Resource – Page 1069

BC/BS of Tennessee – a profitable nonprofit

The Best Of Times And The Worst Of Times: A Conversation With Vicky Gregg
Health Affairs
November 29, 2005

The CEO of BlueCross BlueShield of Tennessee describes what it’s like to be a profitable nonprofit in a state with a struggling Medicaid program.

Interviewed by James C. Robinson

Success Of The Blues

Robinson: 2004 was the best year you’ve ever had, according to your annual report. If I could cite some statistics from the Goldman Sachs investment bank, BCBST ranks among the top not-for-profit Blues on every dimension of performance. In particular, between 2003 and 2004 your revenue increased 42 percent, compared with 13 percent for all Blues plans. Your earnings increased 12 percent, compared with 6 percent for the other Blues plans. And your enrollment increased 12 percent, compared with 2 percent for the other Blues. How do you explain your success over these past years?

Gregg: Well, good hard work, for one thing. But I will tell you that we feel the competitiveness day in, day out. There’s no sense on our part that we walk in and it’s a slam-dunk on any employer’s health benefit account that we bid on. We have all of the big insurers here in Tennessee. We have CIGNA, we have United. We still have some strong regional players. We have John Deere; we have some hospital-based programs such as PHP in East Tennessee. There’s no market that we look at and say, “Oh, well, we just own this market.”

This year in particular-2005, year to date-our rate increases to our commercial customers are around 4 percent. We’re very successful, but we’re also today pricing below the medical cost trend. Our medical cost trend was running closer to 10 percent, maybe even ticking up a bit. So we are giving some rate relief in the market. We are trying to make sure that people are able to keep coverage, which we believe is an important part of what we contribute as a company.

Robinson: So you are consciously pricing below your medical cost trend?

Gregg: Yes.

Robinson: That’s possible, due to the fact that you’ve had very high financial reserves-a surplus built up from past years. If my numbers are correct, last year your reserves were at 540 percent of risk-based capital levels, which is way above the National Association of Insurance Commissioners [NAIC] minimum levels and the Blue Cross Blue Shield Association [BCBSA] guidelines.

Gregg: When we look at our company, we have to have capital. And as a not-for-profit, we do not have access to the capital markets in the sense that some of our competitors do. We look at what we need to drive our company and to be successful. And our sense is today, the most that we could say that we’re, quote-unquote, over-reserved, is around $250 million. Well, for a company of our size paying out more than $15 billion in claims this year, is $250 million really, quote-unquote, over-reserved? I think, again, it’s capital that allows us to fuel our business and to be competitive and to do the things that we need to do to be able to deliver affordable health care to our membership.

Consumer-Driven Health Plans?

Robinson: The buzz at the moment in health care is all about consumer-driven product designs. What is the trend in your commercial population in terms of copays, coinsurance, deductibles, and the product mix?

Gregg: We had several years, starting in early 2000s, of high double-digit inflation in medical care costs. And we saw our commercial employer customers begin to ask, “How do we engage our employees?” They did it in a number of ways.

First, we saw them begin pushing some of the premium costs over to employees. This was to wake them up, in terms of what health care really costs. The second element of employer strategies was to put deductibles and coinsurance back into place, after having taken them out during the managed care era. And now it is not unusual to see $500 and $1,000 deductibles and 20 percent coinsurance. That is the primary tool that most of our commercial customers use. It’s very prevalent in the small-group market, maybe a little less among larger groups.

We have also seen a big increase in the HSA products in our individual market. People want to have a little more flexibility there. We have seen some HSA penetration now in our group market.

Robinson: Do you see any potential in new product designs to bring some of the uninsured into insurance coverage-people who are not indigent but who are the working uninsured, who work for small firms?

Gregg: Yes. We have a number of products, and we’ve done a lot of focus groups around what products and price points are attractive to at least some of the uninsured. For the population that we’re talking about-and it tends to be low income but working-we heard a couple things. First, the price point is somewhere around $60 per month for a premium. So what can you buy for $60? The second point, which really made us sit back and say, “Wow, we need to think about this,” is that they indicated that if they’re going to pay $60, they don’t want just catastrophic protection. They’re paying $60, and they want to know what they’re going to get back for that. So in the focus groups they want dental benefits, they want vision benefits, and they want all these different things. So we have designed products. We have one called Simply Blue that’s targeted to that market and provides skinny benefits but does have some front-end first-dollar coverage [for preventive care].

The Price Of Health Care Services

Robinson: Tennessee is, like many other states, evolving toward becoming a very consolidated health care market, on both the hospital side and the insurance side. Blues plans are dominant in each region-and in each region one or a few hospital systems are dominant. So instead of a textbook economic market with lots of buyers and lots of sellers, you have a dominant buyer-that’s you-and then one seller or a few sellers on the hospital side. How does that affect the market-oriented approach to managing cost, to managing choice, and to managing performance?

Gregg: I like to use the term “shared destiny.” Our state is the poor state. We are forty-seventh in overall health status in the country. We have an uninsurance rate now that will be pushing toward 20 percent, from a low of about 6 percent. Another 20 percent are still on Medicaid, and another 15 percent are in Medicare. So you’re looking at 55 percent of the market either unfunded or underfunded, from the perspective of the actual costs of providing and financing care.

I don’t think any one entity, whether it’s Blue Cross or anybody else, can win at the expense of everyone else. Because ultimately all we’re doing is driving more people out of the market. I tell people that our biggest, toughest competitor is “nonconsumption.” It’s people who choose not to buy. And when you’re in a state where the average income is less than the U.S. average, people’s ability to buy health insurance is compromised.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.558v1

Comment: This interview should serve as an awakening for those who believe that nonprofit insurers provide services and coverage that is significantly superior to the for-profits. Although the for-profits may draw off a small percentage of receipts for the investors, the nonprofits are not much better in that they behave the same way as the for-profits within the private insurance marketplace.

The health insurance underwriting cycle is a phenomenon in which insurance premiums cyclically swing up and down even though health care costs maintain a relatively stable upward climb. As insurance profits increase, more players and plans enter the market. Competition drives down premiums to below the medical cost trend, and the losers leave the market. The winners then control the market and drive premiums back up well above the cost trend, with a return to significantly higher profits. Although some health care analysts have said that the underwriting cycle is no longer relevant, it is quite obvious that BC/BS of Tennessee (BCBST) is using its reserves (profits) to support its lower-than-market premiums in an attempt to drive out the competition. The underwriting cycle is alive and well and has contributed significantly to the “enviable financial success” of BCBST. The underwriting cycle would disappear if we had a universal, publicly administered insurance system.

