More good reading on the healthcare benefits crisis

From Atlantic Information Services, Inc. come these “15 Big Predictions for ‘04 . . . CDH [Consumer-directed health care] Trends for the New Year”

The top 15 predictions:

(1) New partnerships between insurers and financial institutions: The anticipated HSA boom will give insurers and third-party administrators (TPAs) an opportunity to develop and sell new products. It also will provide financial institutions with a way to enter the health insurance market. Few insurers and TPAs, however, will want to deal with tracking account rollovers, and financial institutions won’t want to deal directly with claims. That will clear the way for partnerships between the two groups . . . .

(2) CDH adoption will grow most significantly in 2006: CDH plan enrollment will balloon in 2004 to almost 1.2 million, from a base of about 500,000 in 2003 . . . . Enrollment, he says, will grow most significantly in 2006 when increased product availability - spurred by HSAs [health savings accounts, created by the new Medicare law] - meets growing demand from mid-size and small employers that typically lag behind jumbo firms in benefits innovation.

(3) HSAs will improve acceptance of CDH, but adoption will remain low . . . . Employees who have grown accustomed to 100% coverage and low copays will be reluctant to accept a high-deductible CDH plan.

Yeah . . . but who has that kind of coverage anymore?

(4) HSAs will be favored by small employers . . . .

(5) HRA [health reimbursement account]-based CDH plans will be seen as more effective than HSAs . . . .

(6) The industry will develop new CDH flavors: Driven by a perceived market demand, insurers will develop specialty CDH products - such as Rx only, vision only and dental only . . . .

(7) CDH successes will breed lackluster imitators: CDH will move closer to the mainstream in ‘04, but a new wave of products marketed as “consumer-driven” will fail to offer necessary consumer support tools. Giving employees financial responsibility without information, tools or support to help them make decisions is a recipe for disaster . . . . “Lackluster product offerings will turn some against the [CDH] concept merely because the specific implementation of CDH that they experienced was sub-par.” Bad experiences among consumers in such plans could poison the CDH movement. . . .

(8) CDH vendors and insurers will be forced to address shortcomings: Although managed care organizations - through their captive health provider networks - can offer deep discounts, few of them have developed robust decision-support tools . . . CDH vendors, by contrast, tend to offer more sophisticated, user-friendly systems and member-support tools, but rely on limited “rental network” discounts. . . .

(9) Hospitals will face more pressure to compete on price and quality . . . .

(10) Employer-employee tension will prompt future CDH growth: Another year of double-digit health insurance rate hikes, coupled with increased cost sharing, will lead to more tension between employers and employees. That tension will inspire more employers to examine CDH as a new option for 2005 . . . .

(11) Employees will grumble about increased financial responsibility: There will be a learning curve associated with CDH plans that require employees to wait for reimbursement from their HRAs or HSAs . . . .

We’ve had plenty of tension and grumbling this year (Exhibit A: the grocery strikes). Better IMHO for employees accept the fact the problem is not the fault of greedy employers, and for employers and employees to shoulder the responsibility and explore CDH options together — with candid discussion of the true costs and risks of various options — than for the whole country to get suckered into some mammoth one-size-fits-all government healthcare entitlement program we can’t afford that just encourages costs to keep ballooning since Uncle Sam is the only responsible party.

(12) Information-starved consumers will spawn a new industry: As employees take on more fiscal responsibility over their health care decisions, they will want to learn all they can about medical conditions and treatment options, physician selection, and pharmaceutical costs and effects. . . .

(13) Positive results will help CDH pick up steam . . .

(14) Enrollment in optional CDH plans will increase substantially: When offered as an option alongside traditional managed care plans, enrollment in CDH plans this year will hover between 30% and 50% - significantly higher than the single-digit enrollment numbers seen in recent years . . . .

(15) Restricted access will be more palatable to consumers: Although restricting access to providers successfully held down costs for HMOs, it caused consumers to bristle. With consumers now in the driver’s seat, however, the concept that led to a backlash against traditional managed care might be embraced by CDH enrollees . . . .

Meanwhile, in contrast to this movement towards a market-based approach in which consumer choice and responsibility is viewed as key, rumblings favoring universal (i.e. government-provided) health care grow.

CNN reports: Panel urges universal health insurance by 2010 See also a similar and somewhat more detailed story in the Washington Post. Both articles report on a study by the Institute of Medicine entitled “Insuring America’s Health: Principles and Recommendations”

CNN summarizes the study as advocating that “In addition to covering everyone, health insurance should be continuous, affordable for individuals and families and sustainable for society.”

Ok . . . who can argue with that? And we all want love, world peace, prosperity, and justice for all, too . . . . BUT HOW? Here’s the answer:

The report does not endorse a specific proposal, noting three approaches that it said would result in insurance for nearly every American:

Requiring employers to provide health insurance, with the government providing coverage for those not covered in the workplace.

Requiring individuals to obtain coverage and providing tax credits to help them pay for it.

Establishing a single-payer system administered by the federal government that would eliminate insurance premiums and enrollment qualifications but require increased taxes.

OK, but none of these “proposals” addresses the problem of COST. How do any of these options provide incentives to restrain the cost increases?

The Post said:

Although some criticized the report for a lack of specificity and for not urging quicker action, overall it drew praise from across the political spectrum.

Stuart M. Butler of the conservative Heritage Foundation called it “pretty much on the mark,” though he wondered what the committee meant by language calling for minimum coverage, and about costs. Ron Pollack of left-leaning Families USA called the report “very significant” and said he hoped it would “catapult this issue to the top of the agenda.”

A White House spokesman said Bush, who has proposed new tax credits to help the uninsured buy coverage, is committed to making health care insurance available to more Americans. “The president is working toward making health care affordable and accessible to as many Americans who desire to have it through . . . a host of measures, without creating a government-run health care system that rations and may ultimately be counterproductive to the high quality of care that Americans enjoy today,” said spokesman Trent Duffy.

Senate Majority Leader Bill Frist (R-Tenn.) praised the report but said he was “concerned that the report may not focus enough on the reasons why health care costs continue to rise and how to pay for any reform.”

Indeed, look at the portion of the report that discusses costs – a nice exposition of the problem; no meaningful solutions.

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