IN THIS ISSUE:
? Consumers At The Center — WBGH
? Employers “Not Confident” Of Controlling Costs
? Modern Healthcare Looks At Consumerism
? Three Steps For Employers – John Word
? “Stop Being Polite” – Emily Friedman
? Real Help In Securing Coverage
? Vendor Corner
? Current Events
CONSUMERS AT THE CENTER — WBGH
Reuters’ Karen Pallarito reported on the recent annual meeting of the Washington Business Group on Health (WBGH) by writing, ?Consumers are at the center of the latest equation for taming runaway healthcare costs?.? She says most workers are still sheltered from the cost of their care ?paying only nominal copayments for the services they receive.? She quotes WBGH president Helen Darling as saying, ?What workers pay is still relatively small? and what the employers are paying is very, very high,? roughly $10,000 to $13,000 for an employee with family coverage. Ms. Darling adds, ?This is an unsustainable business model, which is why you see small employers dropping health benefits.? Ms. Darling urged employers to switch from a copayment model to coinsurance to ?expose employees to the real cost of benefits.?
EMPLOYERS ?NOT CONFIDENT? OF CONTROLLING COSTS
WBGH has also released a new survey of employers which indicates they “doubt they can do much to bring health care costs under control,? according to Roberto Ceniceros in “Business Insurance.” He reports, ?83% of employers are increasing employee’s premium contributions, and 80% are raising employee’s copayments,? but ?just 18% of employers are confident in their ability to manage health care costs.? The story also notes that employers are skeptical about consumer driven approaches, with two-thirds being ?not confident? that such plans will control costs. (The “BI” story misreports this information saying, ?Just 67% ? are confident that the plans will successfully control costs.?)
The survey also breaks the respondents into low and high performers, made up of 21% and 16% of the total, respectively. The high performers have a track record of accurately predicting cost increases, keeping the rate of increase down, and maintaining worker satisfaction. The low performers are the opposite on all counts. High performers anticipate a 10% cost increase this year, while low performers expect a 21% increase. The two groups view consumerism differently as well. The low performers see it as a product they can buy that will have consumers pay a greater share of premium and force-feed educational programs. The high performers see it as more of a phased-in process that begins with cost sharing at the point-of-care, which then leads to greater demand for information and other design changes.
SOURCE: An executive summary of the report is available at:
The “Business Insurance” article is at: http://www.businessinsurance.com/cgi-bin/article.pl?articleId=12434&a=a&bt=WBGH
MODERN HEALTHCARE LOOKS AT CONSUMERISM
“Modern Healthcare” includes a major article on consumer driven health plans in its March 10 issue. Written by Laura Benko, the story is a pretty comprehensive look at everything going on out there. She starts with an anecdote about a Kentucky company, Logan Aluminum, that experienced a 23.7% increase in insurance costs in 2001, followed by another 8.5% in 2002. The company signed up with Aetna’s consumer driven program for its 1,000 workers. The company puts up a $400 HRA to cover part of the $1,000 deductible. The article says Logan is just part of a ?fast-growing number of employers? who are exploring this approach. It cites Towers Perrin as saying 44% of large employers are now considering the approach, up from 13% last year.
The story goes on to describe the various approaches being tried out in the market, with emphasis on HRA plans but also mentioning MSAs, FSAs, Blue plans with tiered payment systems, and the Vivius and MyHealthBank models which ?allow employees to select benefits a la carte from an online menu of coverage arrangements, and to balance deductibles, premiums, and copayments to suit their personal needs.? The article notes that physicians are largely supportive of the approach but hospitals are not, fearing they will be stuck with bad debts. It mentions the results so far, especially from Humana which saw costs go up 4.9% when it expected increases of 19.2%, and Destiny whose 500 accounts are seeing increases of 12% while the rest of the area is getting 20% to 30% rate hikes. Destiny president Ken Linde says if you count the account funds that are rolling over, the real rate of increase is more like 7%.
THREE STEPS FOR EMPLOYERS – JOHN WORD
In the “Business Press” of California, former president of the California Health Underwriters John Word writes ?it’s about time? that the problem of the uninsured was given the attention it deserves. He predicts it ?will be the centerpiece in the 2004 presidential debate.? He adds, ?It is time for employers to rethink how they provide and fund health insurance,? and cites three things they can do right away: Switch to a defined contribution ?voucher? so employees can ?stay within their budget;? join a health purchasing alliance to give workers a wide range of choices; and look at consumer-directed options like MSAs.
SOURCE: http://www.thebizpress.com/archives/search.shtml. There is a fee for accessing the article – sorry.
