HSAs of Little Account – Ginsburg

IN THIS ISSUE:


? Commonwealth Fund Distorts Employer Attitudes

? HSAs of Little Account – Ginsburg

? NBGH/Watson Wyatt Survey Predicts Tripling of Enrollment

? The Promise of CD Health in Philadelphia, March 15-16

? CDHCC Conference in Las Vegas, March 29-31

Commonwealth Fund Distorts Employer Attitudes


The findings in the latest Commonwealth Fund study, “Job-Based Health Insurance in the Balance: Employer Views of Coverage in the Workplace,” shouldn’t be taken at face value. The Fund suggests that the big news is that employers themselves support an employer mandate. The press release’s first paragraph says, “Employers strongly support providing health coverage for their workers, with a majority even backing a mandate that companies either provide such benefits or pay into a fund to cover the uninsured?” WOW! A majority of employers support mandatory coverage?!?! And in the report itself, it says, “Among the policy options presented to them, a majority of employers expressed interest in new group insurance options that would require them to make premium contributions for their employees.” YIKES! How can that be?


It can’t be, and it isn’t true. The only way Commonwealth was able to get such a result was by limiting the “policy options presented” to two – “Expand public insurance” or “Require employers to offer benefits or contribute to the cost.” No other option was available. This is like giving someone the option of death by hanging or death by drowning, and announcing, “56% of all people want to die by drowning!” But of course, the truth is buried back in the data tables, which very few people will bother to read.


Other data from the Commonwealth survey included:

? Employers have strong support for, and willingness to cooperate with, the administration of tax credits for workers. 83% would be willing to “reduce an eligible employee’s withholding tax by the amount of a tax credit,” and 77% would be willing to “collect a tax credit and apply it to an employee’s share of their health insurance premium.”

? 53% of employers who currently offer coverage would support “federal premium assistance to pay 60% – 75% of COBRA.”

? 93% would be “willing to provide employees with information about applying to Medicaid and CHIP,” while 75% would be willing to use payroll withholding to make premium contributions to Medicaid/CHIP.

? 86% of employers think it is important to “share in the cost of health insurance for employees” either by providing coverage or making a contribution to the costs.

SOURCE: http://www.cmwf.org/programs/insurance/collins_job-basedinbalance_ib_718.pdf

HSAs of Little Account — Ginsburg


Paul Ginsburg, president of the Center for Studying Health System Change, has written a critical article about HSAs for “Modern Healthcare,” titled “Tax-free But of Little Account.” He makes some good points, such as that the IRS prohibition on “stacked” deductibles means that a family must incur at least $2,000 in expenses before coverage kicks-in, even when only one family member is using services. That was a regulatory mistake dating back to the Clinton-era IRS interpretation of Archer MSAs. It would be better for the family deductible to be a multiple of individual deductibles.


But Mr. Ginsburg uses this problem to dismiss the potential of HSAs in the market, preferring instead the tiered co-pay approach many employers have adopted, especially for prescription drugs, but increasingly for hospital services as well. He says that “leading-edge employers and insurers are avoiding the use of large deductibles. Instead, they are developing financial incentives to steer patients to efficient providers?.” I’m not sure what “leading-edge” means, but the fact is, while tiered copays are fairly common for drugs, they are not for hospital and physician services. Only about 5% of HMO and PPO enrollees are subject to them, according to KFF’s most recent survey of employer health plans. And employers everywhere are increasing deductibles, coinsurance, copays, and premium shares for employees. When comparing HSAs to other types of health plans, one has to look at the total out-of-pocket obligation, not just deductibles.


But there is another problem that Mr. Ginsburg ignores, and that is that any form of tiered copay may indeed “steer” patients to certain providers, but it continues to insulate them from the true cost of the care provided and fails to address the underlying dynamic of a failed system of third-party payment and third-party rationing. People in the field selling HSAs report the greatest selling point is not whatever savings may accrue, but the increased information and control the plans offer. People are tired of being “steered” by faceless bureaucrats with suspect motives. They will do their own steering, thank you. That is the genie that is being released and it is not about to get shoved back into the bottle.

