Wrenching Change in Store for Insurance Industry

IN THIS ISSUE:


? Wrenching Change in Store for Insurance Industry

? MEGA Life to Acquire HealthMarket

? HealthEquity Hires Mellon’s Dennis Stover

? Aetna’s Results Heralded in Trade Press

? Consumerism – “Most Important Change Since 1970s”

? Providers Face “Tidal Wave” of Empowered Patients

? SimpleCare Rides the Wave









Wrenching Change in Store for Insurance Industry



Consumer driven health care is likely to bring about wrenching changes in the insurance industry, according to Anthony O’Donnell in “Insurance & Technology.” He quotes Steve O’Dell of the First Consulting Group as saying, “the fact is we are not a consumer-driven industry; we never have been, and it’s going to takes a damned long time to get there.” The article says, “It can’t take too long, however, because the industry isn’t in a position to set the timetable.” Mr. O’Dell warns that carriers have to make their products completely transparent and work on “data hygiene.” “Once you start providing data and decision-making tools to plan members? that data has to be almost perfect.” Ron Ponder, CIO of WellPoint, adds, “We need to learn from our colleagues in other industries” such as Fidelity and Schwab. He adds, “Healthcare is a very information- and transaction processing- intensive industry, and yet we choose to spend less on IT than any other major sector in the U.S.” Neal Kaderabek of WEA Insurance in Madison, Wisconsin says although his company prides itself on flexibility and speed-to-market, “[w]e’ve got 20-plus years of legacy systems [and] the documentation of what the heck we did is woefully short.” The article suggests that success or failure in a consumer-based system will rest on how well companies can respond to constant change.

SOURCE: http://www.insurancetech.com/story/featured/showArticle.jhtml?articleID=32900001&pgno=1

MEGA Life to Acquire HealthMarket


One way to change quickly is to acquire innovation through mergers. Last year, United Healthcare acquired Health Allies and Golden Rule to position itself in the new market. Now UICI and its MEGA Life subsidiary have announced the acquisition of HealthMarket, the innovative company started by Steve Wiggins. HealthMarket currently enrolls about 2,400 companies with 38,000 members, but its claim to fame is a unique package of products including a fixed-fee schedule, an HSA, and an “episode spending account” all supported by state-of-the-art software and customer support. Mr. Wiggins said in a press release that “the transaction removes all the obstacles to growth – especially the challenge of convincing customers to buy from a start-up insurance company.” UICI CEO Bill Gedwed said that HealthMarket has proven its ability to keep costs below PPOs for the same benefits and has “achieved high customer satisfaction, as evidenced by exceptionally high rates of renewals.”

SOURCE: Contact Mark Hauptman at 817-255-5200 or go to http://www.uici.net

HealthEquity Hires Mellon’s Dennis Stover


Another way is to hire people with experience in other industries. HealthEquity has just hired Dennis Stover to be its director of corporate development. Mr. Stover had been with Mellon Financial for 26 years where, among other things, he headed the bank’s Medical Savings Account development and developed partnerships with over 40 insurance companies. Stephen Neeleman, MD, CEO of HealthEquity, said that Mr. Stover “will help us educate our partners about our integrated insurance-banking-patient advocacy systems that make HSAs easy to use.”

SOURCE: http://resources.healthequity.com/articles/HE_Release_2004-08-04.pdf

Aetna’s Results Heralded in Trade Press


Early results from consumer driven companies will surely increase pressure on carriers to become more responsive. “Managing Benefits Plans” reports on Aetna’s results in its September, 2004 issue. It says, “Employers who offer consumer-driven health-care plans as one of their options experienced low medical cost increases of 3.7%, while a full replacement plan sponsor experienced a medical cost decrease of 11%.” It adds, “General adult preventive exams increased by 23%, compared to an 8% increase for a similar population in a different plan.” At the same time there was, “an 11% reduction in primary care office visits, and a modest 3% increase in specialist visits? a 3% decrease in emergency room visits, a 14% decrease in outpatient cases, and a 5% decrease in inpatient admissions [and] a 5.5% decrease in pharmacy costs driven by a 13% decline in overall prescriptions and a 7% increase in the overall use of generic drugs.” Company President Ron Williams says, “These early indicators show that the consumer-directed elements of the Aetna HealthFund plan appear to have a positive impact at controlling health care costs?.”

SOURCE: The publication is not available on-line, but Grace-Marie Turner recently published a paper using the same data from Aetna. Go to: /assets/New_Studies.pdf.





Consumerism – “Most Important Change Since 1970s”



Mr. Williams is also cited in an article in the “Financial Times” of London. In this article, he shows reporter Ellen Kelleher how he can use the company website to find a hospital for a coronary bypass procedure and is able to locate the ones with the fewest complications and the shortest lengths of stay. He says, “Consumerism is the most important trend in the health insurance industry since the 1970s.” Meredith Rosenthal of the Harvard School of Public Health says insurers “are trying to figure out what to do to control spending that will annoy people least.” The article goes on to say some carriers are taking a holistic approach to patient needs, such as encouraging people to go to specialized facilities for conditions like cancer, burns, or trauma, and dealing with co-morbidities such as the depression that often accompanies diabetes. These sources of information will help fuel consumer-based financing systems such as Health Savings Accounts, according to the article.

