Predictions about Health Care (including Consumer Driven Health)

Wondering where you could find information about lowering the cost of Health Care? In the newspaper, radio, TV, and the Internet there is plenty of information about Health Care. You can also find quite a bit of advice on how to “fix” your company’s Health Care problems.

A survey done by United Benefit Advisors (UBA), showed three clear and remarkable findings:” First, only 22% of employers believe the primary responsibility for controlling healthcare costs reside with the parties directly involved: the employees, the physicians, and the hospitals. Almost all responsibility has been ceded to intermediaries: insurers/health plans, government, and employers.

Second, an overwhelming majority of employers believe the federal government has a definite role to play regarding health care: that of requiring all hospitals, physicians, and insurers/health plans to publicly disclose all cost and quality information.

Employers desire access to the cost and quality information that both employers and employees need and deserve in order to make informed health care purchasing decisions in advance of receiving care. Both the employer and the employees have to be allowed to purchase health care the same way they purchase a home, a car, or any other goods or services.

Third, employers predict two significant changes to the health care system in the next five years:

1) All hospitals, physicians, and insurers will be required to publicly disclose all cost and quality information in advance of purchasing care or purchasing insurance.

2) Employers will increasingly adopt a "total compensation" approach whereby employees will receive a single compensation amount over which they will have total control to allocate their money toward take-home pay, health benefits, retirement or savings plans, or non-health benefits in the manner they feel appropriate to their needs.

The results of the survey indicate that nearly all employers, regardless of size or industry, are determined to change the way employers and employees purchase health care. Soon there will be no more intermediaries. Employees want and deserve control over how their money is allocated and which providers they use for care.”- UBA website 

WHO CAN FIX THE HEALTH CARE PROBLEM? 

We do not believe that the federal government can “fix” health care. And everyone agrees that one company alone cannot “fix” health care. We believe that it must be a combined effort by a lot of companies on a national level who get the federal and state governments to quit “legislating” health care as an entitlement. 

One good example is Wal-Mart- who happens to be one of the largest employers with the greatest number of employees in North America.

As far as Wal-Mart is concerned, health care is a national problem. In order to fix it, Wal-Mart feels that the government, corporations, and workers are supposed to join their efforts to find ways to make the system more efficient. The key step would be to find out what is driving up health care costs and then weed out the inefficiencies in the system. Another important component would be to develop or acquire information technology expertise to help develop a system for keeping electronic medical records as another way of reducing costs.

One result is that Wal-Mart has offered HSAs and HRAs to its employees. Another leading edge effort by Wal-Mart is to open medical treatment facilities within Wal-Mart stores. The bottom-line result for Wal-Mart will be lower costs and better utilization of health care services by its employees.

We see another three trends in health care. Now ask yourself who would be better qualified and able to address these trends: The rate of change in information is increasing exponentially and there is information overload.

So historically, have corporations been able to better access and adapt to change and process information better than the Federal government?

-  As a percentage of GNP- health care costs and its infrastructure is growing faster than any other sector.

So do you agree that Management at corporations has listed Health Care Costs as a critical issue and the Federal Government cannot get Congress to make it the top priority?

– Employee/Consumers want to make their own decisions about health care. Is that more the thinking of Management at Corporations or does the Congress and Federal Government really agree with that philosophy? 

Honestly- you already know the answers to these questions above. Now what about local government? Are they better prepared to “fix” health care? Some attempts by local and state government to mandate health care coverage often come with less than desirable side effects.

The State of New York's "Fair Share for Healthcare Act" attempts to increase individual healthcare coverage through costly mandates on businesses. This proposal would ultimately cost up to 100,000 jobs and impose as high as a $9.2 billion hit to business. This still leaves 83% of the uninsured without coverage. The devastating impacts of this bill are illustrated by an EPI-sponsored study conducted by University of Kentucky and the Economist Dr. Aaron Yelowitz. The study found that while only 17% (466,000) of New Yorkers in need of healthcare coverage would be affected by the bill, businesses will be forced to pay for what is essentially redundant coverage for over 586,000 currently insured New Yorkers.

Furthermore, since it would mandate redundant coverage for many already insured employees, so the cost per newly insured employee could be as high as $19,617 a year.

"It's obvious that trying to remedy the healthcare crisis through employer mandates does little to address the problem of the uninsured," said John Doyle, of the Employment Policies Institute (EPI).The New York’s mandate is ineffective, not to mention costly.

To read the study, "The Impact of the 'Fair Share for Health Care Act' on New York's Labor Market," visit http://www.EPIonline.org/studies. The Employment Policies Institute is a nonprofit research organization dedicated to studying public policy issues surrounding entry-level employment.We also do not believe that the State of Massachusetts’s mandated health care coverage will be successful in the long term after the first three years.

