August 20th, 2009 by EvanFalchukJD in Better Health Network, Health Policy, Opinion
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As I’ve blogged about before (here, here, here and here), a big reason reform is going so badly is this: Reformers don’t understand how people react when you try to make changes to their health benefits.
Companies across America have been making changes to health benefits for years.
Reformers seem to have ignored the lessons of their experience.
Take one of the hottest trends in benefits – evidence-based plan design.
These are plans that offer better coverage if care is done based on evidence-based guidelines. It’s similar to the “comparative effectiveness” ideas that are so important to some of the reform proposals.
The National Business Group on Health published a study of challenges companies face implementing these plans. The study tried to understand how employees feel about these kinds of changes to their benefits.
Here are three of the major findings.
1. Most employees believe that more care is better care. Employees tend to view the idea that sometimes less care is the right care as “both unfamiliar and counter-intuitive.” Quality care is viewed as “trying as many things as possible, including new or alternative treatments.” In other words, you get what you pay for, and efforts to pay less are interpreted as efforts to give less.
2. Employees are suspicious of their employer’s motives. Employees tend to assume that their employer just wants to save money, and doesn’t really care about the quality of care they get. They suspect that moving to an evidence-based plan design is really just the first step toward more severe restrictions on choice and access.
3. Employees worry that employers are overstepping their bounds. Employees report worries that their employer wants to influence treatment decisions. They feel strongly that those decisions should be made by them and their doctor.
Reformers made a big mistake by focusing so intently on health care cost savings as the “single most important fiscal issue we face as a country.” It’s almost as if they decided to pick a way to promote reform that would create the most resistance.
Spend less on health care? That was almost certain to be understood as meaning you want to deny me or my loved ones the care we deserve. A panel of government experts deciding what treatments are effective? Who are they to tell me and my doctor what’s right? And don’t you dare tell me the reason you want to do all this is to make sure I get the best care.
Reformers have stumbled into a trap of their own making. Based on the continuing effort to demonize those who raise objections, they still don’t see it.
This is why reform is going so badly.
*This blog post was originally published at See First Blog*
August 3rd, 2009 by EvanFalchukJD in Better Health Network, Health Policy
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I thought everyone knew the major goal of health care reform is to control spending.
Then why are Democratic leaders proposing changes that would outlaw some of the most successful cost-savings programs in the country?
Today’s The Hill reports on the new strategy to attack insurance companies as “villains.” No doubt, health insurers have a bad reputation and have done plenty to earn it. As the Hill reports, the message is going to be that the reform plan will lead to “capping what [insurers] can force you to pay in out-of-pocket expenses, co-pays and deductibles.”
But for at least half of Americans – those who work for large and mid-sized companies and their families – their “insurer” is actually their employer. And many of these employers have been using out-of-pocket expenses, co-pays and deductibles to improve employee health, and reduce the cost of care. They are creating strong wellness programs and creating financial rewards and penalties, all based on employee participation.
As I wrote in April:
Companies like Safeway, Wal-Mart, Michelin, General Mills, Marriott and so many others have implemented programs to create a “culture” of wellness among their employees and their families. Leaders at these companies constantly talk about living healthy lifestyles, and are paying to make it happen. At Michelin, employees get a cash reward for getting a biometric screening and for participating in company-sponsored health improvement programs. It even started work-site exercise programs, including yoga (although it found that with a workforce that was 82% male it had to call its yoga classes “strengthening and conditioning”).
General Mills published wellness statistics about its different plants and found that the workers in each one competed with the others to get the best scores for BMI and other important health metrics. Marriott found that by eliminating co-pays on drugs for certain chronic diseases, more employees followed doctors’ orders to take them, and although Mariott’s drug costs went up, overall health expenses went down. Abbott Labs brings in motivational speakers and set up weigh-in kiosks in its offices that took pictures of employees as they got healthier so they could see the difference. All of these companies reported on enthusiastic participation, and a sense among employees that their company cared about their well-being.
