What 401(k)'s Can Teach Us About Consumer-Driven Health Plans
Reader Comments
What about the PRICE
I find it interesting that you talk about the difficulty with consumer driven healthcare, yet you never mention the a key factor that is involved in every consumer decision...the price. It is becoming widely known that your insurance company has negotiated different prices with the different providers in a geographic area for the SAME procedure. Yet that price variation amongst providers is not shared by the insurance companies with their customers....the ones paying the premiums that are reflected as top line revenue of insurance companies.
If this country is seriously interested in addressing the COST of healthcare in this country. Just have the insurance companies share with thier customers (also known as the consumer,employee, premium paying member, HSA owner,patient, and the person paying the bill)the prices the insurance company has already negotiated with the providers.
This little step will not only make employers more comfortable with converting to HDHP's supported by HSA's, it will reduce costs to insurance companies because their members will have "shopped" for healthcare, and I'll bet for the first time in a very long time you will see some reduction in healthcare costs. You don't to lose weight, stop smoking, or even take part in "wellcare"....just show the consumer the prices for procedures amongst the providers in their area.....I believe the American consumer will take care of the rest.
What 401(k)'s Can Teach Us About Consumer-Driven Health Plans
This is simply stating the commomnplace phenomenon of resistance to change and timidity which is covercome with education.
As with the initial resistance to adopt the 401(k), that prodcut is now commonplace and highly valued by all as it gives one a sense of control over their own money and coinfidence of futre cash resereves unavailable from governments. These attributes, as the article cites, apply to the HDHP/HSA concept. My family of 5 and I have had an HSA since 2004 and I would never go back to traditional high premium/co-pay structure. Every single person I have spoken to who has an HSA loves it and and would not go back to traditional high premiums and co-pays.
Here is an analogy you may understand. If your auto insurance has a $100 deductible the premium may be $2500 annually; increase the deductible to $1,000 and the premium drops to $1750 annually. Save (this is the KEY CONCEPT so you can fund the dedcutible when and if you need it!) the $750 and in one year you are ahead of big bad insurance companies you all hate for having conned you into a low deductible high premium product.
Open your minds and try an HSA for a year or two, you'll like, just like I am sure you like your 401(k) !
Education is everything!
Nice try. I am sure your Editor was pleased with this article as it did ruffle feathers, and cause debate and conversation. Despite it's one-sidedness and seemingly lack of research. Have you ever asked yourself how many Americans think of their health insurance as HealthCare? There is a significant misperception of what health insurance is supposed to do for us. It is not “The Womb”; like so many use it as a tool to reset our health. It is simply a tool to protect our savings/401k/”can of cash” in the back yard! Originally, we began with Fee-For-Service models where we accessed necessary medical services, paid for them as we received the care then were reimbursed by our Hospital or Medical expense plan. This was in the mid to late 20th century! It is no different than what the HSA/CDHC members are doing today. They aren’t afraid to help manage costs, they are more proactive about their preventative and routine care, and because they understand what the true cost of services are they end up being better consumers. As for the cost of Health Insurance today, each one of us should be better educated about the evolution in the last 20 years of what our plans looked liked then, versus what they pay for today. We have consumer groups as well as Corporate lobbyists pushing our Legislatures to tell the Insurance Carriers what they will cover versus what they will not. We are telling our Insurance Carriers they have to pay for what we need without asking what it costs and how we will be impacted through our premiums. We are all to blame for this, it is not anyone player. In anyone Employer Group, no matter the size it statistically only takes 3% of the enrolled population to tip the balance of a Groups claim experience. Look around you right now and see if you see 3 out of 10 people that aren’t overweight or have taken time off for a surgery or an injury in the last 12 months. How many of you have truly educated yourself about your last healthcare bill? Or gone to your Employer’s Annual Health Benefits meetings (when they aren’t mandatory) or asked your Doctor for a Generic equivalent or asked the Medical Office’s billing department of your provider the estimated cost of the services. Has anyone of us asked how these Pharmacy (national and local) can offer generics for $4 for a 30 day supply (with or with out insurance)? Education is everything, where would we be without education. CDHC/HSA require time, discipline, patience motivation and funding. Not unlike our educations that got us the job that provided our retirement savings plan and the coverage to protect what we try to save each month.
HSAs are not Catching On?
Michelle,
You are grossly misinformed that HSAs are not catching on. At the beginning of this year 6.2 million people were on HSA eligible plans. This is a 40% increase over the prior year. When a product grows by 40% per year, how can you say it is not catching on? It may not be for everyone, but there is not one answer to the health care "crisis".
As a small business owner who has had an HSA plan for the last two years, I can attest that the premium increases have been minimal. As a result, I have been able to offer health insurance to my employees for free and put a few hundred dollars into their HSAs for a lot less than before. I do not have to think twice about hiring a new employee because of health insurance costs associated with that employee. Many of my friends who own businesses that have traditional plans, are on the brink of dropping coverage for their employees all together because they are getting double digit rate increases. I know several insurance brokers who tell me that HSAs are their fastest growing product line. To me it makes sense to keep premium dollars out of the pockets of insurance execs and put them into my employees HSAs.
Pat Attention
Michelle,
You need to pay more attention to what your readers who live in the real world are saying and less to the opinions of Washington-based PHDs.
Change is never easy but the people who have been using HSAs for a couple of years have come to love them. Word of mouth spreads and the market grows.
We have been relying on "the experts" to fix health care for decades and they have made a hash of it. It is time for them to step back and let people spend our own money on the things we value.
Health care is after all OUR money and it is OUR health at stake.
