Consumer-driven health insurance: can anyone control your health-insurance rates? Maybe! (Employee Benefits).

• Author: Day, David

Over the past decade, health-insurance premiums have increased five, 10 and sometimes 20 times the rate of inflation. Why the significant increases every year? The easy way out is to blame doctors, pharmacists and hospitals, but they are only part of the problem. You and your employees are also at fault.

For far too long, employees have been using their health insurance with little regard for real costs. They don't think of it as their money being spent. To them, it's the insurance company s money so they end up overusing their health insurance to get everything they think they are entitled to. In reality, the money being spent is theirs.

It is this "use it or lose it" mentality that has somehow changed health insurance into a "health benefit." It's not insurance anymore. Insurance protects against an unexpected loss.

Think of your car insurance. Does it cover oil changes? What about a car-wash rider or new tire and gas coverage? If you could add these options to your coverage, how would that coverage be priced? Well, the insurance company would estimate your usage, then add 25 to 35 percent and that would be your premium. The next year they would look at your actual claims (i.e. your gas receipts, etc.) and your premiums would be adjusted accordingly.

So how does one change this trend of double-digit health premium increases? You, the employer, have to take control. Just like you control the other aspects of your business, you have to take control of your health-insurance plan or your premiums will continue to increase uncontrollably.

An answer is Consumer-Driven Health Insurance. Put some of the responsibility back on the employee.

How does Consumer-Driven Health Insurance work? The employer selects a health-insurance product with a somewhat high deductible, typically $1,000, $2,500, $5,000 or even $10,000. Because the deductible is higher, the premiums will be lower. You then take the difference that would have gone to the insurance company and you put it into a Health Reimbursement Account (HRA) for the...