Approximately 90 million Americans access health benefits through an employer-sponsored health plan. With health care costs increasing more than 15 percent annually, employers are burdened with shouldering the majority of the inflation in the health care system. The challenge of providing comprehensive coverage to their employees without going bankrupt has driven employers to find a solution to control the claim costs and bring health expenditures back to reasonable and predictable levels.

Most employees are unaware of the actual cost of health care because their health plan (largely paid for by their employer) covers most services at a co-payment or coinsurance level that is a fraction of their actual cost. If asked, most consumers would say a doctor's visit or a prescription costs $10 or $15 -- the co-payment. The true underlying cost is usually 5 or 10 times that amount. There is little reason to be a prudent consumer when the employee is so far removed from the actual cost.

Understanding that demand must be controlled, many employers are now exploring the option of Consumer-Driven Health Care, or CDHC, as a possible remedy for out-of-control costs. CDHC is a model that blends an employer-funded health care reimbursement account (HRA) with a high deductible PPO plan.

As an example, an employer provides its employees with a company-paid HRA, perhaps $1,000 in each employee account. Once an employee has used all of the money in his or her HRA, the employee must pay the remainder of the annual PPO deductible before the health plan will cover any other health care services received during the year. Once the employee has satisfied the annual PPO deductible, any other health care services he or she receives over the course of the year are covered by the PPO plan's coinsurance benefits.

In theory, re-engaging the consumer in the economic realities of true health care costs and expecting lower consumption levels is reasonable. The CDHC model does appear to be a step in the right direction. Unfortunately, the problems are too complex to be solved by product mix alone. Average consumers don't bear all the blame for medical inflation.

Helping employees understand the "real" cost of health care and teaching them to be wise consumers will not necessarily address many other factors driving health care inflation. These factors include cost shifting from the public to private sector, legislative mandates, new expensive life saving medical devices and new life-sustaining drug therapies.

There are no easy answers to the complex problem of rising health care costs. It is going to take an integrated approach of government, health plans, employers and consumers to tame the current inflation trend.

The government must provide fair and reasonable reimbursement levels to health care providers for the Medicare and Medicaid population. Until reimbursements are at reasonable levels, providers will continue to shift the cost to private payers. Likewise, health plans must continue to develop intense outreach and disease management programs to have an impact on the 10 percent of the population that consumes 80 percent of all claim dollars. Employers must establish plan designs that influence responsible consumer behavior.

CDHC may not solve all of the rising health care cost problems, but it is a step in the right direction for employers trying to have an impact in areas they can influence.

Pynes is a principal in Barney & Barney's Employee Benefits Department. For information, call (858) 550-4983 or e-mail shawnp@barneyandbarney.com.