By Jim Van Wyck | June 11, 2008
Today’s Wall Street Journal has a fascinating report over the large … and growing influence that health insurance influences major life choices.
Anxiety over becoming uninsured or paying higher premiums is causing
some people — “especially those with health problems” — to go to
“great lengths to get or keep job-based health coverage,” the Wall Street Journal reports. According to the Journal,
some people are getting married sooner so spouses enroll in a company
plan, while some married couples are delaying divorces to retain their
current coverage. Meanwhile, the Journal reports, some
self-employed people are opting to incur the cost of hiring additional
employees just so they can qualify for group insurance. According to
the Journal, coverage concerns are also affecting other
“major life decisions,” including the age of retirement and the state
where people choose to live.
Karen Politz, a research professor at Georgetown University’s Health Policy Institute, said, “People are turning themselves inside out to get health insurance.” According to the Journal,
“Financial advisers say health coverage worries are rampant among
clients,” and among those with medical conditions, “conversations
increasingly center on how to get or stay on a group policy or segue
into the individual market in a way that prevents insurers from denying
coverage or excluding pre-existing conditions.” Leon Rousso — a
certified financial planner in Ventura, Calif. — said, “Access to
coverage is a huge issue,” adding, “You may have the financial means to
pay for premiums but not be able to get coverage, leaving you exposed
to potentially catastrophic losses if you become ill” (Knight, Wall Street Journal, 6/10).
Topics: Health Insurance | Comments Off
By Jim Van Wyck | May 12, 2008
Business Week has a fine article looking at how insurers are making huge profits from under-insuring college students. Equally disturbing is the fact that many institutions are “in on the game”.
In Depth
May 8, 2008,
Is Your Kid Covered?
Insurers make big profits from college students, but some families are left with huge bills
by
Ben Elgin and
Jessica Silver-Greenberg
In fall 2006, Ralph Giunta Sr. decided to buy his son Ralph Jr. a
practical birthday gift: health insurance. The father, who owns a small
financial-services company that lacks an insurance plan, phoned Palm
Beach Community College, where his son was on the dean’s list. The Lake
Worth (Fla.) school recommended a policy provided by MEGA Life and
Health Insurance, whose student business was acquired in late 2006 by
giant UnitedHealthcare. Giunta wrote a check for $1,044 for one year.
“They assured me he was well covered,” he says.
Six out of 10 colleges and universities now recommend specific
health insurance plans for their students, and three of 10 require
them. But as the Giuntas discovered, many of the policies turn out to
be scanty at best, and inferior to comparably priced alternatives. This
can leave families exposed to crippling medical bills they thought
they’d protected against. Insurers, meanwhile, have found that the
student market can be quite profitable.
Ralph Giunta Jr. knew something was wrong in March, 2007, when the
photography major and avid skateboarder felt pain in his legs and feet.
Then 19, he lost all feeling in his lower extremities and was rushed to
the hospital. The diagnosis: Guillain-Barré’s syndrome, a rare disease
of the nervous system that typically causes temporary paralysis. His
father’s anxiety was compounded upon learning more about the insurance
he had purchased. Even with “major medical” coverage, the plan
reimbursed only $22,800 of the $206,325 bill for 19 days of intensive
care.
In the end, Ralph Jr. recovered, but the Giuntas owed $265,000 in
hospital and doctor bills. As he juggles maxed-out credit cards and
loans from friends to make minimum payments on medical debts, Ralph Sr.
admits he didn’t read the UnitedHealthcare plan closely. “I thought,
well, the college is offering it,” he says. “Why would it be a bad
plan?”
More than half of the insurance plans recommended by colleges offer
benefits of $30,000 or less, according to a survey published in March
by the General Accounting Office, an arm of Congress. Many plans have
further limits that prevent payout of even modest maximums. While
two-thirds of the country’s more than 17 million college students have
coverage from a parent’s employer or their own job, many of the rest
may be vulnerable if they suffer a serious illness or accident. With
premiums and restrictions increasing under employer-provided plans, a
growing number of parents are shifting children to college-sponsored
coverage. But “when a student gets gravely sick, $30,000 in benefits is
unrealistically low,” says Alan Sager, a professor at Boston
University’s School of Public Health.
Schools often arrange for a standard student plan, and some even
bill for it automatically unless students or their families opt out.