Safeway has taken this idea even further, and redesigned its entire benefits plan around this concept. Employees who live unhealthy lifestyles and refuse to participate in wellness programs pay more for their health insurance — just like a bad driver pays more for auto insurance. Safeway did this in a highly positive and motivational way, making available a wide array of free services to help employees be more healthy and enjoy lower health premiums. The results have been dramatic: Steve Burd, Safeway’s CEO reported at the WHCC that Safeway’s health costs have been flat since 2005.
This Safeway model – creating both soft and hard incentives for employee health – is one of the fastest growing trends in plan design. The idea is to give employees control over their own health care, including financial responsibility. When this happens, employees live healthier, look for value in their health care spending, and overall costs are lower.
And yet the statements from the Congressional leadership suggest they want to severely limit these kinds of innovations.
It may be good politics to demonize the insurers, but we should realize that “insurers” aren’t exactly who we think they are. Health reform that stifles the innovation that’s working at America’s best companies is no reform at all.
*This blog post was originally published at See First Blog*
July 27th, 2009 by EvanFalchukJD in Better Health Network, Health Policy
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Gary Schwitzer links to a Business Week article that says health insurance is a very uncompetitive market. Schwitzer notes this hasn’t gotten much attention, and wonders if it is a reason why health insurance premiums keep going up.
It is – and it isn’t. As with most things in health care, there’s more to it than it seems.
Business Week and Schwitzer are right that the market for health insurance is not especially competitive. Most states have one or two dominant health insurers, and a number of other much smaller players. The smaller insurers are often at a big disadvantage. I blogged about this a couple of months ago.
But the question of the cost of health insurance is something that mostly affects small employers – the companies that employ some 55 million Americans.
As companies get bigger, they minimize their exposure to the insurance market. Mid-sized employers (between about 500 and 2,500 employees) buy so-called “stop loss” coverage. Under these plans, they self-insure for some of the risk, and buy coverage for unexpectedly high expenses. It’s sort of like a high deductible plan, except it’s for the company. That market is, in fact, highly competitive, and serves many of the 14 million Americans who work for companies of this size.
Really big companies – which employ 43 million Americans – don’t buy health insurance at all. They hire a health plan to administer their expenses, but have completely opted out of the health insurance market.
So is the uncompetitive health insurance market driving health care premium increases?
It doesn’t help, but there here are three other things that we don’t talk enough about that are driving these increases:
1. State coverage mandates. Each state requires that insurers who wish to sell there comply with a huge variety of coverage mandates. In fact, there are nearly 2,000 mandates, some of which add significant costs to health insurance. Adding new mandates is a regular activity of state governments, based on the political clout of patient groups, pharmaceutical companies and others. State governments have had an important role to play in driving premium increases.
2. Guarantee issue requirements. The other thing some states have done is outlaw medical underwriting. This means that if an uninsured person gets diagnosed with an illness, he can just go out and buy an insurance policy and, for the cost of an annual premium, get all the care he needs. He can even cancel the policy after he’s done being treated, and buy one again if he gets sick again. There may be valid public policy reasons to make health insurance guarantee-issue. But the reality is that insurers have to add in additional premium to account for the fact that their risk pool includes in it much more costly individuals than otherwise would. There is no free lunch.
3. Other cost-shifting. Studies show that tens of billions of dollars a year of uncompensated health care to the uninsured is provided by medical providers. They try to offset these costs by negotiating higher payment rates from private insurers. The same is true for government-funded programs. As these programs have attempted to control costs by simply paying less, providers have tried to recoup those reductions through higher fees to health plans. In each case, the ultimate cost is passed on to the consumer. Some groups think this kind of cost-shifting adds 5-10% to annual premium rates.
There are, of course, lots of other reasons for the rapidly increasing health insurance rates. These are few of the less discussed that we ought to talk about more.
*This blog post was originally published at See First Blog*