SOURCE: http://www.hschange.org/CONTENT/653/

NBGH/Watson Wyatt Survey Predicts Tripling of Enrollment


Certainly one place to find “leading-edge employers” is in the National Business Group on Health (formerly the Washington Business Group on Health). And they seem to be quite comfortable, even enthusiastic, abut consumer driven health care. They conducted a survey with the Watson Wyatt consulting group on employer attitudes and activities in this arena. The survey finds that 32% of large employers plan to offer a consumer driven plan next year, up from the 21% currently offering such coverage. They also expect enrollment to triple in 2004. 76% of employers offering such a plan “said employee enrollment in the first year of the program was either at or above the expected level,” according to the press release, with enrollment ranging from 1% to 33% of eligible employees. NBGH President Helen Darling said, “[E]mployers can introduce these plans with greater success if they communicate them effectively.” Employers who have not offered consumer driven plans were asked why, and 29% said there isn’t enough experience yet and 20% doubted they would effectively manage costs. But Watson spokesman Ted Chien said, “[W]ith the creation of Health Savings Accounts, employers should take the time now to determine whether a consumer directed health plan is right for their organization. HSAs may be the added ingredient that makes consumer-directed plans right for more organizations.”


The survey will be released at NBGH’s annual conference March 17 – 19 in Washington. Consumer driven plans will be a major focus of the conference and Galen President Grace-Marie Turner will be one of the speakers, along with representatives of many “leading-edge” companies who have implemented consumer driven plans.

SOURCE: for a copy of the press release on the survey go to: http://www.watsonwyatt.com/news/press.asp?ID=12928

For information on the conference go to http://www.wbgh.com or call 202-624-1763.

The Promise of CD Health in Philadelphia, March 15-16


While we’re on the subject of upcoming conferences, I am chairing, and Grace-Marie is speaking at, the conference on “The Promise of Consumer Driven Health,” at the Sheraton Society Hill in Philadelphia, PA March 15-16. This conference, too, will attract “leading-edge” employers from all across the country. I’ll report on it next week, but if you want to check out the agenda, go to the Strategic Research Institute’s web site.

SOURCE: http://www.srinstitute.com/innovation

CDHCC Conference in Las Vegas, March 29-31


Grace-Marie and I will also be moderating a number of panels at the Spring Consumer Directed Health Care Conference in Las Vegas, March 29 – 31. These conferences are organized by The Emergent Group, and have become landmark events in the whole movement. This is the fourth one I’ve been involved in and they, too, attract a ton of “leading-edge” employers.

SOURCE: http://www.cdhcc.com

Please send all comments/questions directly to me at gmscan@aol.com.


“Consumer Choice Matters” is a free weekly newsletter published by the Galen Institute, a not-for-profit public policy organization specializing in research and education on health policy. Visit our website at http://www.galen.org for more information.


If you wish to subscribe/unsubscribe or update your address, please send an e-mail to galen@galen.org.






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About the author

IN THIS ISSUE:


? Commonwealth Fund Distorts Employer Attitudes

? HSAs of Little Account – Ginsburg

? NBGH/Watson Wyatt Survey Predicts Tripling of Enrollment

? The Promise of CD Health in Philadelphia, March 15-16

? CDHCC Conference in Las Vegas, March 29-31

Commonwealth Fund Distorts Employer Attitudes


The findings in the latest Commonwealth Fund study, “Job-Based Health Insurance in the Balance: Employer Views of Coverage in the Workplace,” shouldn’t be taken at face value. The Fund suggests that the big news is that employers themselves support an employer mandate. The press release’s first paragraph says, “Employers strongly support providing health coverage for their workers, with a majority even backing a mandate that companies either provide such benefits or pay into a fund to cover the uninsured?” WOW! A majority of employers support mandatory coverage?!?! And in the report itself, it says, “Among the policy options presented to them, a majority of employers expressed interest in new group insurance options that would require them to make premium contributions for their employees.” YIKES! How can that be?


It can’t be, and it isn’t true. The only way Commonwealth was able to get such a result was by limiting the “policy options presented” to two – “Expand public insurance” or “Require employers to offer benefits or contribute to the cost.” No other option was available. This is like giving someone the option of death by hanging or death by drowning, and announcing, “56% of all people want to die by drowning!” But of course, the truth is buried back in the data tables, which very few people will bother to read.


Other data from the Commonwealth survey included:

? Employers have strong support for, and willingness to cooperate with, the administration of tax credits for workers. 83% would be willing to “reduce an eligible employee’s withholding tax by the amount of a tax credit,” and 77% would be willing to “collect a tax credit and apply it to an employee’s share of their health insurance premium.”

? 53% of employers who currently offer coverage would support “federal premium assistance to pay 60% – 75% of COBRA.”

? 93% would be “willing to provide employees with information about applying to Medicaid and CHIP,” while 75% would be willing to use payroll withholding to make premium contributions to Medicaid/CHIP.

? 86% of employers think it is important to “share in the cost of health insurance for employees” either by providing coverage or making a contribution to the costs.