The conversation on consumer-driven health plans provides further evidence that nonprofit insurers engage in nefarious activities in the private insurance market. BCBST determined that the insurance market wanted a premium “price point” of about $60 per month. They also determined that consumers wanted to get something back for their premium. So they gave them some front-end services to create the illusion of coverage but stripped the plans down to a package of “skinny benefits.” A publicly funded and administered program would be designed to ensure affordable access to comprehensive services and would never resort to fake plans that provided almost no protection.

When people “choose not to buy” because their “ability to buy health insurance is compromised,” then Blue Cross can’t “win at the expense of everyone else.” Nor should they! Let’s abandon these policies that are designed to make the private insurers the winners. Instead, let’s make the patients the winners by adopting policies that are designed to ensure affordable, comprehensive coverage for everyone.

The crumbling obstacle to universal health care

By Saul Friedman
Family & Relationships
Newsday
November 26, 2005

The unique but irrational foundation of America’s employer-based health insurance system is collapsing. And nothing illustrates this more than the increasing number of companies cutting or ending health benefits they promised employees and retirees.

Yet this may ultimately be good news, for if employer-based health insurance does come to an end (perhaps during another administration), we can get on to the inevitable, joining the rest of the world in publicly financed universal health care. A recent Harris Poll for the Wall Street Journal found that 96 percent of those polled favored Medicare, and 75 percent supported “universal health insurance.”

But the fundamental obstacle is employer-based health insurance, for the millions of workers who have it are reluctant to give it up for universal health care. In an interview with the Boston Globe, Bob Moffit of the conservative Heritage Foundation wondered, “Why is America the only industrialized country that ties health insurance to employment?” “It’s nuts,” he said, that nine of 10 Americans with private health insurance get their coverage through their employers. “Imagine if auto insurance worked the same way. So if you lost your job, you could no longer drive. That would be absurd.”

How did this come about? During World War II, when ceilings were imposed on wages and prices, employers lured workers by offering fringe benefits such as health insurance, the costs of which were (and are) tax deductible for the companies.

All of battered western Europe as well as former enemies Germany and Japan established national health systems. And over here, Harry Truman, too, proposed national health care, but big business cut off that idea by providing private insurance for employees, and labor unions grabbed for it in contracts.

It was generally successful as long as health care costs remained stable and uncomplicated by new technologies and drugs; the workforce remained relatively young and healthy with few retirees; U.S. manufacturers had no competition.

But as that landscape changed, Dr. Marcia Angell, a Harvard lecturer, pointed out the essential flaws in employer-based health insurance: It is cumbersome and costs taxpayers billions in tax breaks. If the business declines in a recession and workers become unemployed, they and their families lose insurance. Even more fundamental, employer-based coverage creates a potential conflict of interest: If the employer’s bottom line is hurt by the rising costs of covering health care, the company will inevitably choose to protect profits over protecting the health of workers and retirees.

General Motors, beset by huge losses due mostly to runaway worker-retiree health care costs and competition from Germany, Japan and Canada (where governments provide health coverage), sharply cut its health benefits with the reluctant permission of the union. (On Monday, GM also announced that it plans to cut up to 30,000 jobs.)

The Medicare legislation set aside $89 billion to pay employers to maintain retiree health coverage. But two companies that lobbied for the subsidy, Lucent Technologies and SBC Communications, announced they’re cutting retiree benefits. Retailer J.C. Penney notified 9,500 retirees it will end some or all benefits when the law takes effect Jan. 1. Wal-Mart is screening out prospective employees who may have health problems. Sears is eliminating retiree benefits for new employees.

Weirton Steel killed health benefits for 10,000 retirees, their dependents and survivors when it was purchased by International Steel Group. United Airlines slashed benefits for 35,000 former workers. Avionics maker Rockwell Collins says it will no longer offer drug benefits for Medicare-eligible retirees after 2007. And Pfizer Corp., which will make billions selling drugs to Part D beneficiaries, is cutting benefits for retirees who had worked at Pharmacia, a drug firm taken over by Pfizer.

Don M., a Colorado reader, writes of a cruel twist for escaping the cost of retiree benefits. His former employer, Texas-based Electronic Data Systems, founded on Medicare business, is raising the cost of its insurance so high that retirees have no choice but to sign up for Part D and leave the company plan.

The trends are obvious. The rate of coverage for employees and retirees has dropped from 64 percent to 59.8 percent in four years. Small companies can no longer afford employee health insurance. Consequently, Washington’s Economic Policy Institute says the number of uninsured Americans rose in four years by 6 million, to 45.8 million men, women and children.

One group has some protection from the trend: older and disabled Americans who are in original Medicare. Despite efforts by Republicans to pick away at its benefits, Medicare remains the most efficient and popular health insurance program in the nation, even among younger people who’d like to have its protection.

As employer health coverage has declined, especially among low-income families and the 550,000 who lost their jobs and insurance in the Gulf Coast hurricanes, enrollment has increased sharply for Medicaid and the State Children’s Health Insurance Program.

So here is another trend, said the Economic Policy Institute: “This is a significant shift from private sector coverage to public sector coverage.” If that continues, perhaps we’ll learn that what’s good enough for former enemies is good enough for us. Article 30, Paragraph 1 of the new Iraqi constitution, which the United States helped write, says, “The state guarantees social and health insurance, the basics for a free and honorable life for the individual and the family. . . .”

Stay tuned.

WRITE TO Saul Friedman, Newsday, 235 Pinelawn Rd., Melville, NY, 11747-4250, or by e-mail at saulfriedman@comcast.net.

This article originally appeared at:
http://www.newsday.com/news/columnists/ny-bzsaul4526008nov26,0,5656919.column?coll=ny-news-columnists

The Latino Health Insurance Crisis: A Forgotten Community

Latinos for National Health Insurance
A Coalition for Equality in Healthcare
63 East 9 Street, Suite 11k
New York, NY 10003
917-304-6886
Email LatinoHealth@msn.com

Estimados Amigos,

We are very glad to tell you that our campaign is moving forward. First, please note our new dedicated email address for our coalition LatinoHealth@msn.com ; and we just secured our soon to be constructed website www.LatinosNHI.org.

Last week we wrote to all the members of the Congressional Hispanic Caucus, thanking those who are sponsoring HR 676 “A National Health Insurance Plan”, and encouraging the rest to support this legislation. They were very impressed by the number of Latino leaders, doctors, organizations in our coalition who want a single payer healthcare system, and we just learned that Congresswoman Napolitano and Congressman Bacerra became co-sponsors of HR 676. We are working with other national organizations to have at least 100 members of Congress be co-sponsors by the next summer.

