Consumer Power Report #138

Published August 1, 2008

The chickens are coming home to roost.

I won’t spend a lot of time on Ted Stevens. He will be tried and found guilty — or not. But it is interesting how often the biggest pork producers get caught with their own hands in the cookie jar (or pork barrel, to keep my metaphors straight). While I’m no great fan of John McCain, I will give him credit for his long-standing objections to all of these sleazy practices. The really amazing thing is how cheap these guys are willing to sell their honor for.

But Ted Stevens is a lightweight compared to the politicians who have been spending every dime they can find on government programs. We’ve had a pretty good economy for a few years and tax revenues have been flowing in to the coffers. So, of course it must all be spent (oh, excuse me — “invested”).

You know about the soaring federal deficit, but the states are feeling the same pinch. At its recent meeting in New Orleans, the National Conference of State Legislatures (NCSL) released some new budget reports. As recently as April the NCSL reported that 23 states were facing budget deficits of $26 billion for fiscal year 2009 (which started July 1, 2008). By June, that number increased to 31 states with $40.3 in deficit, and many states have yet to report, including California, Illinois, Michigan, and North Carolina.

There is, however, a big silver lining in this cloud. It is unlikely these states will try much in the way of radical health reforms until the economy improves. In California late last year, Governor Schwarzenegger’s ambitious $14 billion health plan came to a screeching halt when the legislature realized the state was already $14 billion in the red.

This year, we are a month into the fiscal year and California has yet to pass a budget. It sure makes you want to entrust these clowns with your health care, doesn’t it?

SOURCE: Stateline



A legislative staffer I deal with a lot sent me a link to a recent article by Steve Davis, the editor of Inside Consumer Directed Healthcare. In this case, he was writing in a sister publication, Health Plan Week. The story is about state and local government feeling besieged by rising health care costs. My contact was particularly interested in part of the story that cites Meeker County, Minnesota as experiencing rate increases of 16.8 percent this year and 17 percent last year, even though they had switched to an HSA program three years ago. The article concludes that, “the strategy has been ineffective to date at holding down rate hikes.” What’s going on here, my contact wondered.

The article mentions that the County got its coverage from Blue Cross Blue Shield of Minnesota. To understand the significance of that, you have to have read an earlier article in the Minneapolis Star Tribune by Chen May Yee. This story was widely noticed for highlighting the travails of a Josh Gruber who had been disappointed in the savings from his HSA, especially in light of the added work involved with the program.

Less noticed in the story was this quote, “Blue Cross confirms that premiums for its HSA-linked plans — the fastest-growing segment of the health-insurance market — are rising in tandem with older plans. Minnesota’s biggest health insurer explained that the new plans are still based on the old concept in insurance: pooling risk. HSA enrollees are pooled with those in traditional plans to fix next year’s premiums. “It’s not intuitive,” admitted Shawn Patterson, Blue Cross vice president of marketing. But the more people who sign on, the greater the likely impact on spending, he said.”

So, HSA experience is pooled with the experience of every other type of program, and they all get the same rate increase — even though other studies confirm that the trend for HSAs is about one-third of HMOs and PPOs. When Mr. Patterson says larger enrollment will have a greater impact on spending, he means only that people in HSAs will lower the cost increases for everybody, not that they will benefit from their own prudent use of services.

This is outrageous. There is a rationale for pooling different kinds of benefit designs together if one design is a tiny niche product that doesn’t have enough enrollment for “credible” experience. But that is not the case for HSAs, which the article describes as “the fastest growing segment of the insurance market.”

No. What all this says is that BCBS of Minnesota doesn’t want HSAs to grow because BCBS of Minnesota doesn’t get as much premium revenue from this product. They don’t want HSA holders to benefit from their reduced consumption. They want HMO and PPO enrollees to benefit from what HSA holders are doing.

SOURCE: Health Plan Week; Star Tribune


Health Affairs has published an important new study on Pay For Performance (P4P) that concludes it has had virtually no impact on physician practice. That is not to say physician practice isn’t improving with time, but P4P programs have little to do with it.

The study looks at 5,350 physicians in 154 physician groups in Massachusetts from 2001 through 2003. Overall about half of these physicians were in P4P programs established by five health plans that cover four million enrollees in that state. The plans reported information about physician compliance with thirteen measures of performance established by the National Committee for Quality Assurance known as HEDIS measures. It compared physicians who were “highly incentivized” by P4P bonuses to physicians who were not involved in P4P programs.

This e-mail program doesn’t allow for complex tables, so it is hard to show the information graphically, but here are some highlights —

Breast Cancer Screening: “Highly Incentivized” Physicians (we’ll call them HIP below) complied with HEDIS measures 82 percent of the time in 2001 and 82 percent in 2003, while the comparison group (call them non-HIP) complied 83 percent in 2001 and 84 percent in 2003.

Cervical Cancer Screening: HIP — 84 percent in 2001, 86 percent in 2003; Non-HIP — 84 percent in 2001, 86 percent in 2003.

