According to
PricewaterhouseCoopers, healthcare costs will rise by 9.9% in 2008*, more than
double the overall inflation rate. The
study predicts costs in 2009 will rise by an additional 9.6%. The study surveyed more than 500 employer
groups insuring more than 11 million people.
Cost increases were attributed to a number of factors, including those
with insurance paying more to compensate for the costs of those without it and hospitals
"charging greater fees to pay for facility upgrades". We see hospital construction all around us as
hospitals prepare for baby boomers' increased need for medical care.
The message was clear at the
Senate Finance Committee summit, at which Federal Reserve Chairman Ben Bernanke
spoke**, that "Washington is gearing up for another run at healthcare
reform". Bernanke reported "that rising
government spending on healthcare (roughly 25% of all government spending) will
require cuts in other government programs, higher taxes, or wider budget
deficits."*** Bernanke is recommending
that Congress establish an independent healthcare panel like the one used to
recommend the closing of military bases and establish a commission like the
Federal Reserve Board to set health policy.
I recently sent letters to a
number of our federal and state legislators, including Arlen Specter, Robert
Casey, Michael O'Pake, Carl Mantz, Tim Holden, James Gerlach, Patrick Murphy,
Karen Beyer, Charles Dent, and Robert Wonderling advocating for a number of
reforms to improve the healthcare environment for small business. On Thursday, July 24th, I met with
Karen Beyer in her office to discuss my ideas, including a proposed requirement
that insurance companies provide more advanced notice of renewal rates to allow
groups more time to shop, compare premiums, and enroll employees. I am advocating that health insurance
companies be required to release claims data to groups of all sizes, not just
large groups.
I am advocating for
government mandated pricing transparency on the part of medical providers. If you call your mechanic and ask how much it
costs to have your car's tires replaced, they can quote you a price, but if you
call your hospital and ask how much an MRI costs, they can't, or won't, give
you a straight answer. This makes it
nearly impossible for people to be informed consumers. I am also advocating that medical schools and
hospitals increase the number of physicians that they train for specialist
positions to reduce the shortages we have.
To further reduce these shortages, I am endorsing real medical
malpractice reform, not using medical malpractice as a political gambit as
Mayor Ed Rendell has done with the Mcare abatement program, which has had
devastating effects on the financial stability of many local medical practices
(one of the reasons we have fewer specialists in PA).
I am suggesting that the
federal government allow the cost of health club memberships to qualify for
Section 125 pre-tax treatment. I am
advocating federal standards for uniformity in electronic medical records
technology and tax credits to incent physicians, hospitals, and insurance
companies to implement these programs. Think
about how many duplicate tetanus shots ER's provide each year just because
people can't remember when their last one was administered, or the cost and
confusion of each of our multiple physicians maintaining and sharing separate
and duplicate paper patient records, as two small examples.
Both health insurance
companies and employers are looking at a number of ideas to limit cost
increases. Each of these could have some
incremental impact to improve costs, but none have been shown to yield dramatic
results.
Zero Copay Incentive
Programs. There are a number of very expensive brand
name drugs for which generic alternatives are available. The incentive works something like this - the
insurance company identifies patients that are taking these expensive brand
drugs and they send them and their doctors a series of letters offering that if
they switch to the generic alternative, the patient will receive that generic
drug for free (copay waived) for some period of time (say, a year). The hope is that the patient will switch,
have a good experience with the generic, and continue using the lower cost
drug.
Wellness fairs and
incentive programs. Some employers are offering incentives to
employees who will participate in programs designed to reduce costs and improve
employee health. Wellness fairs provide
employees with the opportunity to have their cholesterol, blood pressure, or
blood sugar levels checked, or to have their body mass index measured against
benchmarks. They also provide education
about health and wellness, smoking cessation, exercise, and weight loss. Personal health risk assessments can be
offered which gather data about employee health and habits that can be used to
predict problems and areas for improvement, such as smoking, excessive alcohol
use, poor eating habits, failure to exercise, family history, etc. Highmark Blue Shield conducted a study of
9,000 of their own employees between 2002 and 2005 and found that over that
four year period, wellness participants' inpatient expenses were lowered by
$182, yielding a return on investment of $1.65 for every $1.00 spent on the
wellness program.
Disease Management
Programs. Since a large percentage of healthcare claims
result from the treatment of a small percentage of employees, many insurance
companies have put programs in place to identify some of the most serious
illnesses and provide more personalized attention to employees with these
conditions. Asthma, Coronary Artery
Disease, Congestive Heart Failure, COPD, cancer, and diabetes are some of the
most commonly targeted diseases. A nurse
consultant may be assigned to each patient to call if they fail to keep
appointments, renew prescriptions, or schedule treatment as recommended. This can help avoid expensive
hospitalizations that may result if people do not comply with their physicians'
orders. The use of 24-7 nurse hotlines
by people who are unsure of the seriousness of their condition can also help to
keep some people out of the emergency room who may have gone unnecessarily.
All of these programs offer
cost savings opportunities, but without broad and multi-faceted healthcare
reform initiatives, the savings will fall short of offsetting the increases the
small business market is facing over the next two years.
David S. Coult, CFP®, CLU®,
ChFC® is President of Milestone Financial Associates, LLC, an employee benefits
and financial services firm in Kutztown, PA, and the health insurance broker
for the ABC, Eastern PA Chapter Association Health Plan through Highmark Blue
Shield. His wife is a physician. He lives in Coopersburg, and can be reached
at
This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
or by
calling 1-800-342-1146.
*PricewaterhouseCoopers study
released June 17, 2008
** The Washington Post, June 17th, 2008
***USA Today, June 17, 2008
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