Textron Turns to Consumer-Driven Health Care

With health-care costs soaring, something had to be done. So on January 1,2002, Textron Inc. rolled out a consumer-driven health plan for 1,600 of its36,000 U.S. workers. The multi-industry company, which is based in Providence,Rhode Island, extended the offering to 25,000 active and retired employees onJanuary 1, 2003.

    “Our employees and managers understood that it was prohibitively expensiveto continue to absorb double-digit increases in the cost of health care,” saysGeorge Metzger, vice president, human resources and benefits. “The typicalsolutions of decreasing benefits and increasing employee premiums were simplyunacceptable. Our research eventually brought us to consumer-driven health careas the `best-fit’ solution.”

    Textron chose consumer-driven health care because “we believe that apartnership between the company and our employees is the best way to slow risingcosts, while giving employees flexibility, financial incentives, and educationalsupport to help them make better-informed decisions about the type and qualityof the health care they elect,” Metzger says.

    Textron’s consumer-driven plan provides an annual personal account of $1,000for employee-only coverage, $1,500 for the employee plus one dependent, or$2,000 for the employee plus two or more dependents. When the account isexhausted, employees incur a deductible of $600, $900, or $1,200, depending onthe number of dependents covered. Once the annual deductible has been satisfied,insurance kicks in with 100 percent coverage for in-network services and 70percent for out-of-network services. Monthly premiums are $61 for an employee,$114 for an employee plus one dependent, and $160 for an employee plus two ormore dependents. Unused personal account balances roll over to the next year.

    To monitor and evaluate the effectiveness of the plan, “HR uses bothinternal and external resources to provide extensive retrospective dataanalysis, as well as predictive modeling,” Metzger says. “This analysis willenable us to forecast specific cost-drivers so that we can then develop focusedstrategies to address utilization.”

Workforce, February 2003, p. 38 — Subscribe Now!