National health care
We already have a national health care Its called Medicare, and Military use TriCare. It does not work because the Doctors abuse/and the people that submit the charges are not trained or held accountable and do not follow the rules, IE. observation is a 23 hr period after 23 hrs the patient must be admitted or released, doctors also take patients for dialysis and admit them for something unrelated and put them in for the dialysis when the hospitals are only a in patient only for dialysis and the hospital has to eat the cost, or charge the patients. And why our our doctors so much in to the reactive acts for health care vice the Pro active if you help the population eat right and take care of them selves in the first place vice giving them drugs when the right diet will cure them. Pay the medical profession for healthy patients vice the un needed surgeries. But then that's why the federal government did the audit in Florida and recouped MILLIONS of dollars, for miss charges. So why does our insurance cost so much ! Why do the drugs for my dog cost 1/8 the price it cost my mom for the same drug and dose ? $ $ $ and stop the Kick backs to the politicians/before and/or after they hold office.
Providers are the problem??
Because I really think the issue lies more with payors here.
Does the CEO of a health plan really need to make several million dollars a year? Or in the case of United Health Care, a billion? Do we really need "gatekeepers" telling the providers what they can and can't prescribe, in order to save money for the payor, even when it might not be in the best interest of the insured, regardless of whether it's the individual or the employer who is paying the tab.
I have a high-deductible plan and an HSA. My plan has a separate deductible for pharmaceuticals that only kicks in when my first deductible is met. I never meet the deductible, and end up spending a lot on medications every year. I can easily see how someone could get into trouble if they actually got sick.
And the self-righteous assertions here don't even begin to discuss those who change jobs and are then denied insurance because of pre-existing disease states or medications they have received. Yeah--it's not supposed to happen, but you know what? It does.
consumer driven health care
I agree that consumers need to take an active role in their health care. I also agree with the point of this article....it won't happen until consumers can cut through the jargon and red tape. So, Tim and Patrick, your challenge is to ante up to the KISS principle and come up with straight-forward presentations that we lay folk can understand and trust. Drop the jargon, the acronyms and fancy title, and just lay it on the line! Then we can make informed decisions.
HSAs
Providers haven't yet fully grasped that the playing field changes when you are actually paying "your" money to the doctor for care. The doctor works for you. What a novel idea! We have been using HSA/HDHPs since 1997 (when they were called MSAs) and have saved thousands of dollars on insurance premiums. We've received hundreds of dollars of discounts from providers when we pay cash (from our tax favored HSA account). The doctor doesn't have to take time with paperwork - just with their patient. It works if you take the time to plan. One commenter says the playing field will change when you take out the insurance company as the GREAT INSULATOR and competition for your money returns. This is true. Comprehensive health insurance is the REASON why health care costs are inflated. A national health care program will work temporarily because of government price controls on providers of care. Eventually shortages (of providers) will show up. If the Federal government is put in charge of the Sahara Desert, there would soon be a shortage of sand.
For those who want to offer one-size-fits-all national health care, let's start by offering all Americans for the next five years only one model of car. Politicians can look at the American population and determine which single model would be "best," then make it illegal for anyone to buy anyting but that vehicle.
Absurd? Yes. Analogous to national health care? Absurdly, yes.
There are two different issues being debated in these responses.
1. Should employees be incented to choose a compensation package consisting of health insurance and a smaller cash income, or should cash and health insurance be taxed identically so that employees are indifferent to choosing higher incomes and purchasing individual coverage vs. preferring less income and an employer-provided plan?
2. What is the best way to control health care costs?
The second issue has been the focus of most of the discussion. There is no question that there are costs incurred when consumers are given choices. Some suppliers go out of business, while those who meet consumer needs thrive. Advertising is an effective form of communicating tangible differences in products ranging from soaps to politicians to automobiles to health insurance plans. And doubtless it would be more efficient if supplier (in this case, health care providers) had to deal with only one plan, just as it would be easier for auto mechanics or refrigerator repairmen if everyone owned the same model. So, yes, advertising does have a cost. In the case of health care, for every dollar of premium income, between one and two cents are dedicated to educating individuals to specifics of a particular plan (including advertising, collateral material, member materials, etc.).
Is there anyone alive that thinks that we could control health care costs if Congress were running the system? State legislatures and Congress increasingly are responding to special interests to increase mandatory benefit packages to cover unlimited infertility services, chiropractic services, mandatory prescription drug coverage, unlimited substance abuse treatment, etc. Health plans are opposing requiring all members to pay for these costs that impact only a few members, because each mandated benefit raises premiums and thus makes health care less affordable to those on the margin.
Put Congress in control of the system, and you'll see every special interest group bidding to have its interests reflected in the services that are offered to patients.
Investments in technology will decline, making care less efficient (surgery rather than advanced imaging, inpatient services rather than day surgery, etc.).
More fringe services will be covered. Global budgets will run dry long before the end of the fiscal year.
Individuals of all income and demographic groups will be deneid care for financial reasons. And those who are willing to invest in private care to save a loved one's life - whether they're wealthy patients or lower-income patients whose families, friends and community have ralled to raise the resoruces for more advanced treatement - won't legally be able to access private care.
I see how the government runs the friendly, efficient post office; how it manages airport security (legally can't focus resources on those most likely to blow up airplanes); how it controls costs in the Medicare and Medicaid programs; and how it fills spending bills with "earmarks" that require the recipient governmental units to spend dollars in a particular way, whether there is a need - or a more pressing local need - or not.
No, I'll take the current system, with all its flaws and my ability as a consumer to make choices and influence the system without being allowed to use force, to a one-size-fits-all system whose resources will be allocated by politicians rather than by health insurers and providers whom I can continue to patronize or replace, based on my evaluation of their courses of treatment.
