IN THIS ISSUE:
? McInturff ? Consumer Choice is Better Terminology
? Kaiser Benefits Study ? Premiums, Cost-Sharing Rising
? Consumer Driven Plans in California
McInturff ? Consumer Choice is Better Terminology
The Health Insurance Association of America (HIAA) held a briefing to unveil the results of a new study of ?consumer choice? health plans. HIAA president Don Young said in a press release, ?This study clearly shows that consumers are ready to look at new alternatives for health care financing, and we expect consumer choice health plans will quickly and dramatically increase in importance over the next five years.? The study was based on public opinion surveys as well as focus groups of consumers, employers and physicians. It was conducted by Public Opinion Strategies, headed by Bill McInturff. Some of the findings included (these are my words, not McInturff?s):
? The terminology should be changed from ?consumer driven,? or ?consumer directed,? to ?consumer choice.? People aren?t sure if ?driven? and ?directed? means that consumers are being driven and directed or doing the driving and directing. ?Driven? and ?directed? are also seen as harsh and aggressive, while ?choice? is seen very positively.
? The language is important because people are just beginning to find out about this concept. They will be more receptive in their first encounter if the terminology is right.
? A majority of larger companies say they will offer consumer choice plans within the next five years ? 12% say they do today, another 13% say they will next year, and another 27% plan to within five years. The reasons they give include raising employee awareness of costs, allowing people to be more involved in their own health care decisions, and helping top control employer costs.
? Although the number involved in consumer-based plans is small, the satisfaction level is high, with 85% of HR executives reporting their employees were either satisfied or very satisfied. The reasons for high satisfaction include wider choice of provider, lower costs, and good customer service.
? While there is a fair amount of receptivity to the idea, there is also a lot of skepticism and a lot of detailed questions need to be answered. Both individual consumers and benefits administrators react favorably to the concept, though the former are more favorable than the latter, and administrators of large firms are more favorable than those of smaller forms.
It is interesting, though not surprising, that employers are less enthusiastic about the concept than their employees are. Employers often think this is all too complicated and difficult for their workforce and it takes control away from the company. Paternalism is alive and well in corporate America.
Kaiser Benefits Study ? Premiums, Cost-Sharing Rising
At the same time the HIAA study was being released, the Kaiser Family Foundation released its annual survey of employer benefit plans. Among other things, the survey found:
? Premiums increased 13.9% in 2003, the highest increase since 1990.
? Premiums now average $3,383 for single coverage and $9,068 for families.
? Worker contributions to premium did not rise as fast as the premiums themselves, staying stable for singles (at $508) and rising 13% for families (to $2,412).
? Worker cost-sharing is also increasing with higher PPO deductibles and higher copayments in HMO plans.
? Few employers expect to drop coverage in the future, but many expect to raise deductibles and premium share.
? Of ?jumbo? firms (5,000 or more workers), 17% say they are now offering a high deductible plan ($1,000 or more) and another 16% say they are likely to next year.
? Altogether, 62% of all firms said they shopped for a new plan this year and 33% said they changed their type of health plan or their insurance carrier. Interestingly only 37% of jumbo firms said they shopped for a new plan, while 62% said they changed their type of plan or their carrier.
In addition to rising deductibles, there are some interesting implications for consumer driven (ooops ? ?consumer choice?) plans in the survey results. When asked about the effectiveness of various cost containment strategies, 22% said disease management is ?very effective? and 44% said it is ?somewhat effective.? For consumer driven approaches 14% said very and 54% said somewhat, for higher cost sharing it was 10% and 49%, and for tighter managed care it was 6% and 51%. The combined ?very? and ?somewhat? score puts consumer driven care slightly at the top.
One note of irony from the press conference ? KFF played a video of real-life employers reacting to their own health benefits costs. One of these employers explained how important it was that his workers be able to go to the doctor without paying anything. A few seconds later the same gentleman was back on the screen saying, ?I can?t understand why health care costs go up so much faster than the rest of the economy.? Duh! I would like to have a copy of those two quotes and play them in a continuous loop in every executive suite in the land.
This is a massive body of work and a landmark document for health and benefits policy. The study is available on-line, but at 152 pages and chock full of graphics, it is not easily downloadable. You might be better off getting summaries from the web site and ordering a hard copy version of the full report.
SOURCE: Go to http://www.kff.org to get access to all of the material, there should also be links to a related Health Affairs article and to a web cast of the press release.
Consumer Driven Plans in California
This must be the season for consumer driven studies. Another one comes from the California HealthCare Foundation, written by Jon Gabel and Thomas Rice. This paper looks at the acceptance of consumer driven plans in California compared to the rest of the country and examines what factors will drive future enrollment. It divides the market into three types of products:
? HRAs, such as those offered by Definity, Lumenos, Aetna and Humana.
? ?Customized packages,? which are essentially defined contribution with individual choice of benefit plans, such as offered by Wellpoint and HighMark, and
? ?Design Your Own,? such as the Vivius model.
I?m not sure the descriptions are particularly apt, but the market is still evolving so latitude is allowed. The paper notes that these programs have barely dented the California market, other than Wellpoint?s defined contribution model. The authors are surprised since California is usually a trendsetter. It might be impolite to say so, but a lot of California employers may be putting all decisions on hold until the budget, energy and gubernatorial crises sort themselves out. More than a few employers may be wondering whether they even want to stay in California, let alone start a new benefits program.
In any case, the paper ticks through a few of the obvious issues ? labor market conditions, concern about selection, lack of experience, fear of failure, and regulatory questions ? that play into an employer?s decision. They also briefly mention the HMO market domination in the state as a contributing factor.
The paper could have done a lot more with exploring design possibilities. HRAs for instance could be configured in a lot of creative ways, not just as MSA look-alikes. Some vendors are doing Rx-only HRAs, others are creating shared deductible programs, others are looking at rolling HRA balances into ancillary coverage like dental and vision. Some of these approaches could fit very well with the underlying HMO coverage that predominates in California.
SOURCE: www.chcf.org for the press release
www.chcf.org for the 8 page study.
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