SOURCE: http://www.cmwf.org/programs/insurance/collins_job-basedinbalance_ib_718.pdf

HSAs of Little Account — Ginsburg


Paul Ginsburg, president of the Center for Studying Health System Change, has written a critical article about HSAs for “Modern Healthcare,” titled “Tax-free But of Little Account.” He makes some good points, such as that the IRS prohibition on “stacked” deductibles means that a family must incur at least $2,000 in expenses before coverage kicks-in, even when only one family member is using services. That was a regulatory mistake dating back to the Clinton-era IRS interpretation of Archer MSAs. It would be better for the family deductible to be a multiple of individual deductibles.


But Mr. Ginsburg uses this problem to dismiss the potential of HSAs in the market, preferring instead the tiered co-pay approach many employers have adopted, especially for prescription drugs, but increasingly for hospital services as well. He says that “leading-edge employers and insurers are avoiding the use of large deductibles. Instead, they are developing financial incentives to steer patients to efficient providers?.” I’m not sure what “leading-edge” means, but the fact is, while tiered copays are fairly common for drugs, they are not for hospital and physician services. Only about 5% of HMO and PPO enrollees are subject to them, according to KFF’s most recent survey of employer health plans. And employers everywhere are increasing deductibles, coinsurance, copays, and premium shares for employees. When comparing HSAs to other types of health plans, one has to look at the total out-of-pocket obligation, not just deductibles.


But there is another problem that Mr. Ginsburg ignores, and that is that any form of tiered copay may indeed “steer” patients to certain providers, but it continues to insulate them from the true cost of the care provided and fails to address the underlying dynamic of a failed system of third-party payment and third-party rationing. People in the field selling HSAs report the greatest selling point is not whatever savings may accrue, but the increased information and control the plans offer. People are tired of being “steered” by faceless bureaucrats with suspect motives. They will do their own steering, thank you. That is the genie that is being released and it is not about to get shoved back into the bottle.

SOURCE: http://www.hschange.org/CONTENT/653/

NBGH/Watson Wyatt Survey Predicts Tripling of Enrollment


Certainly one place to find “leading-edge employers” is in the National Business Group on Health (formerly the Washington Business Group on Health). And they seem to be quite comfortable, even enthusiastic, abut consumer driven health care. They conducted a survey with the Watson Wyatt consulting group on employer attitudes and activities in this arena. The survey finds that 32% of large employers plan to offer a consumer driven plan next year, up from the 21% currently offering such coverage. They also expect enrollment to triple in 2004. 76% of employers offering such a plan “said employee enrollment in the first year of the program was either at or above the expected level,” according to the press release, with enrollment ranging from 1% to 33% of eligible employees. NBGH President Helen Darling said, “[E]mployers can introduce these plans with greater success if they communicate them effectively.” Employers who have not offered consumer driven plans were asked why, and 29% said there isn’t enough experience yet and 20% doubted they would effectively manage costs. But Watson spokesman Ted Chien said, “[W]ith the creation of Health Savings Accounts, employers should take the time now to determine whether a consumer directed health plan is right for their organization. HSAs may be the added ingredient that makes consumer-directed plans right for more organizations.”


The survey will be released at NBGH’s annual conference March 17 – 19 in Washington. Consumer driven plans will be a major focus of the conference and Galen President Grace-Marie Turner will be one of the speakers, along with representatives of many “leading-edge” companies who have implemented consumer driven plans.

SOURCE: for a copy of the press release on the survey go to: http://www.watsonwyatt.com/news/press.asp?ID=12928

For information on the conference go to http://www.wbgh.com or call 202-624-1763.

The Promise of CD Health in Philadelphia, March 15-16


While we’re on the subject of upcoming conferences, I am chairing, and Grace-Marie is speaking at, the conference on “The Promise of Consumer Driven Health,” at the Sheraton Society Hill in Philadelphia, PA March 15-16. This conference, too, will attract “leading-edge” employers from all across the country. I’ll report on it next week, but if you want to check out the agenda, go to the Strategic Research Institute’s web site.

SOURCE: http://www.srinstitute.com/innovation

CDHCC Conference in Las Vegas, March 29-31


Grace-Marie and I will also be moderating a number of panels at the Spring Consumer Directed Health Care Conference in Las Vegas, March 29 – 31. These conferences are organized by The Emergent Group, and have become landmark events in the whole movement. This is the fourth one I’ve been involved in and they, too, attract a ton of “leading-edge” employers.

SOURCE: http://www.cdhcc.com

Please send all comments/questions directly to me at gmscan@aol.com.


“Consumer Choice Matters” is a free weekly newsletter published by the Galen Institute, a not-for-profit public policy organization specializing in research and education on health policy. Visit our website at http://www.galen.org for more information.


If you wish to subscribe/unsubscribe or update your address, please send an e-mail to galen@galen.org.






SHARE THIS ARTICLE

About the author