Report From the Road

IN THIS ISSUE:

? Report From the Road

? Consequences ? Frightening or Exhilarating?

? Florida State Employees to Get HSAs

? Kentucky State Employees to Get CD Health

? HSAs Help the Uninsured in North Carolina

? Detroit News Sees HSAs as Part of Solution

? Destiny Health Expanding to Mid-Atlantic

? Fiducial ? HSAs to be Dominant Form of Financing

? Aetna Offers Retirement Reimbursement Accounts

? Mellon Offers Fully Integrated HSA

? State Farm Bank Announces HSA Product

Report From the Road


I apologize for letting the newsletter slip for the past two weeks. The travel schedule finally caught up with me. It isn’t just the trips themselves, but this year seems worse than normal for thunderstorms, flight delays, and even diversions to other airports. Sitting on the tarmac for four hours, three or four times a week is not conducive to getting the publication out.


But the travel is worth it. I get to hear first hand what is happening out in the world. Consumer driven health generally, and HSAs specifically, are taking off. People who have been around a long time expect this approach to be adopted by the market far faster than HMOs were in the 1970s and 1980s. Serious, credible people are saying HSAs will have half the market in five or six years. The product development process is a wonder to behold. Everyone seems to be working on a product or a service to accommodate the newly empowered health care consumer. Banks, mutual funds, credit unions, insurers, brokers, TPAs, software companies, HR outsourcing firms, employers both large and small, independent physicians and physician groups, disease management companies, patient education and wellness programs, specialty hospitals, and ambulatory surgery centers – all are actively working on some form of response to a new environment.


Well, not all. There is also a growing backlash from organizations that see their power and influence threatened. The heath care establishment isn’t happy with this trend of the great unwashed making more of their own decisions. I’ve had a number of discussions lately with people who say, “Consumer driven health care is great, but cash accounts just get in the way of what needs to be done.” Say, whaaaa? These folks would like to define “consumer driven health care” as the elite dictating what people should do and providing incentives to make them do it. So, they would pay people a bonus for complying with wellness programs. They would lay out practice protocols (based on “evidence-based medicine,” of course) and penalize physicians who don’t comply. They believe the elite should define what are “basic benefits” that everyone would have to buy. They argue that people can’t be allowed to control their own resources until they are well-educated. The source of the education would be – them.


For instance, I recently participated in a discussion that was considering how to measure “quality” in health care and how to make those quality measurements available to individual consumers. There was much discussion of all the efforts around this — all the agencies, professional organizations and private businesses that are trying to get a handle on it. One person said the government should step in and decide what aspects should be measured and by whom. I disagreed, arguing that this is precisely the kind of situation that markets are good at sorting out – let a thousand blossoms bloom and over time some will be seen as working better and others will fail. The successful ones will be refined as new information becomes available. I think my view prevailed at the end of the day, but that was just one meeting in one location.

Consequences – Frightening or Exhilarating?


Another example might be an article called “The Hidden Costs of Consumer-Driven Health Plans,” by Ryan Gish in “Hospitals and Health Networks.” Mr. Gish ticks off a list of consequences that may be seen as scary if you are fat and happy, but liberating if you are interested in change. He says, “The underlying economics of the consumer-driven health plans have significant implications for providers. They have the capability to transform everything from pricing to quality reporting to physician relations.” On pricing he says, “If you thought that HMOs squeezed prices, wait until consumers take the wheel … It won’t be long before hospitals and physicians alike are asked for a ‘menu’ of services and list prices.” On quality – “Once consumers pay for their own medical care, they will demand quality indicators to determine the ‘value’ they receive … Health care ‘insiders,’ including hospitals, physicians and insurers, will have missed the opportunity to set the standard for quality reporting and influence its interpretation.” On physician relations – “Physicians may begin asking hospitals a new question: ‘Why are your services so expensive? My patient wants to go to a less expensive facility.'” Mr. Gish is exactly right. The question is, do you see this change as frightening or exhilarating?

SOURCE: http://www.hospitalconnect.com/hhnmag/jsp/articledisplay.jsp?dcrpath=AHA/PubsNewsArticle/data/040420HHN_Online_Gish&domain=HHNMAG

Florida State Employees to Get HSAs


Meanwhile, ready or not, here it comes. The “Tallahassee Democrat” reports that HSAs may become available next year to Florida state employees and their dependents. Governor Jeb Bush also expects HSAs to “become an affordable? alternative? for the 3 million Floridians who lack health coverage,” according to the article by Diane Hirth. The article also reports that, “A health insurance reform package passed by the legislature this year? requires insurers to offer HSAs, along with traditional coverage, to businesses.” The article quotes Coral Gables business owner Michael Rich as saying, “We saved no less than one million dollars” by switching to HSAs.

