Consumers for Health Care Choices and The Heartland Institute are developing a number of events that you will love.
First, we are doing a series of Consumer Education Workshops around the country this fall. These are intended to reassure nervous business owners and employee representatives about the merits of Consumer-Driven Health Care and answer their questions about how CDHC plans work in real life.
The event that is furthest along in planning will be held in Harrisburg, Pennsylvania on
September 3. The agenda and speakers will go like this:
8:00 a.m. Welcome and Introductions
Greg Scandlen, The Heartland Institute
Hagerstown, MD
8:10 a.m. How to Buy Health Insurance
Ross Schriftman, RHU, LUTCF, CNC
Kistler, Tiffany Benefits
Horsham, PA
8:40 a.m. How to Manage Your HSA, HRA Accounts
William West, MD
First HSA, Inc.
Reading, PA
9:00 a.m. How to Shop for Medical Services
Danae Powers, MD
State College, PA
9:20 a.m. Legislative and Regulatory Environment
Nate Benefield
Commonwealth Foundation
Harrisburg, PA
9:40 a.m. Questions for the Panel
10:00 a.m. Wrap-up and Send-off
We are also working on similar events in Austin, Texas, Chicago, and either Lansing or Grand Rapids, Michigan, but haven’t firmed up the dates and speakers yet.
ALSO, mark your calendar for our next Annual Meeting and Awards banquet on November 12, 2008 at the JW Marriott in Washington, DC. This is just one week after the elections and we will be featuring a lot of analysis of the elections and plans for coping with the new environment.
We will announce this year’s awards recipients in the near future, so stay tuned.
IN THIS ISSUE:
I’m excited to announce that the newest member of CHCC’s Corporate Roundtable is Cancer Treatment Centers of America. With inpatient facilities in Philadelphia, Seattle, Zion (Illinois), Tulsa, and soon Phoenix, CTCA is a fulfillment of Regi Herzlinger’s vision of “focused factories” that concentrate multi-disciplinary care on a particular condition.
The CTCA Web site explains, “Our cancer experts specialize in a variety of disciplines. Your CTCA care team may include: medical, surgical and radiation oncologists, hematologists, pulmonologists, gastroenterologists, neurologists, gynecologic oncologists, orthopedic oncologists, anesthesiologists, pain management physicians, pathologists, internists, and more. In addition, your care team also includes naturopathic medicine providers, registered dietitians, cancer rehabilitation therapists, mind-body specialists, and even chaplains to support you during treatment.”
Cancer Treatment Centers of America continues the Roundtable tradition of being home to the most innovative and creative companies in American health care.
Roundtable member HSA Bank this week announced a new relationship with Health Care Service Corporation, the parent company of Blue Cross Blue Shield plans in Illinois, Texas, Oklahoma, and New Mexico, the fourth-largest health insurer in America. The relationship is keyed to integrating information about a consumer’s health coverage and his or her HSA account.
HSA Bank president Kirk Hoewisch said Consumer-Driven Health Care “can create a segmented customer experience between the high-deductible health plan and the health savings account.” He added that the new relationship should provide consumers with “a more seamless experience.”
SOURCE: Health Care Service Corporation; HSA Bank press release
Roundtable member IncentOne conducted a survey of employers to determine their use of incentive programs to promote their wellness efforts. It found that the use of incentives rose from 62 percent of all major employers last year to 71 percent in 2008. Employers are also learning how to measure Return On Investment (ROI) for wellness programs. The average incentive amount is $200, increasingly in the form of gift cards, which increased from 17 percent in 2007 to 28 percent of employers in 2008. This contrasts with the use of premium reductions, which dropped from 41 percent last year to 26 percent this year.
SOURCE: Business Insurance; go to IncentOne for a copy of the survey.
HSAs and the Wall Street Journal
A reader complained that I hadn’t done anything with The Wall Street Journal article by M.P. McQueen, “HSA Users Find Hassles Amid Savings.” On balance it isn’t a terrible article although it is unfortunate that all the negative anecdotes are cited at the beginning of the article and the positive ones are at the back.
But the author is clearly disadvantaged in not knowing very much about health insurance. For instance, she (I assume M.P. is a she, but I could be wrong) cites that HSAs have deductibles of at least $1,100 for individuals and $2,200 for families, and then comments, “That’s very different from traditional group health insurance, which typically begins right away paying doctor and prescription bills.”
Well, no, it’s not. The most common form of coverage is a PPO and 81 percent of those plans have annual deductible averaging $461, according to last fall’s KFF/HRET survey. Moving from a $461 deductible to a $1,200 deductible is hardly a revolutionary move. In fact, one of the ironic twists of HSA coverage is that it actually provides a source of funds to pay for first-dollar expenses while traditional PPOs do not. Granted that HMOs typically do not have annual deductibles (although that is changing), but they still have significant cost-sharing.
But the problems illustrated in the story’s anecdotes aren’t very impressive, either. Most are not unique to HSAs or represent common issues when shopping for anything. A 46-year-old self-employed man in San Francisco pays $215/month for a $4,000 deductible, but that is pretty high for that coverage. A search on ehealthinsurance.com reveals a host of more affordable options, including an Anthem plan with a $3,500 deductible and no coinsurance for $147/month. The 46-year-old complains that the cost of treatment for a pinched nerve was higher than he expected, so he may switch to an HMO. Good luck saving money that way, but whatever.
