Describe some measures that firms have taken to gain tighter management control over the cost of health care.

Question

What will be an ideal response?

Answer 1

Here are some measures that firms have taken to gain tighter management control over the cost of health care:

1. Band together with other companies to form a "purchasing coalition" to negotiate better rates with insurers. Such coalitions have become key cost-control devices for small businesses.
2. Analyze data on cost drivers, participation rates, and employee satisfaction to gain insight into benefits usage and costs. Here are some key questions to address. Cost drivers: What employee health conditions or behaviors are the most expensive? Health-plan providers and employers can then implement voluntary programs for affected groups, such as smoking-cessation programs. Participation rates: How many employees use wellness programs? Communicate the value of underused programs and consider implementing different ones. Satisfaction: How do employees rate their health plans or wellness benefits? That analysis could lead to changes in plan design or to new health-plan vendors.
3. Encourage the use of generic drugs. Fully 95 percent of companies offer prescription drug program coverage.
4. Audit the eligibility of dependents under company health plans. The goal is to remove ineligible people from the benefits rolls.
5. Use a managed-care approach. Managed care relies on a gatekeeper system of cost controls.
6. Adopt a consumer-driven health plan (CDHP). Such plans involve a high-deductible insurance plan combined with a health-care spending account from which unreimbursed health-care costs are paid.