SOURCE: The article ran on May 14 and the paper’s archives go back only seven days. Contact the reporter at dhirth@tallahasse.com or 850-671-6546.

Kentucky State Employees to Get CD Health


The state of Kentucky is also entertaining new proposals to cover its 229,000 state and university employees. Governor Ernie Fletcher is quoted as saying, “This will make Kentucky’s employee health care a more competitive, consumer-driven system.” The article goes on to say the state currently pays 100% of premium for workers, but nothing for dependents. The new RFP will require workers to pay some of their own costs but also contribute to the coverage of family members.

SOURCE: This was originally an AP story that I can’t find on the web, but Governor Fletcher’s news release is at http://kentucky.gov/Newsroom/GOV_OFFICE/20040429RFP.htm

HSAs Help the Uninsured in North Carolina


A group in Winston-Salem, North Carolina is pushing HSAs and purchasing pools as ways to help the uninsured, according to an article in the “Winston-Salem Journal.” The group was founded by executives with Wake Forest University Baptist Medical Center and Novant Health, and joined by several Forsyth County public service agencies and advocacy organizations. They say HSAs could cut insurance premiums in half.

SOURCE: http://www.journalnow.com/servlet/Satellite?pagename=WSJ%2FMGArticle%2FWSJ_ColumnistArticle&c=MGArticle&cid=1031775441157&rendermode=preview&path=!opinion!editorials&s=1037645509188

Detroit News Sees HSAs as Part of Solution


“The Detroit News” also sees HSAs as part of the solution for the uninsured. An editorial says a problem is that individual coverage often costs twice as much as it would in a group setting, but “the new health savings accounts that were included in the Bush administration’s prescription drug program will help.” The piece adds that “the health care system must aggressively attack the rising cost of care, and consumers must do their part to keep down costs.”

SOURCE: http://www.detnews.com/2004/editorial/0405/13/a10-151259.htm

Destiny Health Expanding to Mid-Atlantic


Destiny Health, working with Guardian, will soon be offering consumer driven health plans in Maryland, Virginia and the District of Columbia. Destiny CEO Scott Spiker is quoted as saying, “We are motivating employees to change their behaviors, which in turn lowers costs and makes possible premium increases that are well below the industry average.” He adds the company has seen 47% of plan members asking for lower-cost prescriptions, 41% say they are taking better care of themselves, and 37% say they have improved their preventive care regimen.

SOURCE: Contact Ellen Rochford at 773-463-2480.

Fiducial – HSAs to be Dominant Form of Financing


“Health & Medicine Week” reports that experts at Fiducial are predicting HSAs will be the dominant form of health care financing in 5 – 10 years. The article notes that Assurant (formerly Fortis) is seeing “very strong interest and response from both insurance agents and then consumers.” And CareFirst Blue Cross and Blue Shield is adding HSAs to its offering for individuals as well as small and large groups. Spokeswoman Cindy Otley says, “We think the market is steadily going to move in this direction?”

SOURCE: This was published in the May 3 edition, but is not available on-line.

Aetna Offers Retirement Reimbursement Accounts


Aetna has announced a new program called “Retirement Reimbursement Accounts” (RRAs) aimed at the problems employers face in funding retiree health benefits. Accounting rules have made it all but impossible for employers to offer retiree health benefits on anything but a defined contribution basis. Aetna’s RRA should help by allowing employers to prefund these benefits as well as continue to contribute post-retirement. Retirees may spend the funds on any 213(d) qualified expense, including premiums for Medicare and Medigap plans.

SOURCE: Contact Elizabeth Sell at 215-775-5523 or selle@aetna.com.

Mellon Offers Fully Integrated HSA


Mellon Financial has announced a “fully integrated HSA” product that will be available on a private-label basis to insurers as well as directly to corporate clients. The package includes an interest-bearing checking account and investment accounts. Funds may be accessed with paper checks or with a MasterCard debit card. Mellon had a head start in developing this HSA product due to its early experience with MSAs.

SOURCE: http://www.mellon.com/pressreleases/2004/pr042204.html

State Farm Bank Announces HSA Product


State Farm Bank is also offering HSAs, according to “The American Banker.” It will sell the products through the State Farm Insurance distribution network of 16,500 agents. The company wasn’t sure how to price the service, but settled on a $25 annual fee and interest rates based on the amount of balance in the account. The HSAs will be money market accounts accessed with paper checks. The article quotes bank president Stan Ommen as saying, “We’re committed to it. Based on what we’ve seen, there is a big market.”

SOURCE: This was published in the April 30 edition of the “American Banker,” but is not available on-line.

