17th Annual Towers Watson/National Business Group on Health

Employer Survey on Purchasing Value in Health Care
Towers Watson, 2012 
Performance in an Era of Uncertainty
** Affordability issues are a growing challenge
Trends remain double the rate of inflation. Employees’ share of premium costs increased 9.3% between 2011 and 2012, with the dollar burden rising from $2,529 to $2,764. In fact, employees contribute nearly 40% more for health care than they did five years ago, compared with 34% for employers. Likewise, out-of-pocket expenses increased over the last year from 16% to 18%. That increase is partly due to subsidy shifts for dependents, as nearly half of companies increased employee contributions in tiers with dependent coverage. About a quarter of companies (24%) are using spousal surcharges, with another 13% planning to do so next year.
• The total employee cost share, including premiums and out-of-pocket costs, has climbed from 33.2% in 2011 to 34.4% in 2012.
** Employers confirm their commitment to providing health care benefits for active employees, but long-term confidence declines sharply
Many employers are steadfast in their commitment to their active health care benefits as a central component of their employee value proposition. Through 2015, most employers will remain focused on optimally managing the design and delivery of their programs, with a select number tailoring their designs to facilitate the availability of federal subsidies in the Exchanges for a portion of their workforce. Looking to the end of the coming decade, employers are much less confident that health care benefits will be offered at their organization.
• Only 3% of employers are somewhat or very likely to discontinue health care plans for active employees with no financial subsidy in 2014 or 2015.
• 45% are somewhat to very likely to offer an employer-sponsored health plan to only a portion of their population and direct ineligible employees to the Exchanges.
• Today, 23% of companies are very confident that they will continue to offer health care benefits for the next 10 years, down from a peak of 73% in 2007.
** Use of ABHPs is surging but must be part of a broader strategy to be effective
Account-based health plans (health savings accounts and health reimbursement arrangements) can be an important element in an organization’s health benefit management if the right incentives and employee education are attached. Today, 59% of companies have an ABHP in place, with another 11% expecting to add one by 2013. But ABHPs will not necessarily result in lower costs without significant enrollment. Our results show that employers that take a comprehensive approach to ABHPs (e.g., increasing employee and provider accountability while at the same time helping to cultivate smarter health care consumers) are the ones that have gained the greatest advantage. Using a health savings account (HSA) can also effectively align with an employer’s retirement strategy by providing employees with a tax-advantaged vehicle to pay for current costs while accumulating wealth for retirement.
• Total replacement ABHPs are also on the rise, representing nearly 12% of companies with an ABHP — up from to 7.6% in 2010.
• ABHP enrollment has nearly doubled in the last two years — surging from 15% in 2010 to 27% in 2012, and the move toward total replacement ABHPs is continuing.
• About 10% of respondents say employees and dependents enrolled in an ABHP are better at reducing lifestyle risks than those enrolled in non-ABHPs.
• Nearly four out of 10 companies currently consider their HSA for actives part of their retiree medical strategy, and another 20% are planning or considering such a strategy over the next three years.
Regardless of the future of health care reform, providing a cost-effective health benefit plan will remain a differentiator for many companies when it comes to attracting and retaining top talent.
http://www.healthreformgps.org/wp-content/uploads/Towers-Watson-NBGH-2012.pdf

Health benefit programs of large employers have been the mainstay of health care coverage for working families. The Affordable Care Act relies heavily on the stability of these programs. However, only 23 percent of these employers are very confident that they will continue to offer health care benefits ten years from now.
Although this report discusses many observations and strategies for the future, one trend that is of concern is the greater reliance on high-deductible health plans with health savings accounts or health reimbursement arrangements (aka account-based health plans or ABHPs). Although these plans seem to be satisfactory for the healthy workforce and their young healthy families who really don’t need much care, there remains the serious concern that such accounts deter patients with significant needs from receiving the care that they should have.
Quoting from this report, “An important question is whether ABHPs are having a positive or negative effect on employees’ utilization of health care services and ultimately on improving health outcomes. There are significant information gaps about health behaviors and outcomes for employees and dependents enrolled in an ABHP, compared with non-ABHPs.”
The prevailing attitude seems to be that conditions in health care financing are so bad that we have to do something, no matter what. It doesn’t seem to matter whether or not the changes are known to be beneficial, just so long as we don’t enact a single payer system.
Everyone understands that a single payer system would work, but it’s just not feasible. Not feasible? That’s nonsense. We know that single payer would be highly beneficial, creating much greater value in health care spending. Enacting single payer is the only feasible approach we have.

