Consumer Power Report #157

Published December 16, 2008

I just sent the guy who delivers my newspaper a $20 tip for Christmas. He does a good job getting me the Washington Post every morning and I want him to keep on doing it so I can continue my morning ritual of reading the paper over a cup of coffee with the local news on the TV.

If you like what we are doing here, you might want to consider a holiday tip, too. We work pretty hard and like to think the work is appreciated. We would like to keep on doing it, but we won’t be able to without your support. Unlike the tip I sent my newspaper guy, a contribution to The Heartland Institute is tax deductible.

It’s also easy to do. No postage involved, just go to the CHCC page of The Heartland Institute’s Web site.



Bloomberg News reports on a new study conducted by Milliman and endorsed by the U.S. Chamber of Commerce that finds cost-shifting due to underpayment by Medicare and Medicaid costs private insurers $89 billion a year, raising the cost of coverage for a family of four by $1,788. Richard Umbdenstock, president of the American Hospital Association, is quoted as saying, “Cost-shifting raises premiums to all, forcing employers to cut back on coverage and ultimately contributes to the rising numbers of uninsured.”

Richard Kirsch, of the labor-backed Health Care for America Now, is unimpressed. He calls the underpayment efficient and adds, “Everyone agrees that we need cost controls, but when Medicare does a good job, insurers and hospitals complain.” Hmmmm. I wonder why “cost-shifting” from the uninsured is considered a national problem worthy of turning the entire system upside down, but cost-shifting from government programs is a sign of efficiency? (Rhetorical question. I know the answer.)

SOURCE: Bloomberg News


The Blue Cross Blue Shield Association has released its 2008 survey of member experience in consumer-directed health plans. There is a lot of information here, not all of it positive.

It finds that CDHPs continue to grow substantially, with “70 percent of consumers reporting that an HSA-eligible product is (now) available to either them or their spouse/partner.” The mid-market (250 to 5,000 employees) is most likely to offer an HSA or HRA product.

Approximately 25 percent of consumers who are given a choice of plans choose an HSA-eligible product, but the percentage choosing an HRA has dropped from 23 percent in 2007 to 12 percent in 2008. There is very little difference between those who choose a CDHP plan and those who choose a non-CDHP in terms of age, income, or health status. The biggest difference seems to be in education, where 20 percent of those choosing an HSA and 32 percent of those choosing a non-CDHP have only a high school education.

People in HSAs are far more likely to be concerned about the cost of care, to track their expenses, and to choose lower-cost options for treatment. They are also more likely to participate in wellness programs. Both groups are equally likely to comply with treatment for prevention and for chronic care, but people in CDHPs saved a lot of money due to reduced utilization — $616 per member for those who had a choice of plan and $1,074 per member in a full replacement group.

The percentage of people in an HSA-eligible program who do not plan to open an account has grown from 29 percent in 2007 to 46 percent in 2008. Nearly half of them (48 percent) say they don’t see the value in having an account and 30 percent say they can’t afford to make a contribution. Several things may be at work here. Obviously times are tough and the markets are a mess, so confidence is low. But it also remains that people who pay no taxes get no benefits from a tax-favored account. The answer is an employer contribution, and the numbers of people with an account soar when there is an employer contribution.

There is a lot of other information here, especially on the problems that are showing up with HRAs. People don’t understand them, they feel they aren’t getting much employer support, and they are less satisfied with the programs.

SOURCE: Blue Cross Blue Shield Association


Business Week reports on one of the unexpected consequences of newly empowered patients. They have created social networking sites that enable them to run their own clinical trials. The article says, “as it turns out, patients talking among themselves on a global scale with complete transparency produces all kinds of unexpected results.”

Just one example the article gives is a fellow in Brazil who has ALS. He had heard of some success in Italy of ALS being slowed by the use of lithium. The article says, “No company would be willing to finance a confirming trial of a drug that went off patent decades ago, against a disease that strikes only 4 to 8 people per 100,000.