You should know that the number of articles nation-wide asking for real healthcare reform is very encouraging. Economist Paul Krugman continues his valuable columns advocating government-sponsor healthcare system:

“The fact is that the free market doesn’t work for health insurance, and never did. All we ever had was a patchwork, semiprivate system supported by large government subsidies.

That system is now failing. And a rigid belief that markets are always superior to government programs – a belief that ignores basic economics as well as experience – stands in the way of rational thinking about what should replace it.” [November 14, 2005]

And for the first time the NY Times endorsed in their editorial page what they called “the crying need for national health insurance.” [October 17].

Ron Gettelfinger, president of the United Auto Workers union, wrote an editorial titled: Rx for America: a national health plan.” And Michigan’s governor Jennifer Granholm said that “that some form of a national health care program…could be” the solution for the “employee health-care insurance premiums that are eating many industries alive.” [Kalamazoo Gazette, October 28, 2005]

As you can seen the need for national health insurance is now back in the radar screen, and more needed than ever.

We want to invite you to the Congressional Briefing that we helped organized that will take place in Capitol Hill on December 14.

We’ll keep you informed!

Dr. Jaime R. Torres, National Coordinator

Join Us For A Luncheon Briefing

“The Latino Health Insurance Crisis: A Forgotten Community”

Blind Faith And Choice

By Rhiannon Tudor Edwards
Health Affairs
November/December 2005

It was quite a military exercise to get us all—me, my husband, two children (aged nine and five), and my guide dog, Vikki—from Wales to Seattle, Washington, in the fall of 2004. I have retinitis pigmentosa, have been visually impaired since birth, and have been legally blind for the past ten years. Vikki, a black labrador retriever, is my first and only guide dog. I’ve learned a lot—sometimes inadvertently and often unexpectedly—from her, even about U.S. health care. As I sit and reflect on our time in the U.S., she snores gently at my feet.

As background, I am a health economist from the United Kingdom who spent a year in the U.S. studying U.S. health care thanks to a New York–based foundation that provides fellowships to mid-career scholars from British Commonwealth countries. With its assistance, I spent a year in Seattle at a health studies center. My overwhelming sensation from living in the U.S. is one of bewildering choice. The right to choose and the act of choosing are a national obsession. I was overwhelmed by the heart-stopping, paralyzing choice of coffees (particularly in Seattle, the home of Starbucks), TV channels, and salad dressings, and, of course, the role of choice in U.S. health care.

Traveling with Vikki, my family and I were bemused, amused, and occasionally baffled by such a truly American phenomenon as doggie day care, where you can maintain contact with your pet over the Internet throughout the day. There are hotels that not only tolerate visitors with canine pets but actually supply a range of designer dog biscuits for your four-legged friends and provide dogs to dogless guests craving canine company. Amongst its wide range of restaurants, Seattle is home to the Three Dog Bakery, where owners can take their dogs for brunch.

A Tale of Two Medical Visits

During our time in Seattle Vikki developed a large lump on her side, and we decided to take her to a vet. As we walked into the veterinary office, we were greeted warmly and offered a choice of three vets. On what basis was I supposed to choose amongst these vets, never having met them and not knowing what was wrong with my dog? All I wanted was someone who would look at Vikki, provide any necessary treatment, and reassure me. Then I would be on my way. The lump turned out to be a simple benign tumor that probably resulted from a bite received during a rough-and-tumble play session at an off-leash dog park. Ten minutes and $120 later, the tumor had been drained, and we left reassured. The vet explained that we might have to have it drained again. Because we were on a pretty tight budget, the additional cost of a possible second draining was a real factor in deciding how to manage Vikki’s care.

In the U.K. all veterinary costs for guide dogs are covered by the Guide Dogs for the Blind Association. This charitable organization is the single provider of guide dogs for blind people in the U.K. It covers all of the costs associated with guide dog ownership throughout the life of the dog. There is no choice of guide dog providers, but there is universal coverage of the costs associated with owning a dog, which removes any financial barrier to ownership. This is essential, given that 70 percent of blind and visually impaired people of working age in the U.K. are unemployed. That figure is much the same in the U.S. It takes about the same amount of time (six to twelve months) in both countries for a suitable dog to be matched to a blind person. In the U.S., people can choose from a range of guide dog providers all over the country, such as Pilot Dogs, Guiding Eyes for the Blind Inc., and Guide Dogs of America. However, owners must cover veterinary and other costs of owning a guide dog themselves, either through insurance or out of pocket.

As if in sympathy to Vikki’s plight, I developed what can only be described as roaring sinusitis. This is the kind of sinus pain that makes your face ache right down into your teeth. I put up with it for two weeks, consuming copious amounts of over-the-counter decongestants and breathing in steam inhalations. Eventually I decided it was time to consult a doctor. My sponsor offered a pretty comprehensive health insurance package through Blue Cross and Blue Shield. At a time when I wanted nothing more than to curl up in bed, I had to go online to make my way through a bewildering array of acronyms—HMO, PPO, and so on—to find providers covered under our insurance. Once I had chosen one of these providers, I had to select from a range of specialist physicians and specify a geographical location. All this choice at a time when I felt rotten. Once I had located a number of family doctors, I found that none of them could see me for between twenty-four and seventy-two hours, and, worryingly, none would guarantee that they would accept my insurance—despite the fact that I’d located each physician through my health insurer’s Web site. The irony was that in the U.S. there was more choice of providers unable to offer me an immediate appointment. In the U.K. it is routine to wait a day or two for a primary care appointment at your nearest general practitioner (GP) clinic. It is possible to choose with which clinic to register; however, in practice, we simply registered with our nearest provider.

Eventually, my husband, Paul, and I elected to go to a family health clinic in Seattle that took walk-in patients. The waiting room was extremely basic, and the bedside manner with which we were greeted was far less friendly than at the vet’s office where Vikki was treated. It went through my mind that this visit was not the outcome of an informed choice. The first question put to me was whether I would be billing an insurance company for the appointment. I then had to surrender my insurance card and wait whilst it was checked. The primary concern of the clinic was not “What is the problem?” or “Have you been here before?,” just “How will you be paying?” After handing over my Blue Cross insurance card, I was presented with five pages of forms to complete. The forms asked for background information, Social Security number, insurance details (again), and then there was a health questionnaire. Of course, for a blind or visually impaired person, forms are difficult or impossible, so this became a job for Paul.

