robintek

A lot of U.S. employees have noticed that their employers have started shifting the costs of health plans toward them. And, let’s face it, as the increases in health plan premiums continue to outpace inflation, employers will continue to make such shifts.

Employees will be facing some difficult choices. One such choice would be between paying higher monthly premiums for a plan featuring lower out-of-pocket costs and deductibles -or- paying a lower monthly premium for a plan featuring higher out-of-pocket costs and deductibles. Decisions like this bring the age-old cost, quality debate to the forefront. Let’s look at some facts:

• Even in the same market and network, the cost and quality of health care can vary greatly from provider to provider.
• Most employees are baffled by the complexities involved with health care and insurance pricing. The majority of providers fail to see the importance of providing patients with clear and concise pricing information. From in-network and out-of- network, billed charges, customary and reasonable charges, contracted pricing and global pricing, and so forth, the technical language and multiple ways that users are charged make it extremely difficult for employees to understand and compare costs from one provider/facility to another.
• An employee won’t care what services cost if they aren’t the one paying for the services.

In theory, the success of consumer-directed health plans greatly depends on the employer’s ability to get their employees to think like buyers. The reasoning being that employees paying for some portion of the services will look toward high quality, low cost provider options and lower both their own health care costs and those of their employer.

However, the above theory rarely reflects reality. Most consumerism experts say that shopping for health care isn’t akin to shopping for a vehicle or pair of shoes. Most people wouldn’t hesitate to buy the most expensive vehicle when someone else is paying the bill. After all, the most expensive vehicle must be the best, right? The problem with applying the same theory to health care and trying to create a smart consumer through increasing their out-of-pocket costs is that many consumers, no matter how frugal or involved, can’t get the comparative quality and cost data needed to make an informed decision. The same can’t be said of purchasing a car.

You can help your employees benefit from quality and cost data with these steps:

• Alert local medical facilities/physicians that their plan favors transparent pricing and high quality, low cost care services.
• Help them know their choices and what each costs. Health care plans should be designed so that it’s financially encouraging to choose the medical facilities, hospitals, and doctors providing contracted pricing data.
• Have ongoing monthly education about network choices and how these choices impact what they and everyone else spends on health care.

Since Health Savings Accounts (HSAs) were first authorized in January of 2004 as a tax-advantaged portal for medical savings, America’s Health Insurance Plans (AHIP), which is a trade association representing the health insurance industry, has conducted an annual survey of the HSA market. According the 2011 AHIP survey, HSA plan enrollment in the United States has almost doubled over the last three years, going from 6.1 million participants in 2008 to 11.4 million participants in 2011. From 2010 to 2011, the number of Americans covered by HSAs linked to high-deductible plans (HDHPs) increased by 14%.

Other key findings from the AHIP survey are:

• Large-group coverage was the fastest growing market for HSA plans between 2010 and 2011, with a growth of 26%.
• Individual market coverage was the second fastest growing market for HSA plans, with a growth of 15%.
• More than 6.3 million individuals were enrolled in HSA plans in the large-group market.
• Around 2.8 million individuals were enrolled in HSA plans in the small-group market.
• Approximately 2.4 million individuals were enrolled in HSA plans in the individual market.

The Impact Of The Patient Protection and Affordable Care Act On HSAs

As it relates to HSA plans, AHIP has noted that some of the provisions in the Patient Protection and Affordable Care Act (PPACA) could create some potential unintended consequences that might disrupt, if not limit, the availability of HSA plan coverage. Three of the main problems noted by AHIP include:

1. Medical loss ratio regulation. This requires an insurer to spend 80% or more of a consumer’s premiums on direct, non-administrative patient care and improvements to such care’s quality. AHIP asserts that medical loss ratio regulations will be especially problematic for HSA-eligible HDHPs. Participating in a qualified HDHP is a requirement to participate in an HSA. HDHPs provide individuals with a low-premium, high-deductible alternative to traditional health plans. These plans might have lower benefit costs, but they certainly aren’t always cheaper to administer from a per-enrollee standpoint. As a result, they may naturally have lower medical loss ratios.

2. Over-the-counter (OTC) medication restrictions. After 2011, funds from HSAs can’t be used to purchase OTC medications unless the individual has a prescription in hand. By limiting consumer access to many common OTC drugs, such as those used for allergies and colds, consumers will be left in default to use more expensive prescription drugs.