So Macedo stepped up, proposing to fellow PatientsLikeMe members that they test it themselves.” Some 250 ALS patients participated, keeping track of their experience on a detailed spreadsheet. As it turns out, using lithium did not slow the progression of the disease, so in this case the experience debunked a theory. But isn’t that how science progresses?

The article goes on to discuss some issues related to this development, like questions of privacy and misuse of information for commercial purposes. But the article adds, “many patients find all this talk of consequences and concerns immaterial and patronizing.” They are willing to take that chance if it helps find better treatments for their conditions.

In any case, the cat is out of the bag. Medical networking has arrived and is growing dramatically. Consumers are empowered and no one can predict what they will do with that power.

SOURCE: Business Week


UnitedHealth Offers Coverage-Guarantee Insurance

Here’s an interesting innovation. The New York Times reports that UnitedHealth Group is offering an insurance product that insures your right to buy health insurance in the future. The president of United’s individual insurance unit says, “What this product is designed to do, for a very modest premium, is to essentially protect your insurability for the future.” It costs about $50/month and will be available in 25 states.

The product is aimed at people who are already covered but anticipate losing their coverage due to early retirements or being laid off. They will be able to guarantee acceptance in the future if they become sick and need to find coverage.

It’s impossible to say whether the product will be attractive to many people or if it is priced right. But it is good to see some fresh thinking coming from the industry.

SOURCE: New York Times (requires subscription login)

People Hate Mandates

A new poll reveals overwhelming opposition to the idea of mandating that individuals buy health insurance or face a tax penalty. The survey of 840 adults was conducted by Grove Insight from December 4 to 7 and has a margin of error of 3.4 percentage points.

Fifty-four percent of respondents opposed the idea, just 15 percent favored it. The share “strongly opposed” is quadruple the share “strongly in favor” (40 percent to 10 percent). The press release from the company says, “there are large double-digit margins of opposition among self-identified Republicans, Independents, and Democrats. Opposition is also strong among voters ages 35 to 44, those living in the West, voters living in non-metro regions of the country, households with incomes of $35K to $50K, college graduates, and households with children under the age of 12.”

SOURCE: Consumer Watchdog

Damn the Torpedoes

Connecticut’s Universal Health Foundation is proposing a health insurance plan for anyone in Connecticut, but it isn’t clear whether mandatory coverage would be included. The core idea would be to open the state group to everybody and charge them according to a sliding scale based on income. The proposal is aimed at 326,000 uninsured residents of the state and those with “cut-rate health plans.” The group says it will unveil the specifics in January and hasn’t yet settled on benefit structure, costs of coverage, or how much taxpayers will be assessed.

The proposal is a little peculiar since the cost of coverage in Connecticut is already pretty attractive–less than half of what similar coverage costs next door in Massachusetts.

SOURCE: Hartford Courant


A huge survey by the Physicians’ Foundation finds the nation’s doctors are a pretty disgruntled group. The organization surveyed 12,000 physicians and found, among other things:

  • 78 percent believe there is a shortage of primary care doctors in the United States today
  • 49 percent plan to reduce the number of patients they see or stop practicing entirely over the next three years
  • 60 percent would not recommend medicine as a career to young people
  • 63 percent spend less time with their patients because of non-clinical paperwork
  • 94 percent have increased the time they devote to non-clinical paperwork in the past three years
  • 82 percent said their practices would be “unsustainable” if proposed cuts to Medicare reimbursement were made
  • 65 percent said Medicaid reimbursement is less than their cost of providing care and 36 percent said Medicare provides reimbursement that is less than their cost of providing care
  • Only 6 percent described the professional morale of their colleagues as “positive.” Forty-two percent said the professional morale of their colleagues is either “poor” or “very low”

So, let’s see. The folks in Washington plan to expand third-party payment and grow Medicare and Medicaid. Hardly any new physicians are going into primary care, and the ones who already are doing it plan to bail out in the next few years. What good is universal health insurance if there aren’t any doctors?

SOURCE: Physicians Foundation