But the administrators negotiating multimillion-dollar insurance
packages frequently aren’t sophisticated or diligent enough to obtain
the best deals in the marketplace, says Mark Rukavina, executive
director of the Access Project, a nonprofit health advocacy group in
Boston. “Unfortunately, most schools don’t know how to secure the best
coverage for students, and so what results is simply the illusion of
coverage.” Students and parents, for their part, often don’t take the
time to study the fine print.
IN WHOSE INTEREST?
In some cases, universities have comfortable relationships with
carriers that reimburse the schools a small percentage of student
premiums to cover administrative expenses. This raises questions about
whether schools ought to serve as what amounts to a broker. The
University of Alaska system receives 5% of premiums collected through
its plan. With $2.3 million in premiums expected this academic year,
the payment would come to about $115,000, according to a copy of the
contract provided by the system. The Kansas Board of Regents receives
1.5% of its students’ premiums to cover costs of administering the plan
“or other uses as determined by the Board,” according to its contract.
That could mean a reimbursement of about $100,000 for 2007-08.
Officials at the University of Alaska and the Kansas Board of
Regents say the modest fees don’t influence their judgment and are used
only to pay staff to handle student insurance. Some critics counter
that the payments create a conflict of interest. New York Attorney
General Andrew M. Cuomo is examining ties between universities and
insurers. “The question is whether…the relationships between vendors
like health insurance companies and schools cause schools to favor
vendors that are best for the schools financially rather than those
that are best for students,” says Cuomo aide Benjamin Lawsky.
Some plans endorsed by colleges are inferior to what a savvy
consumer can secure on the open market. In the case of the Giuntas, a
search on the Web site eHealthInsurance.com shows several plans in the
Palm Beach area for a healthy, 19-year-old male that provide $5 million
in benefits for roughly the same premium the family paid
UnitedHealthcare. The more robust plans have higher deductibles—up to
$2,500—which patients must pay before coverage kicks in.
UnitedHealthcare says in a statement that it allows school
administrators “to customize plans to meet the needs of their unique
student populations. Administrators strive to balance benefits with
affordability and act in the best interests of their students.” Bill
Truxal, who heads the company’s student unit, says in an interview that
colleges have sufficient clout to negotiate favorable terms. Since the
Giuntas purchased more coverage than the basic plan recommended by Palm
Beach, the payout to the family exceeded the school’s ordinary benefit
cap, the company says.
On a number of campuses, students feel pressure to purchase
threadbare policies because those are the only ones the school will
process. Unless students or their parents take the initiative to shop
independently, Connecticut College, a private liberal arts school in
New London, signs them up for a plan sold by Chickering Group, a
subsidiary of Aetna (AET),
offering just $10,000 in maximum benefits for an illness. The school
includes coverage for “catastrophic” accidents, but this doesn’t apply
to major illnesses such as cancer or appendicitis. If students buy
their own policies, they have to handle the reimbursement paperwork for
all but the most rudimentary services provided by the campus health
center. That’s a burden most 19- and 20-year-olds don’t want to assume.
Cate Moffett, director of Connecticut College’s health center, says
her small staff can’t handle insurance claims for multiple
underwriters. Echoing an argument made by many campus administrators,
she notes that relatively few students fall seriously ill and
complaints about coverage are rare.
A spokesman for Aetna, Matthew N. Wiggin, reiterates that schools
need to weigh policy coverage and cost. “It’s ultimately the decision
of the schools to select the plan that best fits their needs,” he adds.
The vigorous health of most college students helps make insuring
them a lucrative niche, according to industry consultants. Most
insurance companies, even if publicly traded, don’t break out separate
financial results for their student-oriented policies. But some schools
disclose an indication of the profitability of policies sold to their
students: the so-called benefits ratio. This shows the percentage of
premiums returned to customers in the form of benefit payouts. Large
health insurers typically have overall ratios of about 80%, meaning 20%
of premiums goes to profits and administrative costs.
In several cases where BusinessWeek (MHP)
was able to obtain benefits ratios from colleges or universities, the
percentage was well below 70%. Anything below 75% ought to be grounds
to negotiate a better deal, according to Eric Engstrom, president of
Keeling & Associates, a consulting firm in New York.
At Palm Beach Community College, the benefits ratio for the spring
semester of 2008 was 42.6%, according to reports provided to the school
by UnitedHealthcare. In previous semesters the benefits ratios dipped
as low as 10.2% and 13.8%. This means the college’s plan has been a
veritable gold mine for UnitedHealthcare. At the University of South
Florida in Tampa, which offers a plan from American Fidelity Assurance,
the ratio this academic year is 35%, down from 71% and 61% the previous
two years, respectively.