?STOP BEING POLITE? – EMILY FRIEDMAN
On the other hand, writing in the AHA’s “Health Forum Journal”, Emily Friedman agrees that it’s about time to do something about the uninsured, but has a much more cynical view of the likelihood. Ms. Friedman has been doing health policy for a long time, but she ends up with a peculiar mix of na?vet? and bitterness. She takes at face value the IOM statement that 18,000 Americans die each year for no reason other than lacking health insurance. But she disparages the individual insurance market ?where there is little regulation and few price controls and risk-rating is a fine art.? (Perhaps she thinks the small group market is better because there are massive regulations and price controls).
Some of her ponderings are downright offensive. For instance she attributes the lack of action to race discrimination and quotes an unnamed ?conservative pundit? as saying ?if universal coverage is ever passed, the main beneficiaries will be blacks and Hispanics.? Who knows if this was ever said, or what the context might have been, or who said it, but the message is clear – conservatives are all racist and that is why they oppose a massive takeover by the government of our $1.4 trillion health care system. She doesn’t actually support a single payer system, mostly because the taxpayers would never put up with it. She believes what is needed are public subsidies of private coverage, but only if it is ?heavily regulated to prevent the picking off of good risks.? Her Big Idea is ?for provider organizations to stop sitting on the sidelines and start creating their own insurance products?? Someone should remind her that has already been done, it was called Blue Cross and Blue Shield.
But her most withering attack is saved for ?those who like the status quo just fine,? and advance ?policies and proposals that cannot be explained other than by assuming that there are interests who don’t want the problem addressed.? Her ?most sterling example? is the federal HIFA waivers that allow states to redesign their Medicaid programs. She concludes it is time to ?force the issue.? She recommends that people ?stop being polite, and afraid to offend anyone, and being unwilling to make trouble.?
REAL HELP IN SECURING COVERAGE
Being impolite and offensive may be a high value in some circles, but Terry Savage would rather work on helping people actually find insurance coverage. She suggests that the uninsured look into medical savings accounts (MSA). She says, ?The monthly premium cost for that ($4,500 deductible) medical insurance plan might be $377 for a family of four, versus $729 for a traditional plan. That means a savings of $4,224 annually on insurance premiums.? She adds that the idea of a $4,500 deductible ?sounds scary,? but under the traditional plan, the family might be exposed to similar costs through a per person deductible of $250 and coinsurance that could run $1,000 per person. The article goes on to explain in plain English how the MSA works, who benefits from it, and includes a number of links where the reader can get more information.
? HealthMarket, Inc. has secured third round financing of $12.5 million from Allied Capital, according to a company press release. Company COO Greg Morris is quoted as saying ?(consumer directed health plans) are becoming increasingly popular, and now HealthMarket is even better positioned to grow its market share among small employers.? The company currently has 35,000 members and 2,500 employer clients and is expanding into Illinois and Tennessee with expansion into Arizona and Nevada planned. It also provides fully-insured, full replacement plans in Georgia, Indiana, Ohio, and Texas. Contact Maureen Landers at 212-292-8560 or firstname.lastname@example.org
? MyHealthBank is making a new software offering available to insurers in the individual market. The product includes an online sales and quoting tool and applications for individual customers. The company says its software can be integrated with any existing legacy systems. Contact Becky Engel at 503-222-0626 or email@example.com
? Definity is partnering with Health Dialog to provide ?state-of-the-art health coaching and patient-friendly decision support programs.? The program uses ?Health Coaches? to help patients make medical decisions in collaboration with their own physicians. The coaches ?educate members about their treatment alternatives, and the pros and cons of each, and they help coach members on how to communicate better with their doctors,? according to the company press release. The service is available 24/7. Contact Chris Delaney at 952-277-5603 or firstname.lastname@example.org
? NFP Benefits will be recommending Lumenos to its corporate clients who are looking to initiate consumer driven health programs. The Lumenos Health Savings Accounts are available only to self-insured companies. Employees can accumulate funds that rollover from year to year. The company ?also provides online and offline access to the latest health care information, services and support to help consumers reach sound decisions,? according to the company release. Contact Mary Angela Shannon at 703-236-6312 or email@example.com
? Humana is launching a new advertising and communications campaign that will ?draw upon real-world success stories to illustrate the significant outcomes of Humana’s health benefits solutions,? according to a company press release. The theme is ?Guidance when you need it most? and will include print, broadcast and on-line advertising aimed at markets in Chicago, Phoenix, Houston, Dayton, and Columbus in 2003. It will also include direct marketing and customer education components. Contact Dick Brown at 502-580-3683 or firstname.lastname@example.org
? I’ll be speaking on Health Reimbursement Arrangements at the National Association of Health Underwriters Capitol Conference at the Capital Hilton in Washington on Sunday March 23.
? I’ll also be moderating a panel featuring Princeton economist Uwe Reinhardt and Urban Institute president Bob Reischauer at the annual meeting of the National Association for Business Economics at the Watergate Hotel in Washington on Monday March 24.