SOURCE: http://news.ft.com/home/us The article ran on August 31, 2004 but a subscription is required.

Providers Face “Tidal Wave” of Empowered Patients


Writing in the “Milwaukee Journal Sentinel,” John Torinus, president of Serigraph, Inc., agrees. He cites recent alarms about rising health care costs in Wisconsin and notes that politicians usually look for “new taxes to fund the inflation. There are few ideas on driving costs down, which is the real answer.” But he says, “there is some good news.” He says the state Employee Trust Fund kept costs down to a 5% increase through “managed competition,” but competition works even better when it is introduced at the consumer level. His own company “continues to show reductions of more than 20% after seven months under its consumer-driven plan.” And Rockwell Automation “got such good results” at two sites in 2003 that it extended the program to its other divisions in 2004. “If enough employers adopt consumer-driven plans, marketplace dynamics will take hold,” says the article. “The best providers at the best price will be rewarded with more volume.” Rockwell’s Roger Freitag says, “Doctors and hospitals will become more competitive…when they realize ‘it’s a tidal wave they’re facing, not a ripple.'”

SOURCE: http://www.jsonline.com/bym/news/aug04/254485.asp

SimpleCare Rides the Wave


Writing in “The Capital” of Annapolis, Maryland, Evelyn D. Harris describes a local member of SimpleCare, Dr. Anne Marie Russell, a chiropractor who charges patients $60 for the first visit and $40 for subsequent visits. If the patient wants to submit a claim to an insurance company, Dr. Russell will be happy to provide an appropriate receipt. Dr. Vern Cherewatenko, MD is the founder of SimpleCare, which now has 1,600 provider members and 23,000 patient members. He told a recent meeting of 200 providers in Washington, DC that dealing with insurance companies nearly drove him into bankruptcy, according to the article. Now that he deals solely in cash, he can charge less and make more. The article also quotes other physicians in Maryland who do not belong to SimpleCare, but still charge less for cash payment.

SOURCE: The article ran on August 29, 2004, but there is a fee for accessing it. Go to: http://www.capitalonline.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.


The views expressed in this newsletter are the opinions of the authors and do not necessarily reflect the views of the Galen Institute or its directors.



SHARE THIS ARTICLE

About the author

IN THIS ISSUE:


? Wrenching Change in Store for Insurance Industry

? MEGA Life to Acquire HealthMarket

? HealthEquity Hires Mellon’s Dennis Stover

? Aetna’s Results Heralded in Trade Press

? Consumerism – “Most Important Change Since 1970s”

? Providers Face “Tidal Wave” of Empowered Patients

? SimpleCare Rides the Wave









Wrenching Change in Store for Insurance Industry



Consumer driven health care is likely to bring about wrenching changes in the insurance industry, according to Anthony O’Donnell in “Insurance & Technology.” He quotes Steve O’Dell of the First Consulting Group as saying, “the fact is we are not a consumer-driven industry; we never have been, and it’s going to takes a damned long time to get there.” The article says, “It can’t take too long, however, because the industry isn’t in a position to set the timetable.” Mr. O’Dell warns that carriers have to make their products completely transparent and work on “data hygiene.” “Once you start providing data and decision-making tools to plan members? that data has to be almost perfect.” Ron Ponder, CIO of WellPoint, adds, “We need to learn from our colleagues in other industries” such as Fidelity and Schwab. He adds, “Healthcare is a very information- and transaction processing- intensive industry, and yet we choose to spend less on IT than any other major sector in the U.S.” Neal Kaderabek of WEA Insurance in Madison, Wisconsin says although his company prides itself on flexibility and speed-to-market, “[w]e’ve got 20-plus years of legacy systems [and] the documentation of what the heck we did is woefully short.” The article suggests that success or failure in a consumer-based system will rest on how well companies can respond to constant change.

SOURCE: http://www.insurancetech.com/story/featured/showArticle.jhtml?articleID=32900001&pgno=1

MEGA Life to Acquire HealthMarket


One way to change quickly is to acquire innovation through mergers. Last year, United Healthcare acquired Health Allies and Golden Rule to position itself in the new market. Now UICI and its MEGA Life subsidiary have announced the acquisition of HealthMarket, the innovative company started by Steve Wiggins. HealthMarket currently enrolls about 2,400 companies with 38,000 members, but its claim to fame is a unique package of products including a fixed-fee schedule, an HSA, and an “episode spending account” all supported by state-of-the-art software and customer support. Mr. Wiggins said in a press release that “the transaction removes all the obstacles to growth – especially the challenge of convincing customers to buy from a start-up insurance company.” UICI CEO Bill Gedwed said that HealthMarket has proven its ability to keep costs below PPOs for the same benefits and has “achieved high customer satisfaction, as evidenced by exceptionally high rates of renewals.”