By Theodore R. Marmor
Tampa Bay Online, August 18, 2012

Before Medicare began in 1965, many American senior citizens — and their children — struggled to pay for their doctor bills. Ever since, Medicare’s been an American success story.

Why, then, do so many Beltway pundits and members of Congress — including Mitt Romney’s new running mate, Rep. Paul Ryan, R-Wis. — go after it?

Some of its critics claim that slashing Medicare is the only way to control the deficit. Like most attacks on Medicare, this one is based on ideology, not evidence. Medicare’s critics often claim that rising federal health care spending is America’s biggest fiscal challenge. In fact, the federal deficit is bloated today primarily due to the Bush administration’s irresponsible tax cuts, economic mismanagement, costly wars and increased defense spending.

Of course large numbers of retiring boomers mean Medicare will need more revenue. But Medicare costs won’t need to spiral out of control. The new Affordable Care Act includes steps to limit per-person health care price hikes. It’s already saving Medicare money. Yet Romney and Ryan promise they would work to repeal it.

What’s their alternative? The Ryan Budget Plan calls for extremely deep cuts to Medicare, while promising more and longer-lasting tax cuts for a few very wealthy Americans. Most House Republicans have already voted for that. It would end Medicare as we know it, and instead force seniors to buy private insurance with vouchers that would cover less of their healthcare costs each year.

These vouchers would reduce seniors’ choices, not their costs. Why? Republican voucher plans assume that if government ends Medicare, private insurance companies will start to deliver cheaper, more efficient plans. But what’s their evidence?

When the nonpartisan Congressional Budget Office analyzed vouchers, it found that even a slight dip in future federal spending on health care for older Americans would drive costs up. Vouchers with slowly rising buying power would simply leave seniors and their loved ones to pay more out of pocket for bigger medical bills.

In fact, Uncle Sam’s already lost money on Medicare contracts with competing private health insurance plans. Although they spent more per patient, those private plans didn’t improve coverage or quality of care. Meanwhile, Medicare has shown it bargains more effectively for better prices than most private insurers say that they can afford to do.

How are frail older people — one in three with cognitive impairments — supposed to wade through pages of fine print to understand new, complicated and often confusing “choices”? Is that what seniors really want? Surveys show most people care much more about being free to choose their doctors than to do complex comparison shopping.

Consumer choice, it turns out, is just a fig leaf that Medicare’s critics use to try to hide what would truly be in store for seniors if Medicare were to be gutted over time: fewer benefits, higher costs and the loss of Medicare’s guarantee of access to a wide range of doctors and hospitals. What’s more, its supporters aim to mask their true aim by grandfathering in those over 55, keeping them from having to face a transformed Medicare program.

The Ryan Budget Plan wouldn’t really control Medicare’s costs. It would simply shift them to future senior citizens and make Medicare less efficient.

There’s no good reason to weaken and eventually dump a program that’s met the needs of America’s seniors and disabled citizens so well for decades. Instead of wasting time and money pushing snake oil schemes to replace Medicare, let’s tackle the real problem of rising health care costs with sensible cost controls, paid for by taxing — not cutting taxes for — those who can best afford it. That way, Medicare can survive and succeed for a long time to come.

(Theodore R. Marmor is professor emeritus of public policy and political science at Yale University and has testified before Congress about Medicare reform. He is a member of the Scholars Strategy Network, a new national organization that brings together many of America’s leading scholars to address pressing public challenges at the national, state and local levels.)

http://www2.tbo.com/news/opinion/2012/aug/18/naopino2-turning-medicare-into-vouchers-wont-work-ar-467518/

Comment: 

By Don McCanne, MD

Medicare is under political attack. In this article, Professor Theodore Marmor, one of the nation’s leading experts on Medicare, explains concisely the issues and the potential consequences. It can serve as a valuable resource for explaining to others just what is at stake. For single payer advocates, educating the public on this debate is a must if we are to continue to advocate for an “improved Medicare for all.”

Turning Medicare into vouchers won’t work

By Theodore R. Marmor
Tampa Bay Online, August 18, 2012

Before Medicare began in 1965, many American senior citizens — and their children — struggled to pay for their doctor bills. Ever since, Medicare’s been an American success story.

