Smart employers refuse to let a bad economy stifle their efforts to stabilize their health care costs, according to the 14^th annual study on health care trends conducted by National Business Group on Health and Watson Wyatt. Best-performing employers saw a median health care cost trend of only 0.5% for 2008.

Overall, most U.S. employers can expect their health care cost trend to remain steady at 6% for 2009. Yet companies that struggle with reducing their health care costs — the poor performers — can expect to see their median cost trend hit 10.5% for 2009, up slightly from 10% in 2008.

Given that the best performers were able to cut their health care cost trend by half a percentage point from 1.0% in 2007 to 0.5% in 2008, “tells us that the best performers have differentiated themselves to even a greater degree from all others in terms of their ability to manage two years of annual trends,” said Theodore Nussbaum, director of group and health care consulting at Watson Wyatt.

Nussbaum and Helen Darling, president of the National Business Group on Health, presented the study’s findings last week at NBGH’s Business Health Agenda, which was held in the nation’s capital.

Watson Wyatt and NBGH studied 489 companies providing benefits to more than 8 million individuals. The survey was conducted from November 2008 to January 2009, and the survey participants spend more than $56 billion in health care expenses each year.

Some companies have aimed to hit a zero cost trend by the end of 2009, Nussbaum said. “Two years ago, we might have said that’s not a realistic goal, but with the best performers producing one-half of a percent of trend this year and 1% last year, it may not be a totally unrealistic goal, but whether it’s sustainable is another question,” he added.

The study shows that best-performing employers and companies that have managed their health care cost increases at or below the median cost trend of 6% take a broad approach to lowering health care costs by investing in many programs and strategies.

For example, these employers were more likely to focus on appropriate financial incentives, effective information delivery, metrics and evidence, quality care delivered efficiently and maximizing health and productivity.

It’s not any one of those tactics or a great performance in only one of those categories that drives results, explained Nussbaum. “Successful employers consistently do many things that are in each one those categories. That’s what produces the best results,” he added.

Nussbaum doesn’t buy the argument that some employers are more comfortable in making layoffs than making changes to their health care programs. “There are many companies that are reducing hours and days in order to keep their good workers. Past recessions have taught companies that it takes time to establish a strong employee-employer relationship,” he added. “It’s not a trade-off between making changes to your health care plan and making layoffs that is driving the unemployment rate.”

Additionally, there been a sense in the benefits community that employee cost-sharing is high enough, explained Darling of NBGH. Many layoffs reflect a fundamental restructuring of the U.S. economy, meaning that the jobs will never come back because of globalization.

“Some industries will shrink as much as 50%. The financial meltdown just accelerates the layoffs. Yet when you look at the overall data on the U.S. economy, employers, for the most part, have not reduced salaries and benefits,” she added.

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