Expose unveils health-care cost delusions

Article Abstract:

Reports that the growth in medical costs is now under control are deceptive. June 1996 figures from the Labor Dept. show that health-care costs for businesses grew by only 0.01%, the lowest medical inflation rate ever in the department's 13-year history of tracking this statistic. While this may seem like a good cause for celebration, it should be noted that the slowdown in growth holds true only for businesses. Medical costs in general continue to increase almost four times the inflation rate. Companies are reporting slower growth in health care costs because they are transferring employees to cheaper managed-care plans and sharing medical costs with their workers. Consequently, employees' health care costs have grown by at least $5.5 billion since 1990. Employers can do more to reduce medical costs for themselves and for their employees. HR managers at larger firms have already launched a market-based initiative to reform the health care system.

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Carving out health-care savings

Article Abstract:

A growing number of companies are finding that they can reduce their health care costs by implementing a benefits-management strategy called 'carve-outs.' This practice calls for the segregation of certain types of health benefits, often those that involve specialty health services, from the general health plan. The separated health benefits are then managed using managed-care strategies such as case management and precertification to control costs. At present, carve-outs are proving to be most effective in limiting spending on prescription drugs and mental health and substance-abuse services. This cost-control strategy is becoming more popular because of the increasing number of specialty-care providers, those entepreneurial health-care vendors that are responding to companies' concerns over the cost and quality of health services. More importantly, carve-outs are gaining wider acceptance because it works.

Health services administration, Cost control

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Under the knife

Article Abstract:

Some companies are responding to increasing health care costs by reducing employees' medical coverage for certain procedures. Compensation managers must learn to balance employees' needs with their firm's financial needs. Most employee benefits managers believe that some type of coverage limitation is nearly inevitable. The difficult issues facing managers who must decide to limit coverage include deciding which procedures will be covered, and dealing with negative publicity surrounding the decisions.

Analysis, Finance, Cover Story, Compensation management, Health insurance

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