New Institute to Address Rising Costs of Insurance Premiums
The Washington Business Group on Health, an employer health policy group, has founded a new institute to develop proposals to address the increased cost of health benefits for employees, the Wall Street Journal reports. The Institute on Health Care Costs and Solutions hopes to develop plans to "make care more affordable and cost-effective" and provide "useful information" to help employers make decisions on health benefits for employees in 2003. In addition, the institute plans to study disease management programs used to treat patients with chronic illnesses and determine whether tiered prescription drug plans "actually save money." Michael Davis, vice president of compensation and benefits at General Mills Inc. and co-chair of the institute, said, "We are in a recession. Corporate America cannot continue to absorb escalating health care costs that have increased nearly 50% over the past five years."
Helen Darling, president of the Washington Business Group on Health and director of the institute, added that the Sept. 11 attacks on the World Trade Center and the Pentagon have "exacerbated an already deteriorating health cost issue for employers, contributing to the pressing need for fresh approaches to the problem." Most employers will face "at least the second straight year" of double-digit increases in their budgets for health benefits in 2002. Darling said that the average annual cost for family coverage at large companies may reach as high as $10,000 by 2004, up from about $7,000 in 2001. Many companies will pass some of the additional costs to employees, but Darling said that "we need to understand more about what the consequences of that are" for both employees and employers. The institute has 15 members, including eight large employers who purchase health care for employees -- such as IBM Corp., Honeywell International Inc. and PepsiCo Inc. -- three groups that represent health plans, a pharmacy benefit manager, a benefits consultant and two companies that provide "consumer-directed health services." The members will contribute a total of $1 million to fund the institute for two years (Winslow, Wall Street Journal, 12/19).