Chlamydia Screening ages 16 – 20: HIP — 31 percent in 2001, 41 percent in 2003; Non-HIP — 30 percent in 2001, 39 percent in 2003.

Chlamydia Screening ages 21 – 26: HIP — 31 percent in 2001, 36 percent in 2003; Non-HIP — 34 percent in 2001, 39 percent in 2003.

Diabetes Care, eye exams: HIP — 51 percent in 2001, 54 percent in 2003; Non-HIP — 52 percent 9in 2001, 56 percent in 2003.

Diabetes Care, HbA1c tests: HIP — 81 percent in 2001, 85 percent in 2003; Non-HIP — 81 percent in 2001, 87 percent in 2003.

Diabetes Care, LDL-C screen: HIP — 79 percent in 2001, 88 percent in 2003; Non-HIP — 80 percent in 2001, 89 percent in 2003.

Well-Child, age 3 – 6: HIP — 81 percent in 2001, 86 percent in 2003; Non-HIP — 87 percent in 2001, 90 percent in 2003.

Well-Child, adolescents: HIP — 34 percent in 2001, 40 percent in 2003; Non-HIP — 57 percent in 2001, 62 percent in 2003.

Leaving aside the question about whether any of this measures anything meaningful — other than marking off boxes on a check list (notice there is nothing here about actually listening to your patient, or finding and treating anything that might be wrong, or persuading the patient to change behavior), what else does it show us?

It shows us that the much-vaunted pay-for-performance system is useless, not withstanding the fact that private payers, Medicare, and the presidential candidates all promise that such programs will save the health care system. In fact, on many measures the “non-incentivized” physicians improved more than those who were “highly incentivized.” Golly, is it possible that physicians actually pay attention to the emerging literature and freely change their practices in the interests of good patient care? Oh, no, that can’t be it.

SOURCE: Health Affairs P4P Study


The trade publication Business Insurance devoted an entire section to consumer driven health care recently. This is important because the Crain’s publication is must-reading by risk managers, major brokers, HR executives, and CFOs around America. It is highly regarded and employs some of the best business writers in the country.

The series features an analysis by Washington-based Jerry Geisel about the changing political environment and how HSAs may fare. He cites the enthusiastic support of the Bush administration and the Republican Congress, but says the Democratic House-passed “substantiation” requirement may be a sign of things to come. But several observers quoted in the article say that there are now too many people with HSAs for them to be repealed.

SOURCE: HSAs in the New Congress

Louise Esola wrote three articles about the importance of employee education in converting from low co-pay programs to higher deductible plans. She quotes AON’s Bill Sharon as noting with the right kind of education, employers see 40 percent to 50 percent enrollment by workers. A related article cites Humana early experience with its own employees. Only 6 percent initially signed up in 2000 and they were mostly actuaries and accountants because they understood the numbers. But the company has worked with the rest of its workforce to help them understand the math and now CD Health is the sole benefit program for the company. A third article describes the experience of Atlanta-based BlueLinx and how their employees have come to embrace the program and change their shopping behavior.

SOURCE: Employee Education Overview; BlueLinx Experience; Humana Experience

Joanne Wojcik focuses on how high-deductible health plans have fueled the growth of retail clinics. She writes, “once the CDHP market started to ignite, so did the retail clinic industry. Today there are about 1,000 retail clinics operating in the United States compared with about 100 in 2006.” A related article looks at how Black & Decker has been building a relationship with MinuteClinics. It includes a commissioned study by Mercer of three year’s worth of experince.

SOURCE: Black & Decker Experience; Retail Clinic Overview


Greg, I would be happy to discuss our home office employee experience with a high deductible HSA. We converted our employee plan over three years ago and our experience has been unbelievable since. Last year’s loss ratio was 57 percent and I am spending less as a percent of payroll today for my employee healthcare including employer contributions to employee’s HSAs than I did three years ago. It’s amazing what happens when people shop for their healthcare. We have also had terrific experience with our individual health business. 42 percent of our high deductible HSA qualified plans actually fund their HSA’s and our average balance is over twice the industry’s average at over $2,000. We still pay 6.15 percent interest and it’s clearly working for us.
Ben Cutler
CEO, US Health Group
Fort Worth, Texas

I’ve been signed up for your column for years and read the piece about stop attacking HSAs. Of course they are no cure for all that is wrong but it I think they help in other ways. If people can accumulate any sort of a balance by retirement it will help for retiree health care (will anyone have employer retiree coverage in 10-20 years and what about Medicare?).

And the move to say the accounts are only for healthy and wealthy may be partially true depending on the study du jour you read but how can people shoot down a tax advantaged savings tool at the same time politicking for additional ways to promote savings in general and for retirement as people bandy about occasionally super 401k/IRAs which are tax advantaged.

Certainly I know it’s a lot of politics by both sides but putting aside all the health public policy issues raised by a high deductible plan just having the ability to save under HSAs has so many other reasons to keep these accounts around.


Aaron Graham

Thank you, Greg,

The (HSA Bank) survey dispels some erroneous thinking around here, namely, that HSAs adversely affect important health decisions/treatment
Dr Robb