Status Quo Solutions For Status Quo Health Plans

Cost Containment Strategies Haven’t Changed In 18 Years

This 2004 report by the State of Texas outlines strategies employed towards controlling rising medical costs that haven’t changed since. The solution? Reduce benefits and cost shift to plan members.

“The measures that the Employees Retirement System (ERS) and the Teacher Retirement System (TRS) have implemented to reduce the amount the State pays for its health care plans have generally worked as intended. These measures primarily consisted of plan design changes that shifted medical costs from the State to members.“

This 2004 report provides a lot of information to be gleaned from this. For example TPA administration fees are about 5% of total spend. Rx rebates are 5% of total Rx spend (the report states the rebates earned are only a portion of total rebates and the total is greater but unknown due to PBM’s proprietary contracting).