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Talking ‘Turkey’ on Thanksgiving
A Health Coverage Diversion

Talking Turkey on ThanksgivingRacial, gender, social and political harmony has been sorely lacking in our country, and the ‘perfect storm’ to potentially divide families on this particular Thanksgiving was both real and ominous.

This particular Thanksgiving, many American families were understandably apprehensive to discuss anything remotely political at the dinner table. Because of this, three NFL football games suddenly became unusually more interesting, perhaps because the game or teams served as a common thread to unify rather than divide. Upcoming Netflix shows also morphed into a topic for others to share – shows to watch, avoid or to anticipate an impending release.

Diversions can be a great thing, when needed!

Almost immediately after arriving at our family Thanksgiving gathering, I was approached by my 23-year-old niece, who had taken a job shortly after graduation – a fact worth celebrating! She was leaving her parents’ health coverage and was trying to navigate through her new health benefits. Her question was simple, lacking any political or social overtones, and yet quite revealing to this baby boomer:

“Uncle David, would you have time to visit with me this weekend to discuss my benefit options available through my employer? The health insurance, in particular, is complicated stuff!”

I quickly gave my niece a hug, partly to assure her that I would be happy to assist her, but just as importantly, it was a natural ‘diversion’ that we both could safely partake!

Educating a new generation of Americans about health insurance ‘stuff,’ is nothing new. Once upon a time, most of us boomers were also ‘barnacles’ – living off our parents’ health plans. Somehow we survived the switch to ‘real world insurance’ once we took our first legitimate job that offered health coverage. No longer is health insurance just a card handed to us by our parents. It becomes a key to gain access to a very complicated system of care. But it also takes time to become educated on what this card will do.

What strikes me most, however, is that today’s coverages have become more, uh, complex. Now more than ever, employers are asking their employees to accept a greater financial burden when seeking healthcare. Not only is this a taxing problem for older employees who have weathered health insurance changes in the past, but for our newly-employed youth who enter the workforce. Think about it, we are handing them a ‘perk’ that requires a greater explanation than a cursory, ‘Good luck with your decisions.’

In a short period of time, young, first-time employees are entering a new world of qualified-high deductible health plan options, coupled with health savings accounts (HSAs), health reimbursement arrangements (HRAs), flexible spending accounts (FSAs), preferred provider organizations (PPOs), health maintenance organizations (HMOs), and many other benefits beyond health insurance.

As indicated in a prior blog, “Understanding Health Insurance 101,”only one in 10 Americans can adequately define key components of their health plan, such as deductibles, coinsurance, copayments and out-of-pocket maximums. The other 90 percent is expected to make choices about their coverage that demands additional education from their employers (or vendors).

I enjoyed spending time with my niece discussing her benefit options. Even though it wasn’t the most captivating topic that could be discussed on Thanksgiving, it was a good diversion – and for that, I am thankful!

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Hospitals as Insurers? Iowa Employers Evenly Split

Tug-of-WarA tug-of-war ensues between two powerful healthcare players to gain negotiating leverage. On one end are insurance companies, on the other, healthcare providers – specifically hospitals. On the insurance side, one need look no further than the recent acquisitions of Humana by Aetna and Cigna by Anthem. On the opposite end, hospital acquisitions remain high.

From the perspective of each player, all of us will be winners because consolidation will provide the necessary “economies of scale” that will drive down health costs along with the premiums we grudgingly continue to pay. Both sides triumphantly claim similar virtues of consolidation from their own perspective – but not for the other.

Think about it. Aquire a competitor, shed the excess fat of redundant services and become a lean mega-player to fight the battles on behalf of the unsuspecting healthcare ‘consumer’ – people like you and me. Each player strongly proclaims that “bigger is most certainly better” – only, however, if it happens on their respective side of the rope. Should this same quest to ‘grow’ happen on the opposite end of the rope, it suddenly becomes a horrible scourge that will harm our markets – and most certainly harm us ‘common folk’ who must navigate through this endless mess.

Who is right?

In our 2015 Iowa Employer Benefits Study©, organizations were asked two very simple questions regarding the cost of health insurance. The first question was:

Do you believe that having more insurance companies competing for your business will keep health insurance premiums lower?

Apparently, Iowa employers feel differently about having any one dominant carrier negotiating on their behalf. A clear majority of overall respondents (61 percent) indicated that having more insurance companies would keep health premiums lower. Such conventional thinking spans the entire size categories of employers.

Having More Insurance Carriers in Iowa

It seems clear that employers want more competition based on this response. Yet, when asked another question about having a new, potential competitor within the marketplace, employers were not as convinced.

The second survey question asked:

Consider if hospitals became their own insurance company. Do you believe this would give hospitals greater incentive to control health costs and ultimately the premiums they would charge employers?

Employers were evenly split on the idea of hospitals having the appropriate incentives to control costs, with the larger employers being less convinced.

Hospital Incentives to keep Control  Costs

What does this information potentially tell us?

To keep health premiums contained, employers somewhat buy into the idea that competition seems to matter when it comes to having more insurance companies, but they are less inclined to trust that hospitals are equipped to fill that competing role.

Stay tuned as the tug-of-war continues and the rope tightens…

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Accept This Challenge!

Health Insurance QuizA new report on America’s Health Insurance IQ was issued by LIMRA suggesting that Americans are grossly uneducated about many components found within health insurance coverage. This is not surprising to me…how about you?

LIMRA is a consulting and professional development organization that helps to increase the marketing and distribution effectiveness of more than 850 insurance and financial services companies around the world. Surveying individuals on topics specific to insurance and financial services provides greater insight on how our population can be educated on various topical issues.

To gauge their basic knowledge on health insurance, the recent survey asked more than 2,000 Americans a series of 10 true/false questions. The dismal results are alarming:

  • About 8 in 10 consumers failed the test – five or fewer questions were answered correctly
  • 1 in 10 consumers correctly answered at least seven questions
  • Not one of the 2,000 surveyed answered all 10 questions correctly

Other findings reveal that insured Americans are a bit more likely to have a better understanding of health insurance than their uninsured counterparts.

LIMRA’s Conclusion?

“Our survey confirms that consumers need help determining what types of coverage are available and what they should buy to best meet their need,” said Anita Potter, assistant vice president of LIMRA Insurance Research. “Our industry can help by engaging and educating consumers now – so when they ultimately choose their health care insurance, it is done prudently.”

The 10 questions relate very little to the complex health reform law found within the Affordable Care Act (ACA), such as insurance exchanges. The lack of knowledge Americans have on existing health insurance components is a concerning harbinger of what awaits in 2014 and beyond.

Another study just published in the Journal of Health Economics finds similar results regarding the complexity of health insurance for the average consumer. The Study concludes that the health insurance industry should consider moving to more simplistic cost sharing arrangements that would allow for greater consumer understanding. Deductibles, copays and coinsurance, it appears, is very confusing to the average American.

Try taking this LIMRA quick quiz on health insurance. Do you need a refresher course, too?

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