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Iowa Number$ on Consumer-Driven Health Plans

Consumer-Driven Health Care in IowaConsumer-Driven Health Plans (CDHP) — a trend, fad or an anomaly in Iowa?

Unsure? So am I.

Let me briefly explain using a few results from past studies.

A CDHP is considered by many to be the next generation of medical coverage that employers will offer to their employees. Under this approach, an employer will allocate a sum of money annually to offset the employees’ portion of a high-deductible plan. By doing this, employers continue to support their employees’ health care needs, while allowing employees to more directly control their own health coverage. The whole concept of CDHPs is to put the patient back into the health care cost equation, where they now have ‘skin in the game’ and should be capable of assessing the true value of health care. 

There are various hybrid arrangements of CDHP’s. The two most common funding vehicles for CDHP’s are Health Reimbursement Arrangements and Health Savings Accounts.

  • Health Reimbursement Arrangement (HRA) – The HRA is an employer-provided fund that must be used by the employee for qualified medical expenses. HRAs allow the employer flexibility in plan design, such as permitting employees to roll over any unused balance into the following year. Typically, employees do not “own” such an account, and any balances are usually forfeited back to the Plan should the employee terminate employment.
  • Health Savings Account (HSA) – HSAs may be funded by the employee, employer or both. HSAs are permanent, portable, tax-favored savings accounts available to anyone with a qualified high-deductible health insurance plan. Because the HSA is owned by the employee, the employee retains control of their HSA even when changing employers.

In 2005, 4.5 percent of Iowa employers (regardless of size) reported they offered some type of a CDHP to their employees. In 2008, over 17 percent of Iowa employers reported offering a CDHP – whether it was a full replacement of other traditional health plans or offered as an option to traditional coverage. Our data was telling us that each year more Iowa employers were jumping on the CDHP bandwagon. This was beginning to look like a big trend in Iowa – not unlike what was being observed in other parts of the country. However, in 2012, something very strange happened. The number of employers reporting CDHP dropped to 13.3 percent.

David P. Lind Benchmark

In addition to observing this supposed-trend reversal, a large number of employers in our 2012 survey (over three-quarters) indicated they were ‘very unlikely’ to offer CDHPs within the next 12 months. This was also a big change from 2005 when only 41.5 percent of employers reported to be ‘very unlikely’ to offer CDHP coverage.

David P. Lind Benchmark

What happened? Not sure, but do have my suspicions.

CDHPs sound great in theory. In fact, I have been on a qualified, high-deductible health plan for at least seven years. Can they reduce unnecessary spending by the employee without undermining the preventive care aspects of coverage? Does the current marketplace offer the appropriate tools that are necessary for the health care ‘consumer’ to become more of an astute purchaser of health care? Frankly, there are national studies that show mixed results regarding these questions. My advice is to carefully review such reports and pay close attention to who commissioned these reports. It can make a difference on how the above questions are addressed.

So are CDHPs a trend, fad or an anomaly in Iowa?

Stay tuned to see what our 2013 Study reveals within the next two months.

To learn more, we invite you to subscribe to our blog.

Trust – Now is a Good Time (Part 3)

David P. Lind BenchmarkAlbert Einstein spoke of trust in the following way: “Every kind of peaceful cooperation among men is primarily based on mutual trust.”

Trust in our healthcare system has been waning for a number of years…and it does not seem to show signs of improvement anytime soon.

A number of past studies provide sobering facts on the perception of our healthcare system:

  • In 1966, 73 percent of Americans expressed a “great deal of confidence” in our medical institutions. However, by 2004 that figure had dropped to 32 percent. (Data from Harris)
  • 79 percent of Americans agreed with the statement, “There is something seriously wrong with our healthcare system.” (National Coalition on Health Care 1997)
  • 87 percent of Americans agreed that “the quality of medical care for the average person needs to be improved.” (National Coalition on Health Care 1997)

Trust can be difficult to measure…but easier to understand.  Medical organizations that are sincere about pursuing and maintaining an enduring culture of trust should establish initiatives to emotionally connect with their patients to perpetuate that trust.

With the advent of “consumerism” in healthcare, the patient is no longer a passive bystander, but rather, an active partner when interacting with their provider(s). The healthcare organization that can successfully connect with the emotional well-being of the patient will reap abundant rewards within our new, evolving healthcare environment.

By having the “patient-centric” mantra carefully integrated within the DNA of the organization, a deeper patient trust can take root and eventually grow within (and beyond) the community in which the organization practices. As Alice K. Jacobs, MD, President of the American Heart Association once said, “Trust has been shown to be essential to patients, in their willingness to seek care, their willingness to reveal sensitive information, their willingness to submit to treatment and their willingness to follow recommendations.” Establishing a high level of trust is good not only for the patient, but also for their employer, the community being served, and of course, to the healthcare provider.

However healthcare reform turns out, this is a wonderful opportunity for healthcare providers to develop that new sense of trust that patients so desperately hope to have now and in the future. Now is a great time to build that currency of commerce we know as TRUST!


Clueless on Health Care Costs?

David P. Lind BenchmarkEver try to figure out what your health care providers actually get paid?

I didn’t think so. As a patient, you probably check to make sure that the doctors, hospital and pharmacy are considered “covered” by your insurance plan. Why? That keeps your out-of-pocket expenses down because of discounts your health plan negotiated with these providers.

But as patients/consumers, we’re clueless about the negotiated discounts with any given health care provider. We’re out of the loop. Discounts are negotiated privately between insurance companies and health care providers. They’re not posted anywhere, and no one is required to share that information.

But here’s the rub for you, the employer:

Negotiated discounts can vary greatly between insurance companies and will affect your underlying costs.  So which carrier has the deepest discounts?

Competition between insurance companies for pricing purposes is a good thing, but the level of competition needs to be transparent to employees and patients for market forces in health care to flourish—and eventually hold costs down.

True market forces are hindered by the current confidential pricing process.

Enter Consumer Driven Health Plans. Under this concept, an employer allocates a sum of money annually to offset employees’ portions of a high-deductible plan (health savings accounts are part of a consumer-driven plan). Employees are motivated to get the best health care deal they can find.

That’s good, but consumers are most effective when they understand the true cost of a given product or service BEFORE the purchase is made. Encouraging employees to become better consumers is not enough if they don’t know the true cost and value they receive.

We are far from a patient-centered market in health care. This needs to change—and until it does, we as consumers, will be kept in the dark.