July 1, 2009

When Cost-Cutting Increases Consumer Spending

Wayne Gllowac

Dean Halverson

There’s talk everywhere about people cutting spending in light of the economic downturn.

Except for one key area – employees who fear they’re loosing their health insurance coverage, if not their jobs.

According to a recent study from the International Foundation of Employee Benefit Plans, roughly 33% of employers have seen an increase in participants filling prescriptions and signing up for costly medical procedures.

It seems employees are trying to use it before they lose it.

Meanwhile, 35% of employers are increasing deductibles, co-insurance and co-pays, and 35% of employers are increasing employee premiums. Another 22.4% are either adding consumer-driven options or replacing their existing plan with a consumer-based structure. Close to 11% are considering changing coverage for spouses.

While these actions are intended to control health insurance costs, like all strong medicines they run the risk of unintended side effects.

One of these is fear. The more employees see management scrambling to cut costs, the more worried they can get. Some may even turn to the health care equivalent of hoarding, and get the care they can while the getting’s good.

Here’s the point for health care leaders – even cost-cutting strategies won’t necessarily have their desired effect unless they’re rolled out with an awareness of how consumers will respond.

For more information, check out this link.

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Submitted by May26MARCI on Mon, 08/29/2011 - 13:19.

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