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

IN THIS ISSUE:

? Report From the Road

? Consequences ? Frightening or Exhilarating?

? Florida State Employees to Get HSAs

? Kentucky State Employees to Get CD Health

? HSAs Help the Uninsured in North Carolina

? Detroit News Sees HSAs as Part of Solution

? Destiny Health Expanding to Mid-Atlantic

? Fiducial ? HSAs to be Dominant Form of Financing

? Aetna Offers Retirement Reimbursement Accounts

? Mellon Offers Fully Integrated HSA

? State Farm Bank Announces HSA Product

Report From the Road


I apologize for letting the newsletter slip for the past two weeks. The travel schedule finally caught up with me. It isn’t just the trips themselves, but this year seems worse than normal for thunderstorms, flight delays, and even diversions to other airports. Sitting on the tarmac for four hours, three or four times a week is not conducive to getting the publication out.


But the travel is worth it. I get to hear first hand what is happening out in the world. Consumer driven health generally, and HSAs specifically, are taking off. People who have been around a long time expect this approach to be adopted by the market far faster than HMOs were in the 1970s and 1980s. Serious, credible people are saying HSAs will have half the market in five or six years. The product development process is a wonder to behold. Everyone seems to be working on a product or a service to accommodate the newly empowered health care consumer. Banks, mutual funds, credit unions, insurers, brokers, TPAs, software companies, HR outsourcing firms, employers both large and small, independent physicians and physician groups, disease management companies, patient education and wellness programs, specialty hospitals, and ambulatory surgery centers – all are actively working on some form of response to a new environment.


Well, not all. There is also a growing backlash from organizations that see their power and influence threatened. The heath care establishment isn’t happy with this trend of the great unwashed making more of their own decisions. I’ve had a number of discussions lately with people who say, “Consumer driven health care is great, but cash accounts just get in the way of what needs to be done.” Say, whaaaa? These folks would like to define “consumer driven health care” as the elite dictating what people should do and providing incentives to make them do it. So, they would pay people a bonus for complying with wellness programs. They would lay out practice protocols (based on “evidence-based medicine,” of course) and penalize physicians who don’t comply. They believe the elite should define what are “basic benefits” that everyone would have to buy. They argue that people can’t be allowed to control their own resources until they are well-educated. The source of the education would be – them.


For instance, I recently participated in a discussion that was considering how to measure “quality” in health care and how to make those quality measurements available to individual consumers. There was much discussion of all the efforts around this — all the agencies, professional organizations and private businesses that are trying to get a handle on it. One person said the government should step in and decide what aspects should be measured and by whom. I disagreed, arguing that this is precisely the kind of situation that markets are good at sorting out – let a thousand blossoms bloom and over time some will be seen as working better and others will fail. The successful ones will be refined as new information becomes available. I think my view prevailed at the end of the day, but that was just one meeting in one location.

Consequences – Frightening or Exhilarating?


Another example might be an article called “The Hidden Costs of Consumer-Driven Health Plans,” by Ryan Gish in “Hospitals and Health Networks.” Mr. Gish ticks off a list of consequences that may be seen as scary if you are fat and happy, but liberating if you are interested in change. He says, “The underlying economics of the consumer-driven health plans have significant implications for providers. They have the capability to transform everything from pricing to quality reporting to physician relations.” On pricing he says, “If you thought that HMOs squeezed prices, wait until consumers take the wheel … It won’t be long before hospitals and physicians alike are asked for a ‘menu’ of services and list prices.” On quality – “Once consumers pay for their own medical care, they will demand quality indicators to determine the ‘value’ they receive … Health care ‘insiders,’ including hospitals, physicians and insurers, will have missed the opportunity to set the standard for quality reporting and influence its interpretation.” On physician relations – “Physicians may begin asking hospitals a new question: ‘Why are your services so expensive? My patient wants to go to a less expensive facility.'” Mr. Gish is exactly right. The question is, do you see this change as frightening or exhilarating?

SOURCE: http://www.hospitalconnect.com/hhnmag/jsp/articledisplay.jsp?dcrpath=AHA/PubsNewsArticle/data/040420HHN_Online_Gish&domain=HHNMAG

Florida State Employees to Get HSAs


Meanwhile, ready or not, here it comes. The “Tallahassee Democrat” reports that HSAs may become available next year to Florida state employees and their dependents. Governor Jeb Bush also expects HSAs to “become an affordable? alternative? for the 3 million Floridians who lack health coverage,” according to the article by Diane Hirth. The article also reports that, “A health insurance reform package passed by the legislature this year? requires insurers to offer HSAs, along with traditional coverage, to businesses.” The article quotes Coral Gables business owner Michael Rich as saying, “We saved no less than one million dollars” by switching to HSAs.