Why, then, do so many Beltway pundits and members of Congress — including Mitt Romney’s new running mate, Rep. Paul Ryan, R-Wis. — go after it?

Some of its critics claim that slashing Medicare is the only way to control the deficit. Like most attacks on Medicare, this one is based on ideology, not evidence. Medicare’s critics often claim that rising federal health care spending is America’s biggest fiscal challenge. In fact, the federal deficit is bloated today primarily due to the Bush administration’s irresponsible tax cuts, economic mismanagement, costly wars and increased defense spending.

Of course large numbers of retiring boomers mean Medicare will need more revenue. But Medicare costs won’t need to spiral out of control. The new Affordable Care Act includes steps to limit per-person health care price hikes. It’s already saving Medicare money. Yet Romney and Ryan promise they would work to repeal it.

What’s their alternative? The Ryan Budget Plan calls for extremely deep cuts to Medicare, while promising more and longer-lasting tax cuts for a few very wealthy Americans. Most House Republicans have already voted for that. It would end Medicare as we know it, and instead force seniors to buy private insurance with vouchers that would cover less of their healthcare costs each year.

These vouchers would reduce seniors’ choices, not their costs. Why? Republican voucher plans assume that if government ends Medicare, private insurance companies will start to deliver cheaper, more efficient plans. But what’s their evidence?

When the nonpartisan Congressional Budget Office analyzed vouchers, it found that even a slight dip in future federal spending on health care for older Americans would drive costs up. Vouchers with slowly rising buying power would simply leave seniors and their loved ones to pay more out of pocket for bigger medical bills.

In fact, Uncle Sam’s already lost money on Medicare contracts with competing private health insurance plans. Although they spent more per patient, those private plans didn’t improve coverage or quality of care. Meanwhile, Medicare has shown it bargains more effectively for better prices than most private insurers say that they can afford to do.

How are frail older people — one in three with cognitive impairments — supposed to wade through pages of fine print to understand new, complicated and often confusing “choices”? Is that what seniors really want? Surveys show most people care much more about being free to choose their doctors than to do complex comparison shopping.

Consumer choice, it turns out, is just a fig leaf that Medicare’s critics use to try to hide what would truly be in store for seniors if Medicare were to be gutted over time: fewer benefits, higher costs and the loss of Medicare’s guarantee of access to a wide range of doctors and hospitals. What’s more, its supporters aim to mask their true aim by grandfathering in those over 55, keeping them from having to face a transformed Medicare program.

The Ryan Budget Plan wouldn’t really control Medicare’s costs. It would simply shift them to future senior citizens and make Medicare less efficient.

There’s no good reason to weaken and eventually dump a program that’s met the needs of America’s seniors and disabled citizens so well for decades. Instead of wasting time and money pushing snake oil schemes to replace Medicare, let’s tackle the real problem of rising health care costs with sensible cost controls, paid for by taxing — not cutting taxes for — those who can best afford it. That way, Medicare can survive and succeed for a long time to come.

(Theodore R. Marmor is professor emeritus of public policy and political science at Yale University and has testified before Congress about Medicare reform. He is a member of the Scholars Strategy Network, a new national organization that brings together many of America’s leading scholars to address pressing public challenges at the national, state and local levels.)

http://www2.tbo.com/news/opinion/2012/aug/18/naopino2-turning-medicare-into-vouchers-wont-work-ar-467518/

Comment: 

By Don McCanne, MD

Medicare is under political attack. In this article, Professor Theodore Marmor, one of the nation’s leading experts on Medicare, explains concisely the issues and the potential consequences. It can serve as a valuable resource for explaining to others just what is at stake. For single payer advocates, educating the public on this debate is a must if we are to continue to advocate for an “improved Medicare for all.”

