Consumer Driven Health Care

Thursday, July 14, 2005

Building Better Buyers

From BusinessFirst:

Building better buyers

More workers are being pushed into high-deductible health plans, but some find it tough to be smart medical consumers

Jeff Bell

Business First

Angie Booth-Peters says Quandel Group Inc. has seen the light with health insurance and it's shining on high-deductible medical plans with tax advantages for employees.

"With the rising cost of health care, you need to put things in the hands of consumers and have them make more health-care choices for themselves," said the human resources director for Quandel's offices in Columbus and Cincinnati.

Zapped by annual premium increases of 20 percent or more in recent years, executives at the construction management company decided to offer a high-deductible plan with a health-savings account to its 60 Ohio employees in January.

The plan allows employees to put pre-tax dollars in an HSA to pay annual deductibles ranging from $2,200 for family coverage to $1,100 for an individual plan. If their health holds up, employees can roll over their HSA contribution year to year to build a rainy- day fund for future medical claims. They can also take the account with them if they change jobs. If they use up the deductible, traditional health-insurance coverage kicks in.

Quandel workers have a choice of the HSA or a traditional preferred provider organization plan. The HSA, however, will become the only option in 2006.

"It's definitely where everybody is going," Booth-Peters said.

Health-insurance industry experts see it that way, too, even though critics of high-deductible plans claim they merely shift costs that fail to address the root causes of skyrocketing health-care costs.

Small-business appeal

In spite of the criticisms, more businesses are offering high-deductible plans, said a study published in May by America's Health Insurance Plans. The trade group for domestic health insurers found high-deductible plans with an HSA now cover more than 1 million Americans, up from 438,000 last September.

Interest in the plans has caught fire since January as employers and workers became more familiar with federal tax treatment on HSAs that took effect in 2004, said Stevan Garcia, chief executive for UnitedHealthcare in Central Ohio.

"We've seen an uptick across the board," he said, "and for the right reasons. If you don't feel the impact of (medical) costs as a consumer, you may not be engaged in managing those costs."

Garcia said consumer-driven health plans aren't a cure-all for rising health-care costs. He thinks his industry needs to keep pushing for evidence-based medicine and lower costs from care providers, along with disease management and wellness programs for health-plan members.

UnitedHealthcare has 970,000 members in consumer-driven health plans nationally, he said. That represents about 4 percent of it 22 million members. The company embraces the plan model so strongly, Garcia said, that it is the only one offered to the 38,000 people employed by UnitedHealth Group, which is UnitedHealthcare's Minnesota-based parent company.

Employers offering the plans through UnitedHealthcare are experiencing savings on premiums from 25 percent to 40 percent, Garcia said. That is especially important to small businesses in the two- to 50-employee range that have been struggling to offer any sort of coverage because of double-digit premium increases in recent years.

Garcia said a 2004 UnitedHealthcare survey found 27 percent of small-business employees enrolled in high-deductible plans were previously uninsured.

Anthem Inc. also is seeing more small businesses shifting to high-deductible plans, said Kevin Hinkle, director of sales in the Columbus office of the Indianapolis-base health insurer. Of the 589 employer groups in Ohio that offer the plans through Anthem, 526 are businesses with 50 or fewer employees. Such coverage is especially appealing to business owners with 10 or fewer workers, he said.

"Those are companies that are just trying to keep their lights on at the end of the day," he said.

Employers generally aren't interested in taking the high-deductible route, Hinkle said, unless the premium savings are at the double-digit level.

Effect on costs

Hinkle and Garcia said they are seeing more companies, large and small, move toward making high-deductible plans with an HSA the only choice for employees.

The growing acceptance of high-deductible plans is troubling to Cathy Levine, executive director of the Universal Health Care Action Network of Ohio, an advocacy organization for those lacking adequate health care coverage.

Levine thinks high-deductible plans with an HSA work best for the "healthy and wealthy" but not for those at lower income levels or with chronic health conditions that require regular spending on prescription drugs and doctors.

"If you pull the healthy and wealthy people out of the big insurance pool," she said, "the cost of buying coverage for people with chronic health conditions will go even higher. I see HSA plans worsening the cost crisis in health care."

Levine also said lower-income workers are less likely to be able to afford the higher out-of-pocket expenses that come with high-deductible plans. That could push more people into medical bankruptcy, she said.

To avoid such a fate, workers will make health-care choices based on what they can afford instead of what their doctor think they need, Levine said.

"Consumer-driven health plans turn consumers into second-guessers of their doctors," she said.

High-deductible plans also drew fire in a study published this year by the Commonwealth Fund, a New York-based foundation that supports research on health and social issues. It found 38 percent of adults in high-deductible plans reported at least one of four cost-related problems: They are not filling a prescription, not getting needed specialist care, skipping a doctor-recommended test or follow-up visit, and not visiting a doctor or clinic when they have a health problem.

By contrast, 21 percent of adults with no deductible reported one of the four access problems.

The study also said 44 percent of those with annual incomes below $35,000 and a deductible of $500 or more would experience at least one of the access problems. That compares to 21 percent of higher-income adults with deductibles under $500.

Better decisions

Those issues aside, some employers appear to be pleased with how high-deductible plans are working for their companies, says a survey published this spring by Segal Co., a New York-based benefits, compensation and human resources consulting firm.

At least half of the employers in the survey reported their overall medical and prescription drug costs had fallen since they introduced high-deductible coverage. Only 6 percent of the employers said the plans had not been successful.

Yet a substantial majority of the employers said their workers don't have detailed information about physician and hospital costs and quality of care to make cost-effective health-care decisions.

"The (usefulness) of information will determine how effective the plan is and how well it encourages people to use it," said Werner Gliebe, a senior health consultant with Segal who has clients in Central Ohio.

"I don't think the bulk of the population is there yet," he said. "It's certainly a gradual learning process, but people already seem to be making those kinds of choices more effectively on drug purchases as opposed to medical services, which are more complex."

UnitedHealthcare's Garcia said a study the company completed in 2004 found an 8 percent increase in the use of preventative care by high-deductible health plan members. It also saw a 19 percent reduction in emergency room visits by those health plan members, with 43 percent saying they are now more likely to call the insurer's nurse line for preliminary medical advice instead of going to the ER.



© 2005 American City Business Journals Inc.

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