Companies will cope with the rising cost of health care by looking at their existing benefits technology and automation networks and trying to get more out of them. Different strategies include asking benefit staff to take on more responsibility, modify benefit plans to encourage growth, use outside benefits services and outsource some tasks. The most costly of all benefits is health care, and benefit departments must be even more efficient to be able to control ever rising costs. Jack Brunner of Hewitt Associates reported six key areas where employers could take advantage of controlling costs and save up to 45%:

Cost-sharing. Employers should provide a menu of options for employees from which they can choose their own benefits. Different options include dependent coverage elections, health plan choices, provider selection, and pharmaceutical therapies. One idea is to have employees purchase a rider to increase the level of benefits provided. They could choose how the money in their health care accounts could be used to benefit their particular situation.

Coverage elections. Participation rates and dependent coverage account for 40% of variations in employer costs. Because more than 50% of the workforce is part of a two-income family, employers can reduce their health costs significantly by discouraging employees from choosing coverage for their dependents. Some techniques include flex credits, increased dependent contribution differentials, and spousal coverage mandates.

Plan selection. The employer can see a significant cost variation when employees are allowed to choose their own plans. A plan selection is truly a consumer decision and the employee must be willing to study the plans and make the right choices. The employer should provide a good communication and support system for the employee so that the right decision is made.

Provider selection. An extremely big cost savings benefit for employers is to provide a value-based health system. Different systems used include multi-tier networks, expanded cost-sharing, scheduled benefits, health reimbursement accounts, and PPOs.

Prescription drugs. Tiered plans and pharmacy benefits carve-outs help control pharmacy costs.

Condition management. The majority of health-care costs are driven by chronic conditions. Companies are struggling to find ways in which to manage these costs. Bruner recommended using the following steps to control the costs:


Provide incentives to use the most cost effective parts of the health care plan. For example: waive the co-pay in its mail-order prescription plan for employees who participate in a disease management program.

Provide clear information on conditions and therapies.

Focus on support for better outcomes and "win-win" cost management.

Highlight the employer's quality-of-care efforts.

Provide links to provider-specific data.

Facilitate provider-to-provider interventions to assess treatment alternatives.