The Price of Illness: Cost Sharing and Health Plan Benefits
By Arthur L. Baldwin III (principal and consulting actuary, Milliman, Inc.), Marian Mulkey and Matthew Kagan
California HealthCare Foundation
September 2005
From the Conclusion:
In the individual market, trends toward products with greater cost-sharing requirements are to be expected and may be desirable, since holding down premiums may help consumers purchase and maintain coverage. They are also potentially of great concern. The natural instinct of consumers asked to choose among a range of products is to focus on the predictable, recurring expense of the premium, rather than the uncertain, intermittent out-of-pocket costs associated with serious illness or injury. As consumers struggle to find products with affordable premiums, health insurance carriers will continue to do whatever they can to control premiums, including further development of products that impose greater cost sharing at the time of service.
However, individuals’ choice of products with high levels of cost sharing can have long-term repercussions, because consumers are guaranteed coverage only in the product in which they are currently enrolled. If their health or financial situation changes, those who wish to “trade up” to more comprehensive coverage will be subject to medical underwriting and may be declined, leaving them exposed to burdensome, perhaps even financially ruinous, costs. The implications for California’s most vulnerable consumers, including the poorest and sickest, are worrisome and could ultimately prompt health insurers, purchasers, policymakers, and citizens to revisit fundamental issues of how coverage and care should be regulated, financed, and delivered.
http://www.chcf.org/documents/insurance/ThePriceofIllness
ConsumerCostSharing.pdf
Comment: “The implications… are worrisome.”
Milliman, Inc. has been a leader in providing sound though sterile business advice on health care. (Many recognize the name because of their somewhat infamous publication of suggested hospital lengths of stay, a resource used by managed care organizations to reduce the duration of hospitalizations.) It is very reassuring to see that a representative of Milliman recognizes the unfortunate human impact of current trends in health care coverage, and that fundamental reform needs to be considered.
According to a preliminary survey released this week by Mercer Human Resource Consulting, “two-thirds of the large employers surveyed said that they would shift cost to employees, which include increasing the percentage of premiums paid by the employee, as well as raising deductibles, copayments, coinsurance or out-of-pocket maximums.”
(http://www.insidebayarea.com/businessnews/ci_3027958)
People are already hurting and it’s getting worse. Let’s “revisit the fundamental issues” now.