When a state mandates that certain coverages like maternity,  unproven surgical procedures, designer drugs and mental health coverages must be included- then the ability to control health care costs is minimized. The proposal from Massachusetts  requires that individuals buy certain health insurance and they claim it is much the way they would buy car insurance, giving the responsibility to the employee. The problem is car insurance does not require that you insure it for collision and repair- only for catastrophic incidents. So you can see the difference. And you will see escalating costs in Massachusetts’ health care after 3+ years.

SO CAN THE EMPLOYEE/CONSUMER MAKE IT WORK? 

It is obvious that the employee/consumer is slowly becoming better educated and interested in controlling his/her own healthcare. For instance, Blue Cross Blue Shield in a 2005 Survey stated that 60% of Americans have looked up information to make a better informed medical treatment decision. 94% who have not searched said they would if they or other family members needed medical care. 80% say they still talk to their primary medical provider but in addition 70% say they use the Internet as their basic research tool. 

To make my argument even stronger I am going to refer to several surveys. One is done by the Council for Affordable Health Insurance (CAHI) and was released recently. According to the survey Americans are ready to become health care consumers, if given the tools to do so.

Zogby International surveyed the public's attitude about the need for pricing disclosure in the health care system, and whether consumers would take advantage of that information.

The nationwide poll of 1,209 interviews asked: "Do you agree or disagree that hospitals, doctors, and pharmacies should publish their prices for all goods and services?" Fully 84 percent agreed, with only 14 percent disagreeing. The survey also asked: "If you knew the prices a hospital, doctor, or pharmacy charges, how likely would you be to shop around for the best price?" According to the survey, a total of 79 percent said they would be likely to shop for the best price (51 percent "very likely" and 28 percent "somewhat likely").

Today Americans are used to seeing and comparing prices. The question is why would health care be an exception to the rule? The answer is that it probably wouldn’t be. People want to know how much it costs if they are paying for it. The transition to a consumer driven health care society is imminent. The consumers know it. Do the health care providers know it too?

The poll also found that: "Among those most likely to say they would shop around for the best price are Hispanics (89 percent), 20- to 34-year-olds (88 percent), and those earning between $25,000 and $35,000 a year (84 percent)."

For the full report from Zogby International, go to http://www.cahi.org.

It is true that the Federal government is also going to release pricing information, available soon at www.medicare.gov. It will soon list prices that the government pays for common procedures through Medicare, Medicaid, the Dept. of Defense and the Federal Employees Health Benefits Program. We think that this price “transparency” and availability will help. But only if the end user or the employee/consumer uses that information to make better decisions.  

Where else can consumers find this type of information including prices of health care services?  At www.HealthGrades.com you can order pricing information on 42 medical procedures performed most often. It costs $7.95 per procedure: http://www.healthgrades.com/consumer/index.cfm?fuseaction=modnw&modtype=hospitals&modact=mcc_available&tv_Eng=home&tv_kw=MCC

Another example of an employer offering a creative solution to understand health care pricing is eDoctorsOnline.com. eDoctorsOnline.com provides board-certified physicians, nurses, and psychologists 24 hours a day to answer all customers’ health care questions. The service helps its members make better decisions regarding their own health care and can save unnecessary, expensive trips to the doctor. Questions are answered within 24 hours, guaranteed (generally in 2 - 3 hours). Members also have access to the 24 hour Nurse Advice Line. All of the patient's medical information, questions and replies remain completely private and confidential.

In the survey already mentioned above by United Benefit Advisors (UBA), (http://benefits.com) we can find the following:

"An astounding 99% of all employers consider both company health costs and the impact of higher costs on employees either a critical or significant concern," said David LoCascio, UBA's Co-Founder. "This level of concern following the lower, although still significant cost increases of the past two years implies little faith by employers that a real solution to the underlying drivers of healthcare costs has been found or implemented."

The #1 strategy to lower health care costs for the last 5 years has been either reducing plan benefits or increasing employee premium cost-sharing. 

But from all these surveys you can see that the future strategy is Consumer Driven Health Care which incorporate HRAs, HSAs, FSAs, and wellness programs that incorporate individual health risk assessments, and expanded disease management programs to help employees manage chronic health conditions.

We believe that Consumer Driven Health Care is the best solution we have today. 

About the Authors: Rob J. Thurston, President of the HR Consulting Group, has been a national speaker and noted author on HR consulting and systems development since 1981. He has implemented and designed some of the largest selling employee benefits software systems nationwide while part of an international brokerage firm, a national administration firm and while as a consultant. Currently, he is working on the development of a large database of providers and vendors for Consumer Driven health Care services. If you would like a complimentary copy- please call at (801) 765 4417 or email Hrconsultinggroup@msn.com 

Anamaria Szekely, a MBA candidate at Brigham Young University, has worked in several international locations (Europe) and in the United States as a human resources consultant. She graduated from the Babes-Bolyai University, Romania, her major being Organizational Behavior (Psychology). She designed and implemented various projects on areas like organizational diagnosis, job security and performance evaluation.