After waiting about half an hour, I was asked for my $5 copay. Another half-hour later, I was shown into a small examining room. Fifteen minutes after that, a nurse practitioner came in, confirmed that I had a sinus infection, and wrote a prescription for Augmentin. On the way out, the receptionist—who wanted to photocopy the prescription I had been given—chased us across the road. All of the records, I learned, were paper and kept for only one year. At the Safeway pharmacy I was asked for more insurance details and proof of identity. The pharmacist wanted to see my driver’s license, which, as a blind person, I was not able to produce. By now I was feeling really rough. Two signatures and a further $5 copay later, I had the antibiotics in my sweaty little hand and retreated to bed.

In the following week, concerned American friends asked, without exception, what brand of antibiotic I had been prescribed. This just would not happen in the U.K. Perhaps we have a naïve acceptance that antibiotics are antibiotics and that the doctor would have prescribed whatever was appropriate. What is more, we probably don’t even consider that we might have had a choice in the matter.

Ice Cream, Health Care, and Choice

The following weekend, on a recuperative visit to Baskin-Robbins, it struck me that although thirty-one flavors of ice cream—a different flavor for each day of the month—are rather overwhelming, I was able to make an informed choice. Of course, since I’m blind, this involved Paul reading aloud the list of flavors: “pistachio almond, chocolate chip cookie dough, nutty coconut…” He read at least twenty names before he lost patience.

Can we treat health care like ice cream? Does more choice raise collective society benefit or well-being? I guess it all hinges on whether we have the necessary information with which to choose, actually want to choose, and can influence the organization and quality of health care through exercising our choice.

According to economic theory, ice cream is kept at a socially optimum quality, and individual consumer benefit is maximized, by the act of having each of us choose a favorite flavor. Even if we have not sampled “rocky road” or “raspberry royal dream,” we can—or most of you can—see it and imagine what it tastes like. Tiny spoons are provided so that we can have a sample. We can weigh the financial sacrifice of paying for the ice cream versus the benefits of its consumption.

Can we as individual patients really do this for health care, too? And do our individual choices about our own health care lead to the kind of overall health care system that many of us would like to see? In economics, the invisible hand of the competitive market is promoted as the most efficient mechanism for balancing supply and demand for goods and services. The invisible hand does, indeed, work very well for currency and many consumer goods. In a perfectly competitive market there need to be many buyers and sellers who cannot individually influence price. Consumers need to be fully informed and the best judges of their own well-being. The good or service needs to be homogeneous, meaning the same thing or standard. For example, dollars are dollars in a currency market. There needs to be free entry into and exit out of the market rather than professional control of who can and who cannot supply a good or service to the market. None of these conditions holds in the case of health care. Yet as interest in consumer-focused health care in the U.S. increases, the market is held up as a means to promote that goal of all goals—consumer (in this case, patient) choice.

How valuable is choice in health care? Does it lead to outstanding population health status or equitable access to necessary health care? Apparently not, when the U.S. is compared internationally.

In the end, given all the choice in the world, as patients we depend on an agency relationship where the doctor is the agent acting in our best interest. We depend on our doctor not only to provide what care we need but also to make the decision as to what that care is. A 2002 Harris Interactive telephone survey of 1,013 U.S. adults, which asked whether they had seen or responded to ratings of hospitals or physicians, found that only 1 percent of respondents had made a decision to change health plans, doctors, or hospitals on the basis of performance evidence. It seems that as isolated individual consumers, particularly at the time when we are ill, we cannot influence the organization or quality of health care through the market. The bottom line: Choice leaves us isolated.

Can Less Offer More?

After a stay in the United States I simply do not believe that more choice is better in health care. It certainly is not a rational alternative to universal coverage or even wider basic health care coverage for all. The market mechanism has not lead to high-quality health care in the U.S., even for those with health insurance. There are enormous efforts being made to improve the quality of American health care by developing quality indicators. Some of these, such as the Health Plan Employer Data and Information Set (HEDIS) measures, have evolved to help employers choose health plans for their employees. Yet, ironically, given the escalating costs of providing health benefits, this results in employees’ being offered a diminishing choice of plans.

Proponents of consumer-focused health care, and in particular health savings accounts, promise that this will restore choice for the consumer. In fact, these things further isolate the patient, making him or her take greater financial responsibility for health care that, in my view, is disguised as the privilege of choice.

On arriving in the U.S., I believed that most Americans wanted universal health care and that it was only a matter of time until political processes led to wider coverage for the forty-five million Americans who are currently uninsured. I was naïve. I truly found it a surprise to read commentaries in U.S. publications disparaging the poor quality and lack of choice that other countries in the Western world allegedly put up with in the name of universal health care. So if individual consumers cannot influence the quality of health care, and if the majority of the population and stakeholders—such as insurers and providers—do not want a greater role for government in organizing and financing health care, how can the quality of U.S. health care be improved?

The current wisdom appears to be that the key to quality improvement will be through pay-for-performance. This is not a new panacea. All forms of provider reimbursement (fee-for-service, per capita payment, and salary) are in some way paying for performance. What is certain is that however future pay-for-performance schemes are designed, providers will respond and deliver whatever is being paid for, whether or not this leads to better health status or more equitable access to necessary care in the U.S.

Ultimately, choice comes at a price. As consumers, we are expected to pay for the privilege of choice, and if we cannot pay, we do not get to choose and, more than likely, do not get at all. In the ice cream market, if we can’t all afford ice cream every day, it’s not a life-or-death situation. With health care, it’s very different.

After my year in the U.S. came to an end, my family, Vikki, and I returned to the U.K. having made many American friends and in awe of the natural beauty of the Pacific Northwest. With respect to ice cream and health care, Vikki and I both chose the “rocky road” route. I left the U.S. convinced that having less choice in health care is a price well worth paying for universal coverage.

Rhiannon Edwards (r.t.edwards@bangor.ac.uk ) is a senior research fellow in health economics and founding director of the Centre for the Economics of Health at the University of Wales, Bangor, in the United Kingdom.

A Commonwealth Fund Harkness Fellow in health care policy during 2004–05, Rhiannon Edwards thanks the Commonwealth Fund and the Center for Health Studies, Group Health Cooperative, in Seattle for her U.S. experience. She also thanks Paul Gash, Sara Wood, and Bronwyn Tunnage for reading support and help in preparing this essay. Her views are not necessarily those of the Commonwealth Fund, its directors, or staff.

Single payer as an issue for "Unpartisans"

It’s my party, and I’ll vie if I want to
By Brad Warthen, Editorial Page Editor
The State.com
Nov. 27, 2005

Why is it so hard for partisans and ideologues to understand that we might hold our own values and positions even more passionately than they hold theirs, for the simple fact that they are ours. We didn’t do what they did, which was to buy an entire set of attitudes off the rack, preselected and packaged by someone else, and chosen based on nothing deeper than brand name.

