EMPLOYERS WITH HIGHER VS. LOWER HEALTH COSTS

Annually, Towers and Perrin surveys many of the nation's largest employers about their health care costs.  The survey is extensive.  The 2007 survey, conducted in 2006, included 170 employers with 3.5 million employees, retirees, and dependents. 

I'm going to skip the national numbers and concentrate on the cost differentials between employers with high costs and low costs.   

Nineteen percent of the companies are still experiencing double-digit inflation (11% or more) even though the average increase for the group as a whole has slowed to 6%. 

The costs for the top third for 2007 are projected at $10,428 per employee, while the bottom third is at $7,224.  The employer's costs for the top third rose 8% for 2007 compared to 4% for the bottom third.  The employee's costs rose 10% for the top third compared to 6% for the bottom third. 

Counter-intuitively, employees of the low-cost companies are paying $1728 per year on average, less than the $1,884 average at the high-cost companies.

The lower-cost companies are quicker to make changes than the high-cost companies.

Sixty-three percent of the low-cost companies have adopted a consumer-driven health plan, while only 38% of the high-cost companies have. 

Seventy-six percent of the low-cost companies are doing measurements of health status and risks across their population, while only 47% of the high-cost companies are. 

Seventy-three percent of the low-cost companies are communicating and educating employees on how to be a better health care consumer, while only 38% of the high-cost companies are. 

Source:  Towers Perrin "2007 Health Care Cost Survey", October 2006.  Towers Perrin is a global professional services firm that helps organizations improve their performance through effective people, risk and financial management.