Turning Medicare into vouchers won’t work

By Theodore R. Marmor
Tampa Bay Online, August 18, 2012
Before Medicare began in 1965, many American senior citizens — and their children — struggled to pay for their doctor bills. Ever since, Medicare’s been an American success story.
Why, then, do so many Beltway pundits and members of Congress — including Mitt Romney’s new running mate, Rep. Paul Ryan, R-Wis. — go after it?
Some of its critics claim that slashing Medicare is the only way to control the deficit. Like most attacks on Medicare, this one is based on ideology, not evidence. Medicare’s critics often claim that rising federal health care spending is America’s biggest fiscal challenge. In fact, the federal deficit is bloated today primarily due to the Bush administration’s irresponsible tax cuts, economic mismanagement, costly wars and increased defense spending.
Of course large numbers of retiring boomers mean Medicare will need more revenue. But Medicare costs won’t need to spiral out of control. The new Affordable Care Act includes steps to limit per-person health care price hikes. It’s already saving Medicare money. Yet Romney and Ryan promise they would work to repeal it.
What’s their alternative? The Ryan Budget Plan calls for extremely deep cuts to Medicare, while promising more and longer-lasting tax cuts for a few very wealthy Americans. Most House Republicans have already voted for that. It would end Medicare as we know it, and instead force seniors to buy private insurance with vouchers that would cover less of their healthcare costs each year.
These vouchers would reduce seniors’ choices, not their costs. Why? Republican voucher plans assume that if government ends Medicare, private insurance companies will start to deliver cheaper, more efficient plans. But what’s their evidence?
When the nonpartisan Congressional Budget Office analyzed vouchers, it found that even a slight dip in future federal spending on health care for older Americans would drive costs up. Vouchers with slowly rising buying power would simply leave seniors and their loved ones to pay more out of pocket for bigger medical bills.
In fact, Uncle Sam’s already lost money on Medicare contracts with competing private health insurance plans. Although they spent more per patient, those private plans didn’t improve coverage or quality of care. Meanwhile, Medicare has shown it bargains more effectively for better prices than most private insurers say that they can afford to do.
How are frail older people — one in three with cognitive impairments — supposed to wade through pages of fine print to understand new, complicated and often confusing “choices”? Is that what seniors really want? Surveys show most people care much more about being free to choose their doctors than to do complex comparison shopping.
Consumer choice, it turns out, is just a fig leaf that Medicare’s critics use to try to hide what would truly be in store for seniors if Medicare were to be gutted over time: fewer benefits, higher costs and the loss of Medicare’s guarantee of access to a wide range of doctors and hospitals. What’s more, its supporters aim to mask their true aim by grandfathering in those over 55, keeping them from having to face a transformed Medicare program.
The Ryan Budget Plan wouldn’t really control Medicare’s costs. It would simply shift them to future senior citizens and make Medicare less efficient.
There’s no good reason to weaken and eventually dump a program that’s met the needs of America’s seniors and disabled citizens so well for decades. Instead of wasting time and money pushing snake oil schemes to replace Medicare, let’s tackle the real problem of rising health care costs with sensible cost controls, paid for by taxing — not cutting taxes for — those who can best afford it. That way, Medicare can survive and succeed for a long time to come.
(Theodore R. Marmor is professor emeritus of public policy and political science at Yale University and has testified before Congress about Medicare reform. He is a member of the Scholars Strategy Network, a new national organization that brings together many of America’s leading scholars to address pressing public challenges at the national, state and local levels.)
http://www2.tbo.com/news/opinion/2012/aug/18/naopino2-turning-medicare-into-vouchers-wont-work-ar-467518/

Medicare is under political attack. In this article, Professor Theodore Marmor, one of the nation’s leading experts on Medicare, explains concisely the issues and the potential consequences. It can serve as a valuable resource for explaining to others just what is at stake. For single payer advocates, educating the public on this debate is a must if we are to continue to advocate for an “improved Medicare for all.”

Letter, The New York Times, August 28, 2012

To the Editor:

Re “Truth and Lies About Medicare” (editorial, Aug. 19):

As a former chief executive and actuary of an insurance company that once sold both individual and group health insurance, I am particularly mystified by the effort to push Medicare participants into the individual health insurance market.

I thought that we wanted to reduce — or at least control — the cost of health insurance, but individual health insurance is by far the most expensive alternative.

Depending on the size of the vouchers, the government itself may save money, but the entire system will pay more. Someone has to pay for the costs of individual underwriting, marketing and so on, and those expenses will fall on the elderly themselves.

You are also correct in assuming that there is likely to be anti-selection, with the healthier people going to the insurance companies, leaving the sickest and most expensive people in the Medicare plan.

It is certainly true that health insurance needs reform and that President Obama is far from having all the answers, but the Romney-Ryan plan will increase the country’s health care bill with little or any of the increase going to more or better health care.