SOURCE: Contact Mark Hauptman at 817-255-5200 or go to http://www.uici.net

HealthEquity Hires Mellon’s Dennis Stover


Another way is to hire people with experience in other industries. HealthEquity has just hired Dennis Stover to be its director of corporate development. Mr. Stover had been with Mellon Financial for 26 years where, among other things, he headed the bank’s Medical Savings Account development and developed partnerships with over 40 insurance companies. Stephen Neeleman, MD, CEO of HealthEquity, said that Mr. Stover “will help us educate our partners about our integrated insurance-banking-patient advocacy systems that make HSAs easy to use.”

SOURCE: http://resources.healthequity.com/articles/HE_Release_2004-08-04.pdf

Aetna’s Results Heralded in Trade Press


Early results from consumer driven companies will surely increase pressure on carriers to become more responsive. “Managing Benefits Plans” reports on Aetna’s results in its September, 2004 issue. It says, “Employers who offer consumer-driven health-care plans as one of their options experienced low medical cost increases of 3.7%, while a full replacement plan sponsor experienced a medical cost decrease of 11%.” It adds, “General adult preventive exams increased by 23%, compared to an 8% increase for a similar population in a different plan.” At the same time there was, “an 11% reduction in primary care office visits, and a modest 3% increase in specialist visits? a 3% decrease in emergency room visits, a 14% decrease in outpatient cases, and a 5% decrease in inpatient admissions [and] a 5.5% decrease in pharmacy costs driven by a 13% decline in overall prescriptions and a 7% increase in the overall use of generic drugs.” Company President Ron Williams says, “These early indicators show that the consumer-directed elements of the Aetna HealthFund plan appear to have a positive impact at controlling health care costs?.”

SOURCE: The publication is not available on-line, but Grace-Marie Turner recently published a paper using the same data from Aetna. Go to: /assets/New_Studies.pdf.





Consumerism – “Most Important Change Since 1970s”



Mr. Williams is also cited in an article in the “Financial Times” of London. In this article, he shows reporter Ellen Kelleher how he can use the company website to find a hospital for a coronary bypass procedure and is able to locate the ones with the fewest complications and the shortest lengths of stay. He says, “Consumerism is the most important trend in the health insurance industry since the 1970s.” Meredith Rosenthal of the Harvard School of Public Health says insurers “are trying to figure out what to do to control spending that will annoy people least.” The article goes on to say some carriers are taking a holistic approach to patient needs, such as encouraging people to go to specialized facilities for conditions like cancer, burns, or trauma, and dealing with co-morbidities such as the depression that often accompanies diabetes. These sources of information will help fuel consumer-based financing systems such as Health Savings Accounts, according to the article.

SOURCE: http://news.ft.com/home/us The article ran on August 31, 2004 but a subscription is required.

Providers Face “Tidal Wave” of Empowered Patients


Writing in the “Milwaukee Journal Sentinel,” John Torinus, president of Serigraph, Inc., agrees. He cites recent alarms about rising health care costs in Wisconsin and notes that politicians usually look for “new taxes to fund the inflation. There are few ideas on driving costs down, which is the real answer.” But he says, “there is some good news.” He says the state Employee Trust Fund kept costs down to a 5% increase through “managed competition,” but competition works even better when it is introduced at the consumer level. His own company “continues to show reductions of more than 20% after seven months under its consumer-driven plan.” And Rockwell Automation “got such good results” at two sites in 2003 that it extended the program to its other divisions in 2004. “If enough employers adopt consumer-driven plans, marketplace dynamics will take hold,” says the article. “The best providers at the best price will be rewarded with more volume.” Rockwell’s Roger Freitag says, “Doctors and hospitals will become more competitive…when they realize ‘it’s a tidal wave they’re facing, not a ripple.'”

SOURCE: http://www.jsonline.com/bym/news/aug04/254485.asp

SimpleCare Rides the Wave


Writing in “The Capital” of Annapolis, Maryland, Evelyn D. Harris describes a local member of SimpleCare, Dr. Anne Marie Russell, a chiropractor who charges patients $60 for the first visit and $40 for subsequent visits. If the patient wants to submit a claim to an insurance company, Dr. Russell will be happy to provide an appropriate receipt. Dr. Vern Cherewatenko, MD is the founder of SimpleCare, which now has 1,600 provider members and 23,000 patient members. He told a recent meeting of 200 providers in Washington, DC that dealing with insurance companies nearly drove him into bankruptcy, according to the article. Now that he deals solely in cash, he can charge less and make more. The article also quotes other physicians in Maryland who do not belong to SimpleCare, but still charge less for cash payment.

SOURCE: The article ran on August 29, 2004, but there is a fee for accessing it. Go to: http://www.capitalonline.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.


The views expressed in this newsletter are the opinions of the authors and do not necessarily reflect the views of the Galen Institute or its directors.



SHARE THIS ARTICLE

About the author