3. Minimum actuarial value requirement. Each level of insurance coverage (platinum, gold, silver, and bronze) sold in either the small or individual market will be required to meet a level-specific minimum actuarial value starting in 2014. The actuarial value is a dollar value based on the average benefits expected to be paid out by a particular plan. Bronze, which is the lowest level, will be required to have at least a 60% actuarial value. Under the Patient Protection and Affordable Care Act, the Secretary of Health and Human Services is to institute a process that will determine actuarial values. The health care reform law specifically instructs that the HHS Secretary may include annual employer HSA contribution amounts within the actuarial value calculation. Of course, this wording means annual employer HSA contribution amounts may not be calculated. AHIP recognizes that including this in the calculation will help to ensure continued consumer access to affordable, high-quality coverage since inclusion will considerably increase the probability that HSAs will meet the minimum requirements.

In closing, AHIP’s survey clearly reflects that HSA enrollment is steadily growing. Policymakers should recognize that HSA plans are more important than ever when it comes to U.S. consumers having access to affordable, quality coverage.

According to the Centers for Medicaid Services, at $8,086 per person annually, the United States spends more per capita on health care than any other country in the world. However, at least half of the country’s population has one or more chronic diseases, 33% are diabetic or pre-diabetic and 66% are overweight or obese. These statistics came from the U.S. Centers for Disease Control and Prevention. Lack of exercise, poor nutrition and smoking are three leading contributors to such a high percentage of unhealthy people.

Promoting a Healthy Lifestyle. People are naturally wired to keep doing what they’re already doing. If there is no incentive to change, even if it’s beneficial, they won’t. This also applies to offering passive open enrollment. Employees are more likely to keep their current coverage. VBID is a new insurance design based on value. It also encourages wellness proponents. The main idea is to match patients’ out-of-pocket expenses with heath service values. Different levels of value are recognized in this approach. By making high-value treatments more available and discouraging low-value treatments, this approach works to yield improved health outcomes on all health care expenditure levels. Research shows that barrier reductions improve patient compliance for recommended treatments.

In addition to increasing compliance for treatments, this approach has also been shown to increase compliance in patients who need regular medication. A study performed by the Center for Health Value Innovation and the University of Michigan Center for Value-Based Insurance Design showed that patients with chronic illnesses who required medication were more willing to take it. Their cooperation for preventative services was also better. However, there is still one troubling issue, which is people who have the opportunity and encouragement to comply but don’t. This has left researchers wondering what is missing from the VBID approach that is necessary to make such people more compliant. The solution is to implement the use of loss aversion and productive tension to raise individual involvement for improving healthy behavior.

Raising the Productive Tension Level. The main idea of productive tension is to create a program that gives enough initiative to provide patients with a positive reason to change. In order to be optimal, productive tension needs to have four different components:

• Information – Although it increases knowledge, it doesn’t always encourage action. If it did, the country’s population would be rich, fit and happy. After purchasing $46 billion on diet and self-help books in 2010, Americans still need help.
• Infrastructure – This includes having the right tools, technology and resources to help people. Keep in mind that infrastructure alone doesn’t necessarily initiate action.
• Incentives – Nothing works better for motivation than a reward. Financial rewards are especially enticing. These still may not initiate action in all people. In a Global Survey of Health Promotion and Workplace Wellness Strategies, only 48% of employers stated that their incentive programs were minimally effective.
• Imperatives – These are important for accountability and understanding. People need to know what they must accomplish, why they need to do so and what happens if they fail.

Applying the Behavioral Design. One illustrative example of applying the behavior-based design is depicted by Safeway. The supermarket chain’s CEO, Steven Burd, said that 70% of his employees’ health care costs were because of their own behavior. In addition to this, 74% of those cases included four major chronic health conditions. The conditions were cancer, diabetes, cardiovascular disease and obesity. During the following five years, the supermarket chain redesigned its health care infrastructure. Their new focus, after launching the Healthy Measures Initiative, is consumer-based strategies. As a result of the positive changes, Safeway has seen a great increase in voluntary participation among their workers for controlling and preventing these conditions.

Solutions for Creating Tension. There are several different ways to encourage participants to become healthier. The following are a few good examples of beneficial changes:

• Health Requirements – Having employees pass an annual physical and health exam is a great idea for an incentive.
• Company Gym – While providing an outside gym membership may be effective sometimes, having a gym or fitness center in the workplace is even more effective.
• Company Contests – Hosting contests that all employees can participate in is beneficial. Weight loss or health competitions with cash prizes and contribution pools are extremely successful.

The bottom line is that increasing tension to promote a healthy lifestyle change is the best way to make it happen. People are much easier to convince when there are both incentives and rewards.