(“moderates”) …are the people who take the independent risks that make things happen, from campaign finance reform to banning torture. Without them as pivots, giving ideas credibility by virtue of their own independence, we’d be forever in a state of stalemate, unable to settle any difficult issue.

And those of us who support their like are the ones who decide elections – not the partisans, who can be taken for granted.

The best thing is to have no parties. But it’s still fun to imagine what kind of party we who despise them would create if we were so inclined.

…for now, let’s just call it the “Unparty.”

Every Unpartisan would have his or her own set of positions on issues, having worked them out independently. But to banish the thought that Unpartisans don’t take strong stands, here would be some positions I would bring to the party table (and remember, this is just me, not the editorial board of The State):

* A single-payer national health care system – for the sake of business and the workers. If liberals and conservatives could stop driving a wedge between labor and capital for about five minutes, we could make this a reality.

(His other positions are omitted from this message.)

Such ideas are not left, right or wishy-washy. Admittedly, in my zeal to debunk the myth that we “moderates” (an inadequate word, really, for independents) don’t take strong stands, I’ve deliberately chosen some ideas that are attractive to me but are too out there for my own editorial board.

http://www.thestate.com/mld/thestate/living/13265879.htm

Comment: Set aside the political divide that has paralyzed health care reform and see which model of reform would appeal to independent thinkers. This “Unpartisan” editorialist claims his right to express his passionate support for his own values and positions. His independent thinking has led him to conclude that single payer is the health care position that he would bring to the Unparty table.

Many conservatives now recognize that there are many benefits to the single payer model. Reduction of administrative waste is a good thing, even if it is the waste of private insurance bureaucracies and the burden they place on the health care system. Conservatives recognize that laissez faire market forces have not been able to harness run-away, detrimental high-tech excesses that are a major contributor high-cost, low-value health care. Many conservatives reject the inhumane notion that we must now turn to the market principle that costs should be controlled by making care unaffordable precisely for those who have health care needs. Most conservatives do believe in the fundamental insurance principle of pooling risk, and they are chagrined by the insurance industry’s success in dumping risk on others while avoiding their obligation to provide financial security for those with needs.

Liberals support the fundamental concept that health care should be affordable and accessible for everyone, but many of them reject the most effective model – single payer – on the basis that it isn’t politically feasible. Perhaps it is time for the left to relinquish their exclusive claim to the single payer model. They don’t have to turn it over to those on the right. They could turn it over to the Unpartisans who might welcome input from recovering Democrats and Republicans.

An Unpartisan approach does not imply a process of compromise or “meeting in the middle.” The truth in the health policy science behind the single payer model allows it to stand on its own. Presumably, the Unpartisans would place truth above partisanship.

Single payer as an issue for “Unpartisans”

It’s my party, and I’ll vie if I want to
By Brad Warthen, Editorial Page Editor
The State.com
Nov. 27, 2005

And those of us who support their like are the ones who decide elections – not the partisans, who can be taken for granted.

The best thing is to have no parties. But it’s still fun to imagine what kind of party we who despise them would create if we were so inclined.

…for now, let’s just call it the “Unparty.”

(His other positions are omitted from this message.)

http://www.thestate.com/mld/thestate/living/13265879.htm

Cost-sharing can increase health care spending

When patients have to pay a share of drug costs: effects on frequency of physician visits, hospital admissions and filling of prescriptions
By Aslam H. Anis, Daphne P. Guh, Diane Lacaille, Carlo A. Marra, Amir A. Rashidi, Xin Li and John M. Esdaile
CMAJ
November 22, 2005

To accommodate continually rising prescription drug costs, various cost-containment policies have been implemented. One such policy, cost-sharing between patients and insurers, is common in developed countries. In addition to shifting expenditures from insurers (often governments) to consumers, this financing mechanism is appealing because it supposedly reduces expenditures for medically unnecessary treatments by making patients pay for a proportion of all expenditures and thus making them more cost-conscious.

The RAND Health Insurance Experiment was the first scientifically rigorous study that established the impact of cost-sharing for medical services. On completion of the RAND study, there was strong evidence to suggest that ill patients were less likely to seek treatment or be admitted to hospital if they had to pay a portion of the cost.

Health services researchers have been examining the effect of patient cost-sharing for more than 20 years. Costs can be shared for office visits, emergency department use and prescription drugs, among other things. In our study, we focused on the effect of cost-sharing of prescription drugs on overall health care utilization among elderly patients with existing rheumatoid arthritis. We found that these patients had fewer prescriptions filled but used more physician services during the period when they had to pay the dispensing fees for prescription drugs than during the period when all drug costs were covered.

Our findings indicate that physician visits and hospital services are economic substitutes for prescription drugs: during the period when patients have to pay part of all of their drug costs, the frequency of doctor visits and hospital admissions increases. Our results show that, in a predominantly publicly funded health care system, the implementation of piecemeal cost-containment strategies such as cost-sharing of prescription drugs might have the unintended effect of increasing overall health care utilization. As health system reform is being contemplated in Canada, and indeed worldwide, it may be wise to evaluate a policy that would apply to the whole system – first-dollar coverage for all services or cost-sharing for all services – as opposed to a hybrid or mixed policy.

http://www.cmaj.ca/cgi/content/full/173/11/1335

And… an important reminder of what we already know:

Adverse Events Associated With Prescription Drug Cost-Sharing Among Poor and Elderly Persons
By Robyn Tamblyn, PhD; Rejean Laprise, PhD; James A. Hanley, PhD, et al
JAMA
January 24, 2001

In our study, increased cost-sharing for prescription drugs in elderly persons and welfare recipients was followed by reductions in use of essential drugs and a higher rate of serious adverse events and ED visits associated with these reductions.

http://jama.ama-assn.org/cgi/content/abstract/285/4/421?ijkey=3a1c8e11000132544e3fc2fe101d2989234965aa&keytype2=tf_ipsecsha

Comment: Cost-sharing has been shown to decrease health care spending, but it does so at the cost of impaired health outcomes. This study adds another important element to that equation. Cost-sharing not only reduces access to products and services, it can also result in increased utilization of substitute products or services which might result in an increase in overall health care spending.

The advocates of consumer-directed health care (CDHC) would likely recommend that cost sharing be applied to the substitute products and services to prevent this shift to higher cost utilization. But that would further impair affordable access and compound the degree of adverse outcomes.

