NEWS - September 2008
Consumer-Driven Health Care
Shopping for health care is a difficult proposition, since patients are rarely able to evaluate prices before receiving medical services. Consumer-driven health care is a self-directed payment model that provides financial incentives and information to support the decision-making process as an alternative to conventional health insurance. The following news abstracts highlight recent developments.
Fewer Consumer-Driven Health Plans Offered By Employers In Iowa
As reported in August by the Des Moines Register, data from David P. Lind & Associates show that Iowa employees and employers experienced a nearly 9% average increase in insurance costs in 2008. Iowa's largest health insurer, Wellmark Blue Cross Blue Shield, has experienced ongoing demand for its offerings. Next year, Great River Health Systems (Burlington IA) will be testing consumer-driven health plans with a select group of hospital employees to determine if the change will save money for its self-funded health care plan.
A critical factor for employees who are considering consumer-driven health care plans is whether or not there is a financial benefit over conventional insurance. Higher deductibles are one area for concern. The Lind report tracked an 80% rise in premium costs for single workers during the past eight years, from $2,377 in 2000 to $4,276 in 2008. During the same time period, deductibles have more than tripled for all employees (with single or family plans).
Some employers (13% of respondent companies) have turned to wellness as a way to encourage employees to adopt healthier lifestyles. For example, Grinnell Mutual Reinsurance (Grinnell IA) established a pilot program that helps employees set "personalized" health goals.
The McCain-Palin Stance On U.S. Health Care System Reform
According a recent article published by Think Progress, the Republican presidential ticket of McCain-Palin combines the Senator's goal of shifting financial responsibility from insurers to consumers with the Alaskan governor's more generic position to promote competition and flexibility. Palin established the Alaska Health Care Strategies Planning Council which recently published a report recommending that new options be created to increase consumerism (e.g., spending control) and provide individual-owned portable health care coverage. So far, more consumers are reportedly satisfied with their insurance plans (63%) than those with self-directed care (33% to 42%). [Source: EBRI] Ultimately, one critical factor for reforming the U.S. health care system is to improve access to care and coverage.
New Survey Forecasts Slower Growth In U.S. Health Care Costs
Employers expect a nearly 11% increase in insurance costs this coming year, according to a report from Aon Consulting Worldwide published in August 2008. Surprisingly, the 10.6% is similar to the level seen in 2007 but lower than the 15% - 16% gains posted in 2001 and 2002. As noted in an article from SFGate, rising costs can be curtailed by 3% to 4% when employers implement disease management and wellness programs. A study published by PriceWaterhouseCoopers forecasts a 10% insurance cost increase in 2009. An estimated 25% of private payers' expenditures will cover the uninsured and underpayments by Medicaid, Medicare, and other government programs.
The Venture Capital Contribution To Health Care Innovation
Highlighting the role of venture capital in new markets, an article in the Minneapolis-St. Paul Star Tribune profiled the dynamic founder of Definity Health, Tony Miller. Venture capitalists are able to take advantage of opportunities to "disrupt" conventional markets by developing new models. According to Mr. Miller, consumer-driven health care is one way to change the current U.S. health care system. For example, while employers complain about paying for health care plans, the costs are part of employees' compensation packages. In 1999, Definity Health introduced the revolutionary idea of establishing health savings accounts (e.g., consumer-driven health care) which enabled individuals to pay their own medical bills with an option that also fit within the existing system. Definity is now a subsidiary of UnitedHealth. Since divesting Definity, Mr. Miller founded a new company (Lemhi) to promote innovative health care business models.
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