IN THIS ISSUE:
? Humana Reports Large Savings
? Annual Physicals Waste $7 Billion a Year
? California Employers Coping With Rising Costs
? Nevada Employers Passing Costs On to Workers
? Mutual of Omaha Launches New Plan
? HighMark Blues Meet Demand for HRAs
? Two Percent of Market by 2005?
Humana Reports Large Savings
We also encourage consumer driven plans and service provicers to let us know when there is news to report. For instance, we got a press release from Humana announcing that the 12 companies using its SmartSuite plans saw an increase in claims costs of only six percent in the past 12 months, compared to a national average of 15 percent. These companies represent 28,000 enrollees in several different markets, and they saved $9 million by holding down the rate of increase. The release says, “SmartSuite consumers choose from a variety of flexible deductible and copay structures based on the health care and budget needs of themselves and their families.” Chief actuary John Bertko is quoted as saying, “Using our online tools, many members realize they are actually overinsured, paying for benefits they are never likely to use. SmartSuite provides consumers with the flexibility to buy the health plan options that are right for them.”
SOURCE: Dick Brown, 502-580-3683 or email@example.com
Annual Physicals Waste $7 Billion a Year
“The New York Times” reports that annual physical exams may be one of those money-wasting services that shouldn?t be covered by insurance. The story by Gina Kolata says, ?Checkups for people with no medical complaint remain the single most common reason for visiting a doctor,? costing some $7 billion a year. But the Agency for Healthcare Quality and Research (AHQR) ?found little support for many of the tests commonly included in a typical physical exam?. It found no evidence, for example, that routine pelvic, rectal and testicular exams made any difference in overall survival rates for those with no symptoms of illness.? In fact, false positives can add substantial costs through needless biopsies and follow-up tests. The story says most physicians perform the tests, and most insurers cover them, because patients expect it. Perhaps they would demand it less if they paid for it out-of-pocket.
California Employers Coping With Rising Costs
Barbara Correa writes in the “LA Daily News” that, ?Workers in Southern California can expect more of their paychecks to go to health-care plan contributions in 2004 ? and for years to come.? Executives from several companies discuss having workers pay for a portion of the growing premiums, but some are looking at consumer driven plans and other changes in worker incentives. Michael Rivera of Watson Wyatt believes such plans ?are the wave of the future for companies squeezed between insuring their workers and turning a profit.? But many major players are missing the boat. A spokesman for CalPERS, for instance, reports that its health costs went up 25 percent last year, but employees ended up paying only 8 percent more. Maybe that?s part of the reason the state is facing a $38 billion deficit this year.
Nevada Employers Passing Costs On to Workers
In Nevada, one-third of companies ?substantially revised employee health care benefits as a result of increasing premiums in the past year,? and 70 percent are likely to do so in the future, according to Hubble Smith in the “Review-Journal.” The survey by UNLV?s Center for Business and Economic Research found 13.5% raised premiums, 14.6% raised copays or deductibles, and 14.6% reduced benefits. Kaiser Family Foundation president Drew Altman says, ?workers can expect to pay more and get less coverage.? He adds that all of this makes it even harder to deal with mega-issues like providing drug coverage in Medicare or covering the uninsured. The article goes on to say, ?Some firms are simply giving employees cash to buy their own health insurance, sometimes called a ?defined contribution? plan. However nearly 80 percent? said they were not likely to go that route.? The article does not discuss other consumer driven approaches to benefits reform.
Mutual of Omaha Launches New Plan
“National Underwriter,” however, notes that, ?many carriers have debuted so-called consumer-driven health plans,? including most recently, Mutual of Omaha. Mutual?s Brad Utoft says these products ?help employers hold down health benefits costs, while also offering consumers more choice and control.? The program includes informational services such as online claims information, account balances, and prescription information. The program also features a separate smaller deductible for drugs so the chronically ill will be able to afford their prescriptions.
SOURCE: Sorry, but this article does not appear to be available on the web site, which is: http://www.nationalunderwriter.com/lifeandhealth/lhhotnews.asp. It ran in the August 4, 2003, edition.
HighMark Blues Meet Demand for HRAs
The Pittsburgh Blue Cross plan, Highmark, is rolling out a number of new options, according to Lynne Glover in the “Pittsburgh Business Times.” One is ?PreferredBlue? that allows individuals to buy their own coverage, regardless of their health history. This is a PPO with deductibles of $500 or $1,000 for individuals. Company spokesman Daniel Holtz says ?he expects to see more programs that provide catastrophic-type coverage rather than comprehensive-type coverage,? along with more ?pay as you use it? features. The company is also offering a ?BlueAccount? plan in response to market interest. This product combines an HRA with a high deductible PPO. Company spokesman Kim Bellard says, ?We hear from a lot of clients here about their desire to implement a product like this. We?re uncertain how many will make take the jump.? He adds, ?We?re getting requests in every day. It?s definitely a hot topic in the benefits community.?
Two Percent of Market by 2005?
Andrea Tortora reports in the Cincinnati “Business Courier” that, ?A new health insurance option could become the silver bullet that helps employers cap sky-rocketing costs and put an end to nearly five years of double-digit premium increases.? That is stating it more strongly than I would, but she says the ?early results are tantalizing.? She relies mostly on the Humana experience (reported above), but adds that Anthem?s ByDesign program is ?realizing annual savings of between 12 percent and 14 percent.? She also mentions that Forrester Research is predicting that consumer driven plans will have 2 percent of the market by 2005 ? 2.7 million members and $16 billion in premiums.
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“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.
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