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June 27, 2006
RESEARCH HIGHLIGHTS HEALTHCARE COST PRESSURES ON TEXAS EMPLOYERS; VALUED BENEFITS AT RISK IN THE WORKPLACE
Wellness Programs and Consumer-directed Healthcare Plans May be Underutilized Solutions
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Contacts:
| Anayo Afolabi
The Guardian Life Insurance Company of America
Tel: 212.598.8329
Fax: 212.919.2790
anayo_afolabi@glic.com
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CHICAGO, June 27, 2006 —The vast majority (82 percent) of Texas employers perceive healthcare benefits to be extremely or very important to recruiting and retaining employees, yet a majority also report a significant increase in healthcare costs over the previous year and rank reducing those costs as their top healthcare priority, according to independent research conducted by Opinion Research Corp and sponsored by The Guardian Life Insurance Company of America (Guardian) and Destiny Health.
The recent survey of 251 employers in Dallas, Houston, and Austin also revealed that employers are using a variety of strategies to cope with cost pressures, including cutting expenses in other areas of the business, increasing employee co-pays and deductibles, switching healthcare insurance providers, and trimming benefits, while still bearing the brunt of healthcare costs. Employer perceptions about wellness programs and consumer-directed healthcare plans, and their implementation among Texas businesses, indicate these may be underutilized solutions.
Fifty-nine percent of employers responding to the survey faced an increase in healthcare costs over the previous year, by an average of 14.7 percent. One in three employers ranked healthcare among their top three business expenses, and 52 percent ranked reducing healthcare costs as their top healthcare priority for 2006. Based on the survey mean, employers are paying $5,800 per employee for annual healthcare benefits.
Over the past three years, many Texas employers have had to increase employee co-pays (49 percent of respondents); deductibles (47 percent); and employee contributions to health insurance premiums (44 percent). More than three-quarters investigated alternative health insurance providers, and 49 percent made a change. One in five respondents reduced other spending to offset healthcare costs. Eighteen percent dropped healthcare benefits, and an additional 14 percent considered doing so. Benefits at highest risk included vision, prescription drug, and dental coverage. Seventy-five percent of employers still pay more than 50 percent of employee healthcare costs, and nearly 40 percent of companies pay more than 80 percent of costs-shares generally consistent with the prior year.
"Texas employers are seeking ways to provide the benefits employees value, while rising costs continue to stretch both company and employee resources," said Jim Carlough, Texas Regional Sales Manager for Destiny Health. "What's encouraging here is that finding new solutions is clearly a priority, and the market is only beginning to tap the potential of consumer-directed healthcare and incentive-based wellness programs."
The survey indicates that most companies (78 percent) are aware of the concept of consumer-directed health plans, which typically couple high deductibles with employee-managed health savings accounts. Fewer companies have investigated (56 percent) or implemented (15 percent) these plans, though the majority of employers who are aware of the concept and have an opinion about the impact of the plans believe they offer a better way to control health insurance premiums.
Similarly, 77 percent of surveyed employers said they were aware of wellness programs; 49 percent had investigated them; and only 27 percent had implemented a program, though 25 percent of those without a program planned to implement one within two years. Larger employers were more likely to have or be planning a wellness program. Half of employers with wellness programs rated them extremely or very successful, and some 15 percent did not have an opinion on their impact. Twenty-seven percent of those with wellness programs said they reduced healthcare costs.
"Consumer-directed health plans are most effective when they are combined with wellness programs and designed to motivate employees to make better choices," said John Ohe, Assistant Vice President, Group Medical for Guardian. "Guardian has a long history of providing employee benefits and financial services in the state of Texas. The introduction of Guardian's Destiny Health plan in Texas marks the next generation of healthcare solutions that go beyond the plain vanilla HSAs and high deductible accounts. Our health plan can truly give Texas employers cost relief and help them to attract and retain top talent with a high quality health benefit."
An alternative to traditional managed-care plans, Guardian's Destiny Health Plan enhances member health and supports true consumerism in healthcare by balancing comprehensive insurance coverage with resources and tools that empower and motivate members to make wise healthcare decisions and healthy behavior choices. A recent study found that active participants in its integrated wellness program, Vitality, experienced an average 15% reduction in healthcare costs over a three-year period. Guardian's Destiny Health Plan became available in the Texas marketplace in early 2006.
About The Destiny Health Plan in Alliance with Guardian
Destiny Health and The Guardian Life Insurance Company of America joined forces in 2003 to offer affordable, comprehensive consumer-directed healthcare coverage to employers fighting the battle against ever-increasing healthcare costs. As one of the nation's largest mutual life insurance companies, Guardian is the employee benefits carrier of choice for more than 120,000 companies and 6 million individuals across the country. Destiny Health brings more than 10 years of international experience in the consumer-directed marketplace to the partnership. The Guardian and Destiny Health alliance creates a synergy that complements Destiny Health's proven record of innovation with Guardian's reputation and experience, resulting in the first significant, national consumer-directed healthcare option that offers cost control, high-quality care and real consumer choice. The Destiny Health Plan is marketed by Guardian in Illinois, Virginia, Washington, D.C., Maryland and Texas. For more information on the alliance visit www.glic-destiny.com. Guardian and Destiny Health can be found on the web at www.guardianlife.com and www.destinyhealth.com
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