Consumerism Can Help Bring Down Health Care Costs
Business Insurance Online (12/02/02) Vol. 36, No. 48 ; Waldron, Neil

Double-digit health cost increases, spurred by increased drug spending, new medical technologies, and aging patients, are provoking a move toward consumer-directed health plans, in which individual health reimbursement accounts (HRA) are funded by employer contributions, but offered with a comprehensive high-deductible health insurance. Consumer-directed plans are becoming more popular--a recent survey of corporate executives shows that just under 33 percent have already introduced a form of consumer-driven health insurance into their health plans, while 36 percent intend to do the same in 2003. Employers are becoming increasingly burdened with health costs that rose 12.7 percent last year, on average, and 16.8 percent for midsize employers. In response to premium increases, employers are shifting health costs to employees, hoping that the move will force employees to become more aware of their health care dollars and more responsible. Employers are hoping that tiered prescription formularies, increased co-payments, and other programs will spur consumers' interest in managing their own health care. The Internal Revenue Service has driven the growth of consumer-directed health plans by ruling that employer-sponsored personal spending accounts are not taxable, and that employees can rollover their unused account balances into future years.

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