Cost-sharing, in the form of deductibles, co-payments and coinsurance, are widely supported in the United States as being absolutely essential to controlling costs. But we already have extensive cost-sharing, which is expanding even more, and there is no evidence that global spending is being brought under control. Funds spent on providing patient access to beneficial services are not the source of excess spending in the United States. Instead, cost excesses are due to profound administrative waste, over-utilization of non-beneficial high-tech care, lack of an adequate, efficient primary care infrastructure, excess pricing of pharmaceuticals and some specialized services, and other factors that simply are not corrected by cost-sharing.

It is no secret that the single payer model includes several mechanisms that would slow health care inflation by attacking the real drivers of health cost inflation, and it would do so while improving access and outcomes for everyone. Cost-sharing may have popular support, but it’s bad policy, and it should be rejected.

So you want the same insurance as members of Congress

Health insurance open season is opportunity to save
By Tim Kauffman
Federal Times
November 21, 2005

Federal employees and retirees can save hundreds, even thousands, of dollars next year by switching health care plans during the annual enrollment period.

Those enrolled in the most popular health care plan, Blue Cross and Blue Shield Association’s national standard plan, will see 15 percent rate hikes in January. Switching to Blue Cross’ basic option would save an employee more than $1,200 next year in premiums for family coverage. In the Washington area, the same employee could save nearly $1,900 by switching to Kaiser Foundation Health Plan’s standard option, which is reducing its rates by 16 percent.

Standard and basic plans have more restricted benefits than the more expensive high-option plans, so they might not be right for everyone. That’s why it’s important for enrollees to study their choices carefully so they select a plan that’s right for them, experts say.

http://federaltimes.com/index2.php?S=1300216

Federal Employees Health Benefits Program http://www.opm.gov/insure/health/index.asp

Comment: The Federal Employees Health Benefits Program (FEHBP) is the largest purchaser of private health plans in the nation. It provides health care coverage for federal employees, including members of Congress. It provides the national benchmark for health plan contracting, negotiating for the best plans at the best prices. It has often been recommended as the ideal model for universal health care coverage, using tax credits or vouchers and perhaps individual or employer mandates.

It is no surprise that the most popular plan selected by federal employees is the Blue Cross and Blue Shield Association’s national standard plan. Although these plans require more out-of-pocket spending, they offer greater choice within larger provider networks and with less managed care intrusion. Federal employees with higher incomes are quite willing to accept higher out-of-pocket costs in exchange for this greater freedom of choice. Although the information is confidential, it is believed that most members of Congress have selected this option (based on public statements made by some members).

But what has happened? The trend today is to shift more of the costs to individuals. This is being done by tiering the plans into basic, standard, and high-option, not to mention other innovative plans. Premium increases have been somewhat moderated by decreasing benefits and increasing cost sharing. As more move into the lower cost basic plans, the more traditional Blue Cross/Blue Shield standard plans are retaining those who have greater health care costs, driving premiums ever higher. It is ironic that the largest purchaser of private plans is not able to prevent the most popular plan from becoming a victim of the death spiral of accelerating increases in insurance premiums.

Suppose that you currently had the same insurance as members of Congress. What would you do now? The plan already has excessive deductibles, co-payments and coinsurance. Now you are being asked to pay 15 percent more in premiums. Do you reduce your coverage from standard to basic? And how much more will they trim the basic benefits in the future? Do you change to an HMO which is keeping premiums competitive by introducing more cost sharing? Maybe it’s time to gamble on your coverage and place your money in a retirement account that you’ll lose if you get sick (technically known as a health savings account).

Since it’s open season for enrollment in FEHBP, members of Congress now face these coverage decisions for themselves. They will be annoyed, but not enough to make the connection that our system of funding health care requires comprehensive reform. They will begrudgingly pay the 15 percent increase in premiums, and then return to their more pressing task of slashing the health care safety-net for the most vulnerable amongst us.

And for Thanksgiving, sadly we will have to look elsewhere for blessings for which we can give thanks.

Single-payer plan the only solution

By David McLanahan
Opinion
Seattle Post Intelligence
Friday, November 18, 2005

Hurricanes Katrina and Rita have focused the nation’s attention on our country’s disadvantaged. Our residents and politicians have indicated a national will to repair New Orleans and with it, some of the inequities in our social fabric. Now is an opportune time to begin reconstruction of a health care system that has become a threat to all of us regardless of social status.

The Seattle Post-Intelligencer/CodeBlueNow series of essays initiated by former Govs. Booth Gardner and Arne Carlson on the current state of the U.S. health care system is timely and appropriate. Everyone agrees that the system is broken and needs to be changed.

However, a fundamentally different solution, rather than adjusting our dangerously ineffective, market-based approach, is necessary. The current system has resulted in an increasing number of uninsured (currently 45.8 million, almost one-sixth of our citizens), deteriorating benefits for those with insurance and overall rising costs.

Unpayable bills for medical care is the No. 1 cause of personal bankruptcy in our country. We lag far behind other industrialized (and many emerging) countries in typical health care indicators such as infant mortality and life expectancy rates, despite spending 15 percent of our gross national product on health care and 40 percent more per capita than the next most expensive system. According to a study comparing primary care in the United States, Canada, Great Britain, New Zealand and Australia, the United States ranked last or next to last in almost every measure of care, including access, coordination and patient/physician relationship.

Every other industrialized country has some form of government-administered national health insurance. A single, non-profit insurance plan is the only way to counter our system’s duplication of administrative costs, overhead and the necessity for assuring investor profits that squander health care dollars. Innumerable studies, undertaken by both government and independent investigators, have concluded that savings from conversion to a single-payer insurance plan would readily fund current care as well as extending health coverage to the uninsured and the underinsured.

A single-payer plan that could work in the United States has been proposed by an organization of 13,000 physicians, Physicians for a National Health Program. This plan’s essential feature is the elimination of all financial barriers to health care. Every American, independent of employment status, income or medical circumstances, would be covered for all necessary health care, including provider and hospital services, diagnostics, drugs, mental health, dental services and long-term care. All insurance premiums, co-pays and deductibles would be removed. Choice of physician and hospital would be broader than under present insurance plan restrictions.

Our health care delivery system would remain in its current format — private physicians, group practices, community health centers, hospitals and drug companies. Only the paperwork and bills would be routed through and paid by a federal agency. Physicians would be paid by a simple fee schedule covering all patients or through an employer-based calculation.

Repeated surveys have indicated that a majority of Americans support government-guaranteed universal health insurance. Forty percent of physicians support some form of a single-payer program.

So why haven’t we moved in that direction? It’s because the entities controlling our for-profit health care system have been adept at guarding their turf. Insurance conglomerates, pharmaceutical companies and many provider organizations, all interested in protecting their profits and privileges, have convinced politicians that our system should not be changed fundamentally.