SOURCE: The article ran on May 14 and the paper’s archives go back only seven days. Contact the reporter at dhirth@tallahasse.com or 850-671-6546.

Kentucky State Employees to Get CD Health


The state of Kentucky is also entertaining new proposals to cover its 229,000 state and university employees. Governor Ernie Fletcher is quoted as saying, “This will make Kentucky’s employee health care a more competitive, consumer-driven system.” The article goes on to say the state currently pays 100% of premium for workers, but nothing for dependents. The new RFP will require workers to pay some of their own costs but also contribute to the coverage of family members.

SOURCE: This was originally an AP story that I can’t find on the web, but Governor Fletcher’s news release is at http://kentucky.gov/Newsroom/GOV_OFFICE/20040429RFP.htm

HSAs Help the Uninsured in North Carolina


A group in Winston-Salem, North Carolina is pushing HSAs and purchasing pools as ways to help the uninsured, according to an article in the “Winston-Salem Journal.” The group was founded by executives with Wake Forest University Baptist Medical Center and Novant Health, and joined by several Forsyth County public service agencies and advocacy organizations. They say HSAs could cut insurance premiums in half.

SOURCE: http://www.journalnow.com/servlet/Satellite?pagename=WSJ%2FMGArticle%2FWSJ_ColumnistArticle&c=MGArticle&cid=1031775441157&rendermode=preview&path=!opinion!editorials&s=1037645509188

Detroit News Sees HSAs as Part of Solution


“The Detroit News” also sees HSAs as part of the solution for the uninsured. An editorial says a problem is that individual coverage often costs twice as much as it would in a group setting, but “the new health savings accounts that were included in the Bush administration’s prescription drug program will help.” The piece adds that “the health care system must aggressively attack the rising cost of care, and consumers must do their part to keep down costs.”

SOURCE: http://www.detnews.com/2004/editorial/0405/13/a10-151259.htm

Destiny Health Expanding to Mid-Atlantic


Destiny Health, working with Guardian, will soon be offering consumer driven health plans in Maryland, Virginia and the District of Columbia. Destiny CEO Scott Spiker is quoted as saying, “We are motivating employees to change their behaviors, which in turn lowers costs and makes possible premium increases that are well below the industry average.” He adds the company has seen 47% of plan members asking for lower-cost prescriptions, 41% say they are taking better care of themselves, and 37% say they have improved their preventive care regimen.

SOURCE: Contact Ellen Rochford at 773-463-2480.

Fiducial – HSAs to be Dominant Form of Financing


“Health & Medicine Week” reports that experts at Fiducial are predicting HSAs will be the dominant form of health care financing in 5 – 10 years. The article notes that Assurant (formerly Fortis) is seeing “very strong interest and response from both insurance agents and then consumers.” And CareFirst Blue Cross and Blue Shield is adding HSAs to its offering for individuals as well as small and large groups. Spokeswoman Cindy Otley says, “We think the market is steadily going to move in this direction?”

SOURCE: This was published in the May 3 edition, but is not available on-line.

Aetna Offers Retirement Reimbursement Accounts


Aetna has announced a new program called “Retirement Reimbursement Accounts” (RRAs) aimed at the problems employers face in funding retiree health benefits. Accounting rules have made it all but impossible for employers to offer retiree health benefits on anything but a defined contribution basis. Aetna’s RRA should help by allowing employers to prefund these benefits as well as continue to contribute post-retirement. Retirees may spend the funds on any 213(d) qualified expense, including premiums for Medicare and Medigap plans.

SOURCE: Contact Elizabeth Sell at 215-775-5523 or selle@aetna.com.

Mellon Offers Fully Integrated HSA


Mellon Financial has announced a “fully integrated HSA” product that will be available on a private-label basis to insurers as well as directly to corporate clients. The package includes an interest-bearing checking account and investment accounts. Funds may be accessed with paper checks or with a MasterCard debit card. Mellon had a head start in developing this HSA product due to its early experience with MSAs.

SOURCE: http://www.mellon.com/pressreleases/2004/pr042204.html

State Farm Bank Announces HSA Product


State Farm Bank is also offering HSAs, according to “The American Banker.” It will sell the products through the State Farm Insurance distribution network of 16,500 agents. The company wasn’t sure how to price the service, but settled on a $25 annual fee and interest rates based on the amount of balance in the account. The HSAs will be money market accounts accessed with paper checks. The article quotes bank president Stan Ommen as saying, “We’re committed to it. Based on what we’ve seen, there is a big market.”

SOURCE: This was published in the April 30 edition of the “American Banker,” but is not available on-line.

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