Consumer Power Report: Election Fallout

Published January 1, 2007

Managed care companies took an instant hit in stock prices when the November 2006 election results came in. MarketWatch reported United Healthcare dropped 3 percent in one day, Cigna dropped 2 percent, and Humana was down 6 percent.

The MarketWatch article noted, “Analysts began to caution that the salad days for the industry, which doubled profits while most of the rest of corporate America lost money during the first years of the decade, may be nearing an end.”

Source: “Health insurers feel no love after Democrats’ win,” by Russ Britt, MarketWatch, November 8, 2006,{61B75AE9-B277-4D88-A551-819F439C72B9}

Pressing for More Government

Ron Pollack of FamiliesUSA is giddy about the new, Democrat-led Congress. He said it “will have a profound impact on national health policy making in 2007 and 2008.” He is especially excited about expanding the State Children’s Health Insurance Program (SCHIP) because 9 million children remain uninsured.

It sounds like SCHIP hasn’t worked very well if 9 million kids are still uncovered, but there you go. If a program doesn’t work very well, the Left’s answer is to reward it with more money.

Source: “The Impact of the Congressional Elections on Health Care,” Common Dreams Newswire, November 8, 2006,

Leftist Echo Chamber

ABC News did a roundup of “health care experts from around the country to comment on what this change in House leadership might mean.” Of course, the commentators are all liberals, with the sole exception of Gail Wilensky. Most echo Ron Pollack’s predictions about SCHIP and Part D. The ones who don’t expect much change bemoan the fact that Republicans still have some influence.

Source: “Will the Dems’ House Victory Make a Difference in Health-Care Reform?” by Dr. Tim Johnson, ABC News, November 8, 2006,

Good News on HSAs

Cigna, the employee-benefits company, reported startlingly good results with its “Choice Fund” program. A study by the firm released in November 2006 looks at the experience of 38,200 people who switched from an HMO/PPO to an HSA or HRA at the start of 2005. According to the study:

  • Choice Fund enrollees improved from spending 19 percent of their total health care costs out-of-pocket to 16 percent after enrolling in Choice Fund. This is on top of premium savings, which “are typically 10 percent to 20 percent lower for consumer driven plans.” The savings spanned all levels of utilization.
  • Cigna checked compliance with “302 evidence-based measures of health care quality,” and found Choice Fund enrollees continue to “receive recommended care at the same or higher levels as those enrolled in traditional care.” Plus, the use of preventive care increased for Choice Fund members.
  • Sixty-eight percent said “they are more actively working to maintain or improve their health than they were two years ago” and 58 percent said they are “more personally involved” in making decisions about their health than they were two years ago.

Interestingly, the HSA/HRA enrollees place a higher value on quality information than on cost information. Choice Fund Vice President Michael Showalter said, “Consumer-focused approaches in health care have awakened the need for more information and support that helps consumers make informed decisions and helps them better interact with the health care system.”

The study compared HSA and HRA enrollees’ experiences before and after the switch from other providers and also compared it to 231,600 people enrolled in PPOs and HMOs during the same time period. The data were supplemented with a phone survey of 406 people in a Choice Fund program and 401 people in traditional coverage.

Source: “CIGNA Choice Fund Members Spending Less Out-of-Pocket, Continuing to Receive Recommended Care,” CIGNA Health Care, November 8, 2006,

Post-Retirement HSA Advantage

One often overlooked advantage of HSAs is the opportunity to save for post-retirement health care needs, according to a November 5 article in the Everett Herald.

Fidelity Investments estimates the average health care expense for a retired couple is $200,000. Fidelity’s Brad Kimler suggests a person could save $170,000 in an HSA even if he started the account as late as age 45.

Jeff Mund of Hewitt Associates called HSAs, “the triple crown of tax treatment.” He added, “It’s the only place in the tax code where you truly have money that is never taxed.”

Source: “Health Savings Accounts Help Pay Big Medical Bills,” by The Associated Press, Everett Herald, November 5, 2006,

Greg Scandlen ([email protected]) is president of Consumers for Health Care Choices in Hagerstown, Maryland.