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Implementing Cost Controls Over Runaway Health Benefit Expenses

April 10, 2008

Analysis of:As Healthcare Spending is Predicted to Exceed 4 Trillion in Less Than 10 Years, Technology will be Called upon to Stem the Tide | biz.yahoo.com

Health care expenses are rising at an alarming rate.  From 2000 until 2006, the inflation rate for medical care in the United States increased nearly 35%.  And even worse, health insurance premiums rose 78% during the same period.  At the same time, wages were up only 20%. Most employers and benefit plan sponsors do an excellent job controlling their direct human labor wage expenses.  But, controlling benefit costs, whether the benefit plan is self-funded, with the employer or plan sponsor bearing the health benefits cost, or insured, with the employer or plan sponsor paying insurance premiums, is far more complex.  Health benefits are a major operating expense for most companies and plan sponsors.  Yet, very few employers and plan sponsors know how well their third party administrator (TPA) is performing.  Employers and plan sponsors very seldom have appropriate safeguards functioning to verify that their money is being handled properly in their best interests.

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