The revolution in consumer-driven health care is indeed taking hold, if the responses to two speeches I gave in October are an indicator.
I spoke in Ocean City to the annual convention of MedChi, the Medical Society of Maryland. Executive director Michael Preston asked me to talk about innovations in consumer-driven health care, including Health Reimbursement Arrangements (HRA) and tax credits for the uninsured.
Then, I traveled to Salt Lake City, where John Nielsen of InterMountain Health Care invited me to keynote the annual meeting of the Utah Health Insurance Association, whose able executive director is Kelly Atkinson.
Doctors and insurers: Clearly two groups with a vested interest in the system, and I wasn’t sure how they would react. But in both cases, the majority was remarkably receptive to the changes taking place.
First, the Doctors
They are so angry and demoralized over managed care that they are willing to listen to any new idea that will restore control to them and their patients. They were particularly interested in HRAs, where employers can fund an employee’s personal care account to pay for routine medical care, and most often couple it with catastrophic coverage.
Many plans also provide screening and other early-detection tests without charge to the employee to encourage them not to skimp on care. The June 26 IRS ruling allowing money saved in the HRA accounts to roll over tax-free makes these arrangements especially appealing.
An inevitable consequence of this new spending arrangement is that patients will ask their doctors more questions about cost and will try to get the price down. How do the doctors feel about that? Many agreed that if the patient is a cash-pay customer, it would be possible to cut their rates and still make money because they can avoid paperwork, payment delays, and battles with insurance companies. (See “The SimpleCare Story,” Health Care News, February 2002.)
Then, the Insurers
They are losing customers, especially small businesses, because premium costs are rising. They want new tools to lure customers back, and they see HRA products as more flexible and affordable and a way to make patients partners rather than adversaries in using care wisely. Small steps can lead to big changes in the system.
Other issues we discussed:
- Health Insurance Flexibility and Accountability Guidelines that are loosening regulatory shackles on states so they can be more creative in their use of Medicaid and SCHIP dollars (a creativity the Senate Finance Committee wants to rein-in).
- The new Independence Initiative from HHS, which would allow disabled people to decide for themselves what they need to achieve greater functionality, not have the government tell them what they can have.
- Refundable tax credits for health insurance, enacted as part of the Trade Act of 2002.
All of these small steps begin to move in the direction of greater consumer choice and empowerment.
Single-payer supporters still made their voices heard in both presentations, some more shrilly than others. They will be a force in the continuing debate, but they were definitely outnumbered.
It’s clear that big, top-down changes to the health care system won’t fly. Consumer-driven health care ideas are making progress, and may take off sooner than we think. It can’t come a moment too soon.
— Grace-Marie Turner
Benefits of Individual Health Insurance Plans
A new eHealthInsurance study examined 30,000 new individual and family plans purchased by its members in the last six months. The company found the average premium for an individual is $155.90 per month and $324.92 per month for a family. The costs have remained stable while employment-based premiums are soaring. The majority of the policies purchased through eHealthInsurance were for comprehensive coverage.
The study also highlights the effects of state guaranteed issue and community rating laws. The average annual premium for a single policyholder in California, which does not have these two expensive insurance regulations, is $1,538, but the average premium in highly regulated New York is more than twice as much, $3,589. The fact sheet provides excellent charts showing breakdowns of premiums by age and state.
Full text of press release: www.ehealthinsurance.com/ehealthinsurance/press/NationalUninsured9.02.html
Full text of fact sheet: www.ehealthinsurance.com/ehealthinsurance/expertcenter/UITxCreditFactSheet_9.25.02.pdf
Why You Can’t Buy Insurance
Wall Street Journal editorial, 10/1/02
The Wall Street Journal uses the new Census Bureau numbers as a launch pad to detail the dangers of the comprehensive mental health parity bill currently on the front burners in Congress. The Domenici-Wellstone bill would force medium and large businesses to cover 941 mental conditions that would inevitably drive up the cost of health insurance, the Journal says. “Do you have the urge to travel without a clear plan, often under an assumed identity?” You may suffer from “dissociative fugue.”
This is an invitation to a lifetime of Woody Allen psychotherapy, the Journal says. “Refusing to recognize the reality of schizophrenia is a scandal … but the real scandal in American health insurance … is that tens of millions of Americans risk financial ruin because of policies that make basic insurance difficult or impossible to buy.”
Full text (requires subscription): online.wsj.com/article/0,SB1033433111185654113,00.html?mod=opinion
Give Health Insurance Tax Credit to Workers
Detroit News editorial, 10/1/02
Washington should address the problem of the uninsured by giving individuals tax incentives to purchase health coverage, the Detroit News writes. The editorial says the Achilles heel of employment-based insurance is its lack of portability.
“Under this system, employees do not own or control their benefits and therefore cannot carry them from job to job or maintain their coverage during periods of unemployment. … The best way of helping these workers would be by revamping the federal tax code to give workers tax incentives to purchase their own health coverage. This is a complicated, long-term project that will require considerable political will.”
Full text: www.detnews.com/2002/editorial/0210/01/a08-601027.htm
FDA Needs a Dose of Reform
Wall Street Journal, 9/30/02
Robert Goldberg of the Manhattan Institute writes that Dr. Mark McClellan’s nomination to head the Food and Drug Administration (FDA) “couldn’t have come soon enough. … The agency, whose charter was originally to protect people from snake oils and medicine men, has become a bureaucracy that ‘protects’ people from the drugs that can save their lives.”
Goldberg documents how “careless scientific reasoning” and “outright bureaucratic incompetence” keep promising new drugs out of the hands of patients, with a documented cost of lives. Goldberg recommends the FDA set up an advisory system to consult practicing doctors, scientists, and statisticians rather than “policy elites” who distrust innovation.
Full text: www.manhattan-institute.org/html/medical_progress.htm (link on left side of the page)
Material for this report is provided by The Galen Institute, P.O. Box 19080, Alexandria, VA 22320, http://www.galen.org. Grace-Marie Turner is president. This report was produced by Elizabeth Lamirand, who can be reached at 703/299-9550, and edited by Conrad F. Meier, managing editor of Health Care News.