Scare tactics have been all too effective in deflecting the public’s attention from the abundant evidence that we would be vastly better served by national health insurance. Consider, for example, that the highest quality health care delivery in our country is provided by the government-administered Veterans Affairs system, now outperforming the very best private hospitals, including Johns Hopkins, the Mayo Clinic and Massachusetts General Hospital, in 17 categories of quality health care indicators.

We must capitalize on the current focus on the holes in our safety net so sadly exposed by suffering from the hurricanes. We must honestly define the problem and consider how to implement much-needed reform. As former governors Gardner and Carlson conclude, we have suffered from a lack of leadership. They note, “the citizens must take charge” and our political representatives must get the message. We look forward to participating in that discussion.

David McLanahan, M.D., was a surgeon at Pacific Medical Centers for 25 years. Also contributing to the column were doctors Hugh Foy and Erika Goldstein, Harborview Medical Center; Kaj Johansen, Vascular Institute of the Northwest; Richard Kovar, medical director, Country Doctor Community Health Centers; and Peter McGough, chief medical officer, UW Medicine Neighborhood Clinics.

Lessons for U.S. from China's health care privatization

Privatization and Its Discontents – The Evolving Chinese Health Care System
By David Blumenthal, M.D., M.P.P., and William Hsiao, Ph.D.
The New England Journal of Medicine
September 15, 2005

…the means of China’s ascendancy probably would have infuriated Mao.
Instead of adopting a socialist and collectivist strategy that relies on central governmental control and emphasizes social equality, the Chinese have privatized their economy and decentralized much governmental control to provincial and local authorities. And instead of putting the interests of China’s rural peasants first, as Mao advocated (his was a peasant revolution, starting in China’s vast countryside), China’s current leaders have poured money into its cities and let rural areas languish. The results have been huge and growing disparities in the well-being of populations in urban and rural areas and increasing social strife.

China faces huge health care problems that make those of the United States seem almost trivial by comparison and that constitute a major potential threat to China’s domestic tranquility. At the same time, with governmental coffers swollen by tax revenues from its booming economy, the Chinese have opportunities for health care improvement that Western policymakers can only envy. This combination of massive challenges and huge opportunities makes the Chinese health care system a unique laboratory that Western health care planners cannot afford to ignore.

From 1952 to 1982, the Chinese health care system achieved enormous
improvements in health and health care. Then, in the early 1980s, China virtually dismantled its apparently successful health care and public health system overnight, putting nothing in its place. In retrospect, this startling and almost inexplicable event seems to have been collateral damage from a much more carefully planned and successful policy strike: the privatization of China’s economy and a general effort to reduce the role of Beijing’s central government in China’s regional and local affairs. Only recently have Chinese authorities recognized the pain and the massive disruption in health care that they have caused.

Reduction in governmental support for the health care system had the effect of largely privatizing most Chinese health care facilities, forcing them to rely more on the sale of services in private markets to cover their expenses after allocations from public sources declined. Public hospitals came to function much like for-profit entities, focusing heavily on the bottom line. The Chinese government informally sanctioned this privatization of hospitals and clinics by ignoring it.

…the efficiency of the Chinese health care system has declined precipitously. With the growth of the private health care sector, the number of Chinese health care facilities and personnel have increased dramatically since 1980, but because of barriers to access, the use and thus productivity of the health care sector have declined. To many in the United States, this portrait of pockets of medical affluence in the midst of declining financial access and exploding costs and inefficiency will sound depressingly familiar.

Health expenses are a leading cause of poverty in rural areas and a major reason that peasants migrate to cities seeking proximity to better health care facilities and higher wages to pay for care.

The Government Responds

To its credit, the Chinese government has recognized and begun to address the huge health care problems that it created. It has done so with remarkable pragmatism, uninhibited by ideology and often importing (after careful examination) solutions pioneered in other countries. China also benefits at this time from a rare financial opportunity. Because of the rapid growth in its economy, national and local governments have sufficient tax revenues to make substantial health care investments without reducing spending for competing social services, such as housing and education, or for defense, which is now a priority for Chinese leaders.

Since China now seems to consist of two societies, urban and rural, the government has launched different strategies for ameliorating problems in these two locales. It has tried to recreate an urban health care safety net through a system that knits together a variety of devices that will be familiar to U.S. health care policymakers. The first is mandated employer insurance. In 1998, the central government required all private and state-owned enterprises to offer their workers medical savings accounts combined with catastrophic insurance. Imported from Singapore, the medical savings accounts require people to save their own money to pay for a portion of their personal medical expenses. The hope is that because medical savings accounts contain the patients’ own money, patients will be sensitive to the costs of care but will still have protection against those expenses.

The system is far from perfect. Some employers have refused to comply with state mandates, claiming they cannot afford the contributions. Many urban dwellers do not work for organized employers. Companies form and disband rapidly to avoid paying benefits to workers. Dependents of workers may not be covered. An indigenous Chinese private health insurance industry has arisen to sell health insurance to a wealthy minority that can afford it, and China is considering permitting foreign insurance companies to sell health care coverage as well. Whether the Chinese government will be able to cover the 51 percent of urban residents who still lack protection against the cost of illness, and how it would do so, is far from clear at this point.

The central government was slower and more reluctant to address health care problems in rural areas, but it was forced to act because of evidence that health care expenses were undermining other government efforts to alleviate poverty among the peasantry. In 2002, officials launched experiments to create a very rudimentary financial safety net for health care. Under these schemes, the government provides the equivalent of $2.50 a year to help cover a basic insurance plan for peasants, who must match this with an annual $1.25 of their own. Because of their modest funding, these plans cover only inpatient care (with a very high deductible) and leave peasants without adequate primary care services and drugs.

Looking Back and Looking Forward

The recent history of the Chinese health care system offers a number of lessons for observers in the United States and elsewhere. It seems clear that the radical privatization of health care systems carries enormous risks for the health of citizens and for the stability of governments. The Chinese example further reveals that government involvement may be essential to ensure an effective health care safety net and that, regardless of their language, history, or culture, providers will confer the services they are rewarded for offering. When Chinese doctors and hospitals were rewarded for providing high-tech services, they did exactly what U.S. doctors and hospitals have been doing for decades, with the same effects on use and costs. In fact, an overriding lesson of the Chinese experience is a warning to the rest of the world: if leaders anywhere care to, they can mimic and even exceed the inequities and inefficiencies that the U.S. health care system has exemplified for so long.

