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No Groundswell Yet Among Employers for Consumer-Driven Health Plans

No Single Solution to Rising Health Costs Likely Given Employer Diversity

News Releases
July 22, 2004

Alwyn Cassil: (202) 264-3484

ASHINGTON, D.C.—Many employers are skeptical that high-deductible health coverage tied to employer-funded spending accounts—known as consumer-driven health plans—can reduce their health costs, according to a study released today by the Center for Studying Health System Change (HSC).

"There’s a lot of buzz from vendors and consultants about consumer-driven health plans, but many employers are skeptical about cost savings for their company," said Paul B. Ginsburg, Ph.D., president of HSC, a nonpartisan policy research organization funded principally by The Robert Wood Johnson Foundation. "Some have crunched the numbers for themselves and don’t see the savings."

For example, one employer noted that 70 percent of the firm’s covered employees had health care costs of less than $1,000 a year. This employer expected that giving workers a $1,000 spending account would encourage workers to use more services and raise costs, not lower them. Another employer said 30 percent of its workforce did not take up the company’s health insurance, reportedly because the predominantly female workers were covered by spouses’ insurance. But funding a spending account might prompt more workers to opt for coverage and increase the firm’s costs, the employer believed.

Some employers, however, did expect consumer-driven health plans to slow their cost growth. The key advantage of consumer-driven health plans, according to these employers, is their potential to increase consumers’ financial stake in their health care, to improve their understanding of the cost of care and to reduce utilization.

The study’s findings are detailed in a new HSC Issue BriefRhetoric vs. Reality: Employer Views on Consumer-Driven Health Care. The study, by Sally Trude, Ph.D., an HSC consulting researcher, and Leslie Conwell, a former HSC health research analyst, is based on HSC’s 2002-03 site visits to 12 nationally representative communities: Boston; Cleveland; Greenville, S.C.; Indianapolis; Lansing, Mich.; Little Rock, Ark.; Miami; northern New Jersey; Orange County, Calif.; Phoenix; Seattle; and Syracuse, N.Y.

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The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded principally by The Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.


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The Center for Studying Health System Change Ceased operation on Dec. 31, 2013.