Another 34-year old fellow doesn’t get annual physicals under his HSA, but probably would if they were covered. Of course he would, but should 34-year-olds be bothering with annual physicals at all? And another fellow found that service fees for HSA administration were too high at the “full service brokerage,” so he opened one at a bank instead. Is this really a problem? You look at one vendor, decide it is too expensive and choose another vendor instead. Sounds like normal life to me.
SOURCE: Wall Street Journal
Another article in The Wall Street Journal tells a very different story. Simona Covel writes about a New Hampshire start-up company that was looking to install health benefits. The owner, Mark Galvin, got a quote of $1,800 per month per family. He ended up buying a $10,000-deductible HSA plan for $600/month. He saved enough to fully fund each family’s HSA at the maximum allowed ($5,650). But he still had money left over, so he topped off the HSA with an HRA to cover the difference between $5,650 and $10,000.
He says very few of his employees have touched the HRA funds. In fact, very few dip very far into their HSA. Seventy-five percent of the funds deposited in the HSAs were still there at the end of a year and rolled over into the next year. He was asked about the worst-case scenario for his company and he said, “Even if the entire employee base got sick, we would still save 18 percent over what it would have cost us (with traditional insurance.)
He adds that the change took a lot of education of his 55 employees, but that is something a smaller employer is able to do because he is closer to his workforce than a big company would be.
SOURCE: Wall Street Journal
The next time the Journal wants to write about Consumer-Driven Health Care it may want to talk to John Torinus, CEO of Wisconsin-based Serigraph, a firm with 1,200 employees. In an article by Charlie Mathews in the Herald Times, Mr. Torinus is cited as saying, “the key to reining in hyperinflation (in health care) at Serigraph has been the introduction of consumer-driven plans in the past five years.” His company “pays $7,500 per employee for health care, compared to $24,000 per employee at the Cedarburg School District.” Yet the company pays 80 percent of the premium for employees, up from 75 percent in the past. It encourages employees to go abroad for surgery and has a wellness program and an on-site nurse-practitioner. It also helps diabetics and people with high blood pressure manage their conditions. The article concludes with Mr. Torinus saying, “Trust the marketplace, it is a marvelous system,” and that he believes employers should “work on creating an army of health care consumers asking questions and demanding value.”
SOURCE: Herald-Times
Last week we reported on a “report card” developed by the AMA to rank health insurers. Unfortunately, the only performance standard was whether the health plans paid doctors quickly. This feeds the perception that the only thing the AMA cares about is “Show me the money.” This week Employee Benefits News reports on a survey by J.D. Power on “Ranking Health Plans” that the AMA should study to find out how these things should be done.
The article by Robert Whiddon concludes, “Health plans do a bad job communicating with members and they’re getting worse at it.” The company surveyed 40,000 people and found “Fully 55 percent did not understand their health coverage.” The article says information and communications was the measurement plans did the worst on. The other areas studied were provider choice, approval process, customer service, claims processing, coverage and benefits, and statements.
J.D. Power spokesman Jim Dougherty says it is a myth that cost is the primary reason for choosing a health plan. All of these other factors also determine a purchase decision. Dougherty says the survey information can be useful both for benefits managers making a purchase decision and for health plans to improve their performance. Mr. Dougherty also urges employers to be mindful of the downside cost of changing health plans — “member satisfaction dips for 18 months following a plan change (and) such a productivity hit must be factored into the equation.”
SOURCE: Employee Benefits News (link to pdf of entire issue); JD Power press release
Organized medicine really is dense when it comes to financing and economics.
The California Medical Association released a study finding that California HMOs are extremely inefficient and extremely profitable, racking up $8 billion in administrative costs and $4.3 billion in profits. So it supported legislation, SB 1440, requiring health plans to spend 85 percent of premium on patient care. Sounds logical, eh? Well, not really if you consider how markets work. A high level of profitability will attract competitors who would like to share some of those profits by undercutting the prices of the existing companies.
But an 85 percent loss-ratio requirement prevents new competitors from coming in and protects the market share of the existing dominant plans. Why? Because a new company may need to spend extra on advertising and marketing to introduce itself to a new market. And there is a lag time between premiums collected and benefits paid. If a company has mostly new business it will be collecting a lot more premiums than it will be paying out in claims for at least a year. Plus, as the J.D. Power survey cited above indicates, customers place a very high value on qualities like customer service and information, but an 85 percent loss-ratio standard makes it hard to pay for these “administrative” services.
Finally, an arbitrary standard like this means that in order to make more profits a company must raise premiums. The most expensive plans will be the most profitable ones. If new competition is barred there is no restraint whatsoever on the ability of health plans to keep raising premiums (and benefits) in order to achieve maximum profitability. It also discourages lower-premium plans like mini-meds and high deductibles that may have fixed costs but a smaller premium base to spread them over.
None of this is good for physicians, so what was the California Medical Association thinking?
Greg Scandlen is a policy advisor of The Heartland Institute and founder of Consumers for Health Care Choices, a non-partisan, non-profit membership organization aimed at empowering consumers in the health care system.