At the same time, optimists can find reason for hope as China struggles with its self-inflicted health care wounds. China’s leaders have begun purposefully and soberly to tackle the enormous social engineering challenge of repairing past damage and shaping a new health care system that fits their unique social system and culture. It is hard to say precisely what that system will look like, but it will undoubtedly combine private and public provision of both insurance and services, and it will look very different in rural and urban areas. A major unaddressed challenge for China (and for the United States) is how to reform an inefficient, poorly organized health care delivery system that is bloated in urban areas and threadbare in rural sectors. A further challenge facing China will be instilling in health care professionals, and especially physicians, an ethic of professionalism that is essential to ensure that private health care systems protect the interests of patients and provide care of reasonable quality.

http://content.nejm.org/cgi/content/full/353/11/1165

Comment: China’s experience demonstrates once again the truism that private health care systems follow the money. We’ll never get it right until we agree that private health care systems need public stewards to ensure that the money trail leads to quality care for all.

Lessons for U.S. from China’s health care privatization

Privatization and Its Discontents – The Evolving Chinese Health Care System
By David Blumenthal, M.D., M.P.P., and William Hsiao, Ph.D.
The New England Journal of Medicine
September 15, 2005

Health expenses are a leading cause of poverty in rural areas and a major reason that peasants migrate to cities seeking proximity to better health care facilities and higher wages to pay for care.

The Government Responds

Looking Back and Looking Forward

http://content.nejm.org/cgi/content/full/353/11/1165

Mercer survey of employer-sponsored health plans

Health benefit cost slows for a third year, rising just 6.1% in 2005
Mercer Human Resource Consulting
November 21, 2005

When annual health benefit cost increases peaked three years ago at nearly 15%, employers responded with an unprecedented flurry of plan redesign. Increases have slowed each year since then, with cost rising just 6.1% in 2005 to an average of $7,089 per employee, with a similar increase – 6.7% – predicted for next year.

According to the National Survey of Employer-Sponsored Health Plans, conducted annually by Mercer Health & Benefits LLC, employers predicted in
2004 that their health benefit cost would rise by an average of 10% in 2005 if they made no changes. But they expected to lower that increase to about 7% through a variety of initiatives, including cost-shifting and changing vendors. Mercer’s 2005 survey, released today, shows they succeeded.

A key tactic employers used to lower their 2005 cost increase was again cost-shifting. While the average employee contribution as a percent of premium was essentially unchanged, employers increased employee cost-sharing at the point of service. An individual deductible for in-network care is now required in 80% of PPO plans, up from 73% last year.

The use of coinsurance as a means of sharing the cost of office visits increased, from 5% to 9% of all PPO sponsors and from 18% to 22% of all large sponsors. Among jumbo employers (20,000 or more employees), the use of coinsurance jumped from 26% to 37%. This is a significant departure from the recent past, in which PPOs moved to copays to compete more effectively with HMOs for enrollment. Coinsurance reflects the actual cost of the service provided and thus is seen as a consumerist strategy. It also tends to shift more cost to employees than copays do.

Blaine Bos, a consultant with Mercer Health & Benefits and one of the study’s authors, notes that large employers shifted cost to employees by raising their out-of-pocket costs for care rather than by raising their premium contributions. “This signals their preference for keeping the cost of the plan down for all employees by shifting cost to those who use it most,” Mr.
Bos says.

Over a third of all employers (34%) said consumerism will be significant or very significant to their cost-management efforts over the next five years, while 32% said care management will be significant or very significant.

“Many employers see these strategies as two sides of the same coin. Care management programs require the active involvement of employees in improving their health, while consumerist strategies engage the employees in managing health care cost,” says Mr. Bos.

Many of the nation’s largest employers took the step of implementing a consumer-directed health plan (CDHP). Among jumbo employers (20,000 or more employees), CDHP offerings rose sharply, from 12% to 22%. Otherwise, CDHPs saw only modest growth. Only 2% of all employers with 10 or more employees offered CDHPs in 2005, and only 5% of large employers – those with at least 500 employees – offered them.

Enrollment in CDHPs also remained low. Nationally, just 1% of all covered employees are enrolled in CDHPs. When a CDHP was offered alongside other medical plans in 2005, on average 14% of employees chose to enroll. Among the jumbo employers offering CDHPs, enrollment averaged 8%.

Small employers’ lack of interest in CDHPs was a surprise. When Health Savings Accounts (HSAs) were created by the Medicare Modernization Act of 2003, proponents said HSAs would expand access to coverage by providing a less-expensive option for small employers who might not otherwise offer coverage. This theory hasn’t panned out: use of CDHPs by this group reached only 2% in 2005, while the percentage offering any form of health plan dropped from 66% to 63%.

“It seems the cost difference – about 13% lower than the average cost of HMO coverage, and 18% lower than the average PPO cost – just wasn’t enough to prevent some small employers from dropping coverage,” says Mr. Bos. “The more complex plan design may also be a deterrent given that most small employers don’t have a robust HR staff.”

He adds that many small employers instead lowered plan cost by raising deductibles (34% of small PPO sponsors require an individual deductible of $1,000 or more). “In 2005, a PPO with a $1,000-plus deductible was less costly than the average CDHP,” Mr. Bos says.

Mercer’s comprehensive report on the National Survey of Employer-Sponsored Health Plans 2005 will be available in early March for $500.

http://www.mercerhr.com/pressrelease/details.jhtml/dynamic/
idContent/1202305

Comment: This Mercer report seems to celebrate the slowing of the increase in the costs of employer-sponsored health plans to only 6.1%, even if that still is significantly above the rate of inflation. This trend might be good news for corporate human resource managers, but it is terrible news for patient advocates. The anticipated 10% increase in plan costs, reflecting true increases in actual health care costs, was reduced to 6.1%, primarily by shifting plan costs to employees “who use it most.” Erecting financial barriers to health care is bad health policy because it impairs health care access and outcomes.

It is interesting to note that the enthusiasm for health savings accounts (HSAs) is not nearly as great as the shift to high-deductible PPOs. Employers seem to recognize that the real benefit to them of consumer-directed health care (CDHC)has been in shifting costs to employees through the higher deductibles and greater coinsurance of PPOs. The HSA component of CDHC has been an irrational, administratively-complex hybrid of heath benefit and retirement programs. Only very large employers have had the human resources capacity to indulge their employees with these plans that appeal to the invincible who look upon these plans as an additional resource for their robust retirements.

When health plan cost increases continue in excess of inflation, and when patient access charges are increasing even more, it is clear that efforts to address the affordability of health care have been a dismal failure. Tinkering with plan structure is not getting us there. In contrast, the single payer model is designed specifically to ensure the affordability of comprehensive services for everyone. But then Mercer would lose its market for its annual $500 report.

Footer