Stephen Brown
Brewster, Mass.

http://www.nytimes.com/2012/08/29/opinion/medicare-voucher-costs.html

Comment: 

By Don McCanne, MD

Today’s message is important because it comes from an insider in the health insurance industry. Not only does he indicate that it is a terrible idea for Medicare beneficiaries to use vouchers to purchase private, individual plans, but, of even greater significance, is “that health insurance needs reform and that President Obama is far from having all the answers.”

For private insurance reform, nobody has all the answers. The nature of the beast is that when you try to fix one defect, others open up. Instead of moving Medicare beneficiaries into private insurance plans, we need to move private insurance victims into Medicare.

Medicare Voucher Costs

Letter, The New York Times, August 28, 2012
To the Editor:
Re “Truth and Lies About Medicare” (editorial, Aug. 19):
As a former chief executive and actuary of an insurance company that once sold both individual and group health insurance, I am particularly mystified by the effort to push Medicare participants into the individual health insurance market.
I thought that we wanted to reduce — or at least control — the cost of health insurance, but individual health insurance is by far the most expensive alternative.
Depending on the size of the vouchers, the government itself may save money, but the entire system will pay more. Someone has to pay for the costs of individual underwriting, marketing and so on, and those expenses will fall on the elderly themselves.
You are also correct in assuming that there is likely to be anti-selection, with the healthier people going to the insurance companies, leaving the sickest and most expensive people in the Medicare plan.
It is certainly true that health insurance needs reform and that President Obama is far from having all the answers, but the Romney-Ryan plan will increase the country’s health care bill with little or any of the increase going to more or better health care.
Stephen Brown
Brewster, Mass.
http://www.nytimes.com/2012/08/29/opinion/medicare-voucher-costs.html

Today’s message is important because it comes from an insider in the health insurance industry. Not only does he indicate that it is a terrible idea for Medicare beneficiaries to use vouchers to purchase private, individual plans, but, of even greater significance, is “that health insurance needs reform and that President Obama is far from having all the answers.”
For private insurance reform, nobody has all the answers. The nature of the beast is that when you try to fix one defect, others open up. Instead of moving Medicare beneficiaries into private insurance plans, we need to move private insurance victims into Medicare.

Shareholders urge WellPoint to oust CEO Angela Braly

By Chad Terhune
Los Angeles Times, August 28, 2012
Investors in health insurance giant WellPoint Inc., which runs Anthem Blue Cross in California, are pressing for a change in top management as criticism intensifies about the company’s lagging stock, managerial missteps and disappointing earnings.
Shareholder complaints about WellPoint’s chairwoman and chief executive, Angela Braly, have grown louder since last month, when the Indianapolis company posted another anemic quarter and cut its full-year profit outlook as its enrollment fell again.
The investor unrest follows years of consumer fury that beset WellPoint as it repeatedly raised premiums on many families and small businesses by 10% or more.
A New York hedge fund, Royal Capital Management, sent a letter to WellPoint’s board last week saying that Braly has “failed miserably” as CEO and that “it is incumbent upon the board of directors to fulfill its fiduciary responsibility to shareholders by changing leadership.”
Other influential WellPoint shareholders, such as Leon Cooperman’s Omega Advisors hedge fund in New York, have expressed similar concerns about the company’s lackluster performance, particularly compared with its chief competitors’, and they have urged the board to replace Braly.
Thus far, WellPoint’s board has voiced strong support for Braly. “The board has been fully involved in the strategy WellPoint is pursuing and is supportive of the strategy and our management team,” Jacquelyn Ward, the company’s lead outside director, said in a statement last month after analysts began questioning management’s performance.
“Braly has presided over the most arbitrary and capricious health insurance rate hikes of our time,” said Jamie Court, president of Consumer Watchdog, an advocacy group in Santa Monica. “Now she is learning the rules of Wall Street: Cross policyholders all you want, but don’t step on the wallets of shareholders.”
http://www.latimes.com/business/la-fi-wellpoint-under-fire-20120828,0,4090962.story

Our politicians have left the private insurance industry in charge of our health care, but what is this industry really all about? As Jamie Court says, “Cross policyholders all you want, but don’t step on the wallets of shareholders.”
Addendum to today’s Quote of the Day on Angela Braly:
Angela Braly resigned today as president and CEO of WellPoint.
It would be a mistake to celebrate this action as some sort of elimination of an evil-doer. She will be replaced. From the perspective of patients, nothing changed.
The action that we need is from the President and Congress. They need to eliminate the private insurers and replace them with an improved Medicare for all. Hold the celebration until we can accomplish that goal.