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Posts Tagged ‘The Manhattan Institute’

CDHP Potential on Public Sector Healthcare Savings

The Wall Street Journal recently reported on the increasing healthcare cost burden shouldered by state and local governments. While the private sector has restructured employee contributions and shifted more toward consumer-driven health plans (CDHPs), a vast majority of the public sector has resisted passing the buck – government employees pay on average 15 percent of premiums with some states requiring no contribution. The Manhattan Institute, a well-known organization dedicated to individual choice and responsibility, estimated that governments could save $1,376 per employee by following the private-business model.

Realizing the power of CDHPs, states like Indiana have begun offering options with lower premiums and empowering employees to take on more responsibility for the cost of care. An astonishing 70 percent of employees moved to these plans, and a study by Mercer Consulting estimated that the state’s move saved Indiana’s taxpayers $23 million. Multiply that savings opportunity nationwide – and there are more than 18 million government employees in the U.S. today – and the overall savings potential is astronomical. A trend toward CDHP is likely to continue given the financial pressure the U.S. is under when it comes to health care. This perspective is certainly validated by the fact that 23 states already offer these types of plans, and a growing number of states are now pushing into the 40+ percent cost sharing category per a 2011 study published by the Segal Company.

What’s exciting is that the potential savings of moving to CDHPs at the government and state level can be enhanced once employees are empowered with the right information to understand how to intelligently shop for their healthcare. The example of an employee like TaKeisha Woodson should and can be replicated across every public-sector employee. As the U.S. Postal Service and other state and local government entities join the heated debate over rising healthcare costs, change is certainly on its way …