Deloitte Consulting has released its latest annual survey of large employers and has found a high degree of support for consumer-driven health plans (CDHP).
Perhaps the most revealing question in “Reducing Corporate Health Care Costs: 2006 Survey” was, “Which health plan type offers the most effective approach for managing costs and maintaining quality of care?”
When the question was asked in 2003, consumer-driven health wasn’t on the radar screen at all. At that time 57 percent of respondents said preferred provider organizations (PPOs) were most effective, 26 percent said health maintenance organizations (HMOs), 13 percent said point-of-service (POS) plans, and 4 percent said traditional indemnity.
In just three years, CDHP has become recognized as the most effective plan design, cited by 40 percent of respondents. This year, 35 percent still cited PPOs, 18 percent HMOs, 6 percent POS, and 1 percent traditional indemnity.
In cost containment, those companies actually using CDHP have had more positive experiences than those using other models. For two consecutive years, CDHP premiums have risen at one-third the rate of other plans. The numbers in the accompanying table reflect the growth in premiums from 2004 to 2005, and then from 2005 to 2006, for various kinds of benefit plans.
Companies are also switching from health reimbursement arrangements (HRAs) to health savings accounts (HSAs), the survey finds. Of the companies that have been offering a consumer-directed approach, 44 percent use an HRA and 44 percent use an HSA. But of the companies that are considering offering such an approach, only 28 percent plan to offer an HRA, while 55 percent plan to offer an HSA.
Source: “Reducing Corporate Health Care Costs: 2006 Survey,” http://www.deloitte.com/dtt/cda/doc/content/us_chs_red_cor_hea_costs_0106.pdf
‘Wal-Mart Bill’ Proposed in NY
In early March, The Business Review of Albany, New York reported on a “Wal-Mart” bill proposed in that state. The sponsor, Sen. Diane Savino (D-Brooklyn), a former social services workers union official from New York City, was quite direct in saying the bill “is part of an overall (national) campaign to show why Wal-Mart is bad because of how they operate.” Savino’s bill would apply to all employers with more than 500 workers, and would require them to pay to the state a monthly assessment of at least $460 per worker for “minimal” coverage.
The article reports that some 30 states are entertaining similar legislation. Rep. Alexander Grannis (D-New York City), chairman of the New York General Assembly’s insurance committee, said he doesn’t care for this employer mandate but is excited by a proposal in Massachusetts, supported by Gov. Mitt Romney (R), that would require all individuals in the state to have some kind of health insurance, or pay a penalty.
Source: “NY legislators ride anti-Wal-Mart wave on employee health coverage,” by Joel Stashenko, The Business Review, March 3, http://www.bizjournals.com/albany/stories/2006/03/06/story3.html
A little-noticed article by Joanne Wojcik, published in the March 13 edition of Business Insurance, pointed out Wal-Mart and other private entities are not the only employers failing to provide health insurance coverage. “While Dunkin’ Donuts may be No. 1 on the Massachusetts list of employers with 50 or more employees using public assistance,” Wojcik wrote, “the city of Boston is not far behind, ranking sixth on the list.” She added that “in Texas, 15 of the 20 employers listed as having large numbers of kids enrolled in the state [children’s health insurance] program are public employers.”
In Washington, Wojcik noted, 10 percent of state employees are on Medicaid. The reasons public employers give for this are similar to those that private employers offer: part-time and temporary workers, people with spousal coverage, people who refuse to pay their share of the premium, and so on.
Source: “Public Employers Cut Health Benefits,” by Joanne Wojcik, Business Insurance, March 13, http://www.businessinsurance.com
Pay or Play in Massachusetts
It will be interesting to see if the city of Boston will be one of the employers affected by the state’s proposed “pay or play” mandate, which would require employers to provide insurance coverage for their employees or pay into a state fund that does so. Don’t be surprised if it is not. Public hospitals often are exempt from complying with the malpractice rules that govern private facilities.
The February edition of Boston Business Journal reported “business leaders” are willing to support a penalty on employers who don’t provide coverage. But they want to keep the penalty down to $62 per employee, while some proposals want to assess employers $800 per employee annually. So these “business leaders” have already caved in on the principle–now it’s just a matter of setting the price.
Some people never learn. Whatever the fine may be this year, it will be more next year, and so forth. Of course, like the Wal-Mart bills, this idea will never survive an ERISA (Employee Retirement Income Security Act) challenge, so it is really just another tempest in a teapot.
Source: “Biz groups buy into fee for uninsured,” by Mark Hollmer and Mark Leccese, Boston Business Journal, February 24, http://www.bizjournals.com/boston/stories/2006/02/27/story3.html
Premium Tax Waiver in Georgia
Georgia is taking an entirely different approach in encouraging businesses to offer coverage. The legislature is considering waiving the premium tax on HSA-qualified insurance plans, according to the March issue of the Atlanta Business Chronicle.
House Bill 1254 could reduce premiums by 5 percent, according to the article, and is supported by such heavy hitters as House Majority Leader Jerry Keen (R-St. Simons Island) and Earl Ehrhart (R-Powder Springs), chairman of the House Rules committee.
Georgia Insurance Commissioner John Oxendine supported the idea, saying, “I strongly believe that with health care we’ve got to get the American family more involved.”
Source: “Tax break on health plans proposed,” by Erin Moriarty, Atlanta Business Chronicle, March 3, http://www.bizjournals.com/atlanta/stories/2006/03/06/story2.html
Greg Scandlen ([email protected]) is president of Consumers for Health Care Choices in Hagerstown, Maryland.