

In any form of business, routine audits are necessary to make sure that funds spent on various programs are benefiting the company; health promotion programs are no exception to this rule. Management of health promotion programs involves keeping track of the money spent, evaluating the benefits received, and comparing the costs with benefits to determine the cost effectiveness of the program. Benefits resulting from health promotion programs that managers can directly observe include increased employee moral and job satisfaction, reduced employee turnover, and increased productivity and safety. Organized activities directed toward promoting employee health may result in reduced medical costs in the future. Examples of health promotion activities include reducing smoking and heavy drinking, health education classes to promote self-care, immunizations, and use of seat belts when driving. The direct financial benefit of these types of activities should be measured in terms of reductions in employee absenteeism, turnover, and medical care costs. The detail in which a cost-benefit analysis can be performed will depend on the available budget and time. It is important to keep the accounting methods and evaluation techniques as simple as possible. In some cases, a rigorous cost-benefit analysis may not be necessary or cost-effective. (Consumer Summary produced by Reliance Medical Information, Inc.)

Health promotion, Preventive medicine, Wellness programs, Medicine, Preventive

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