A recent PriceWaterhouseCoopers (PWC) study provides an outline of the components of medical trend that drive cost.
The analysis breaks medical trend into three components: General Inflation, Health Care Price Increases and Increased Utilization.
As you seek solutions to control health care costs, recognizing that we cannot change or influence two of the three main drivers of medical trend is an important step in creating a viable cost control plan.
General Inflation will occur over time, we have to accept that fact.
Health Care Price Increases will also continue over time until we have a more market-driven, consumer-friendly health care market.
Consumer-Driven Health Plans should be designed to focus on the one component of medical trend that can be influenced – Utilization.
Categories driving increased Utilization cost were found to be:
- Increased Consumer Demand
- Intensive Diagnostic Testing
- New Treatments
If the main controllable cost drivers in health care are consumers demanding new treatments to help them with their lifestyle choices (obesity, smoking and diet decisions) and physicians requesting higher levels of diagnostic testing – there must be a process to inform, motivate and engage a consumer in the health care process to have any hope of addressing the rising costs of increased utilization.
If not, the one controllable component of medical trend – Utilization - will continue to drive up costs.
You need to seek a platform you can utilize to create a financial incentive for employees to understand their health, change their behavior and understand the cost of the services they seek.
The key to dampening medical trend increases will be focusing resources in areas that truly can have an effect on utilization over time.
True Consumer-Driven Health Plans have a process and a system to help you reduce utilization.
This PWC study highlights the importance of an informed and engaged consumer in the health care process.
To view the report, go to www.pwc.com and search Factors Fueling Rising Healthcare Costs.
Andy Malinoski is Vice President of Marketing and Communications for Vested Health. Joining Vested Health in January 2006, Malinoski is an advocate for consumer-driven plans based on real life experience with health care benefits professionally as an employer and personally as a father of three children. Andy oversees the account management, media relations and educational material development key to providing consumers information about how their health plan works and the benefits available to them through their Vested Health plan.