Cost sharing in corporate benefit plans: the cases of Gulf Oil and DuPont.
In 1983 the Health Systems Management Center of Case Western Reserve University contracted with the Business Roundtable Health Initiatives Task Force to use BRT's survey of members as a guide to the top firms who had taken action regarding health care costs and more importantly, had also evaluated the cost implication of that action. The mandate was to draw together representative case studies on seven firms who met those criteria for use in BRT educational seminars and elsewhere. These cases may provide important insight for other companies which are contemplating action regarding their health care costs. They should also lead to further research on alternative actions available and the means of evaluation that should be considered. Most importantly they may provide some methodology for top management to choose among proposals for attacking this burgeoning corporate cost. Two of the case studies selected as representative were DuPont Corporation and Gulf Oil Corporation. Both DuPont and Gulf Oil, increased the level of cost sharing through copayments and deductibles and improved administrative efficiency by consolidating multiple plans into a limited set of options available to all employees nationally under an administrator chosen by competitive bid. Both plans were evaluated by projecting experience that might be expected under the former arrangements with consideration of biases due to adverse selection among options. This was compared with actual experience to reveal substantial savings in each case which should be replicable elsewhere under similar circumstances. Unfortunately, lack of suitable controls and comparisons limits the confidence in the precision of these evaluations.
D003669:Deductibles and Coinsurance; D006264:Health Benefit Plans, Employee / Q000191:economics*; D007221:Industry; D007348:Insurance, Health / Q000191:economics*; D014481:United States