Companies Looking to Cut Healthcare Costs

Mar 12, 2010
George Anderson

By George Anderson

No surprise; employers are looking to cut healthcare costs. That’s the finding
of CVS Caremark’s annual survey of employers’ priorities for pharmacy benefit
management services in 2010.

According to the research, 94 percent of employers are looking for opportunities
to save even more on employee healthcare programs while, perhaps unrealistically,
seeking to “improve the overall member experience.”

“The economic environment continues to impact companies this year, with 66
percent telling us that reducing overall health care costs is their number
one success measure,” said Jack Bruner, executive vice president, strategic
development, Caremark Pharmacy Services. “Employers tell us they are looking
for more aggressive solutions to increase generic utilization and manage specialty
pharmacy costs, while also focusing on programs to increase medication adherence
and manage chronic diseases.”

In terms of managing costs, 48 percent of employers are considering plans
that require generic medication equivalents to be used in place of branded
drugs. Fifty-six percent are considering waiving a co-payment for members who
use generics instead of brand medications.

Employers are also seeking to increase medication adherence to avoid the
added costs that often occur when people do not take drugs prescribed to deal
with chronic illnesses.

Discussion Questions: Is it within the power of businesses
to cut their healthcare costs without
cutting benefits to employees? How successful have pharmacy benefit management
services been in actual cost reduction for businesses?

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8 Comments on "Companies Looking to Cut Healthcare Costs"

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Bob Phibbs
11 years 1 month ago

Missing from this piece are the simple but very important things HR is doing to lower risk. I’ve seen a proliferation of messages in break rooms, conference rooms and emails reminding employees to wash their hands, if they don’t feel well to not come to work and even how to take care of a sick family member. The old adage, an ounce of prevention is worth a pound of cure, can translate into major savings.

Doron Levy
Doron Levy
11 years 1 month ago

Force retail associates take their breaks. I’ve seen too many run-down employees because they are constantly bogged down with duties that they self sacrifice their own break time to get the job done. When I was a manager, I would love that and reward employees accordingly.

Unfortunately the long term effect on productivity is apparent. There is a reason we only work 40 hours a week with a lunch break during the day. Retail is a hard game to fight and there has to be that rest period for associates to recuperate and re-energize. Now I tell management to schedule breaks and force employees to go on rest periods when they should. Got vending machines at your place of work? Time to replace the Ho-Ho’s with bananas and turkey on whole wheat. Pop machines should be taken out back and exploded.

Ben Ball
11 years 1 month ago

Not in our experience. Unless you are willing to take on enough young employees to avoid being ‘age banded’ by the insurance companies.

And we don’t see any relief in current proposals being debated either.

Janet Dorenkott
Janet Dorenkott
11 years 1 month ago

As a business owner, I am fed up with the increased cost of insurance. Every year, since inception, we have seen outrageous increases. This year it went up 22%. A few years back it actually increased 42%. But every year for fourteen years there has been a double digit increase.

We do everything we can to keep our employees healthy including paying for their gym memberships. But this doesn’t keep kids from getting sick or someone from getting cancer. I don’t want the government handling healthcare, but I do think they should do a few simple things like open up competition across state lines and cap the increases that insurance companies can charge. That would solve the bulk of the problem.

David Livingston
11 years 1 month ago

I’m not complaining. Our premiums went down 14% this year on the same coverage. All this nonsense talk about taking generics instead of brand name. That’s been the policy at most companies now for decades. That cost has already been cut twenty years ago. I never had a health insurance policy that allowed or paid for brand name drugs unless it was the only one available. While some generics are not available in the USA, we need to open up the borders and bring these generics in from Canada and India where they are available.

Anytime I started a new job, I was required to take a complete physical. Companies need to do this more in hiring and require full disclosure of pre-existing illnesses, of both the employee and immediate family members. Otherwise they are on the hook for extra health care costs.

Both of my last corporate employers were self-insured and neither of them were taking strong enough measures to maintain a healthier work force.

Gene Detroyer
11 years 1 month ago

There is a solution. The rest of the world uses it. Business drops all healthcare as benefit.

How often we talk out of both sides of our mouth. We can’t be competitive because our healthcare benefits are so expensive and those companies we are competing with worldwide don’t have such costs. Why don’t we just drop the benefit? Let people pay for it themselves. That is what they did 60 years ago.

We all know where that leads, but the reality is that business today is global and this country has to compete on a global basis. It seems in healthcare, we want to have our cake….

David Livingston
11 years 1 month ago

Gene makes a great point. Twenty years ago my employer provided key people with an auto to drive. Then it got to be expensive to provide a free vehicle and car insurance. Too much liability with execs drinking and driving. So instead they just gave us a car allowance of $300-400 a month and told us to get our own car and auto insurance. Good drivers made out and pocketed some tax free cash. Bad drivers lost a benefit they had been abusing.

Let’s do the same with health insurance. Give employees an allowance to buy their own. Healthy people might make out well, sick people will pay more, and some will choose no insurance, pocket the cash and take their chances. If employers got out of the health care business it would save a lot of overhead and eliminate redundant HR positions.

Cathy Hotka
11 years 1 month ago

There should be significant pity for companies wrestling with this issue; they can’t win no matter what they do. The country is going to have to man up and think through a way to fix this, instead of posturing and finger pointing.


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