Cost Containment

The irony is that we know what works in controlling and even reducing health care costs; “capitated” payments to integrated delivery systems (the PC word for HMO).

 

Studies have shown that these plans reduce costs (Newhouse 1994, Baker 2000). Some even show that the growth in spending is reduced in areas with high HMO enrollment (Zwanziger 1994). In fact, the growth in per worker spending for employer health benefits declined from over 18 percent in 1989 to just 8 tenths of one percent in 1996, following a huge employer investment in managed care plans (Kaiser Family Foundation).

 

It is not necessary to enroll all Americans in HMOs or other low-cost plans such as HSAs. But the system should create financial incentives to voluntarily enroll in such plans. For example, the Wyden-Bennett bill assures that workers have a choice of coverage and permits families to retain all of the savings - including employer share - from enrolling in a lower-cost plan, without loss of tax benefits.   

 

We need a system that rewards people for voluntarily enrolling in plans where providers have a financial incentive to be efficient.

 

John Sheils

Vice President

The Lewin Group

Comments

[Stacy Storm]

Containing the costs of insurance is a big priority. My husband and I, in WA state, pay over $5000 per year for a decent insurance policy with $2500 deductibles for each of us. It will save our business if one of us has a major problem, but we do not get as many of the preventative tests, etc. because we have to meet the deductible as well as pay our monthly insurance premiums. I expect there are many small business owners in this situation. We pay for all the uninsured, welfare, medicare and madicade and cannot afford truely comprehensive care for ourselves.