Asked about the ratios, Grace Truman, a spokeswoman for Palm Beach
Community College, says: “We do not negotiate coverage with the
insurance company. We are not an active player in what they cover and
at what percentage.” To choose its plan, the school relied on “positive
comments” from other colleges about UnitedHealthcare, not on
independent comparisons. Palm Beach has received only one complaint
about the plan, she stresses. “We do tell students to read the plan
carefully.” Still, she continues, “it may be time to take a better look
at this insurance plan.” The University of South Florida acknowledges
that it is seeking a more favorable benefits ratio. “During renewal
negotiations there are lengthy discussions regarding benefit designs,”
says Marisol Amarante- Hernandez, manager of the school’s insurance
office.
James Breeding, director of risk management and insurance at Rutgers
University, stresses that most students and their families are looking
for low prices. Breeding recently negotiated a better deal for Rutgers
students, upping the school plan’s maximum from $50,000 to at least
$100,000, after finding that three to six students exceeded the plan’s
old maximum each year. The new plan, provided by Aetna’s Chickering,
costs about the same as the former one: $424 per year. “The plan is
designed to meet most of the needs of most students, not to meet all
the needs of all students,” Breeding says.
Apart from low maximums, insurers can contain payouts by imposing
“interior caps” on coverage for particular types of treatment. Sean
Marquis discovered the hard way how this works. After turning 26,
Marquis, a medical student at Ross University in Edison, N.J., was
bumped from his parents’ plan. He signed up for the school-sponsored
plan with UnitedHealthcare, comforted by its $100,000 overall maximum.
Last spring, Marquis became dizzy during class. He stepped into the
hallway and collapsed, fracturing a bone near his jaw. He stayed in the
hospital for 48 hours, and left owing $24,098. UnitedHealthcare covered
only $6,260, because Marquis had hit the $2,500-per-day cap for room,
board, and miscellaneous expenses. The hospital forgave more than
$10,000, but Marquis still had to pay several thousand dollars and has
set up an installment plan for remaining medical bills. “I bought
insurance to cover something just like this,” he says.
Peter Goetz, vice-president at Ross, declines to comment on the
Marquis case, citing privacy concerns. The school looks for the best
deal for its students, putting its insurance contract out to bid every
two years, he says. Last fall, it switched from UnitedHealthcare to
Chickering. “Our goal is to always find reasonably priced insurance
that also covers catastrophic events,” Goetz says. UnitedHealthcare
won’t discuss Marquis’ case.
Interior caps aren’t exclusive to the college market, but they
appear to be spreading more quickly there, due to the lack of demanding
buyers. “In the college market, things are more egregious,” says Bryan
A. Liang, executive director of the Institute of Health Law at
California Western School of Law. “Insurers can do what they want and
get away with it.”
Elgin is a correspondent in BusinessWeek’s Silicon Valley bureau
.
Silver-Greenberg is a reporter for BusinessWeek.com.
Topics: Health Insurance | Comments Off
By Jim Van Wyck | May 2, 2008
MINNETONKA, Minn.—Enrollment in its health insurance plans linked to
health savings accounts for the first time surpasses enrollment in
plans linked to health reimbursement arrangements, one of the nation’s
biggest health insurers said Wednesday.
Minnetonka, Minn.-based UnitedHealth Group Inc. said that as of
March 31, 1.38 million people were covered in a health plan offered
through its health insurance units and linked to an HSA, just slightly
more than the 1.34 million in HRA-linked plans.
While HRAs predate HSAs by several years, employers—as the
UnitedHealth figures indicate—are increasingly using the HSA as the
link to a high-deductible health insurance plan. The chief difference
between HSAs and HRAs is that while employers and employees can
contribute to HSAs, only employers can fund HRAs.
Additionally, while employees immediately vest in HSA contributions,
accumulated HRA balances typically are forfeited when employees leave a
company.
Also, HRA-linked coverage only can
be offered through an employer, while high-deductible health insurance
plans linked to HSAs are available in both the group and individual
markets.
UnitedHealth said about 25 million people are covered through the
health plans it offers, making it second only to Indianapolis-based
WellPoint Inc., which has 34 million enrollees in its health care plans.
Topics: Section 105 (HRA's), Health Reimbursement Arrangements (Section 105) | Comments Off
By Jim Van Wyck | May 1, 2008
The University of Minnesota just released a study of employer-sponsored health insurance.
Health insurance costs for employer-based insurance rose by 30 percent from 2001 through 2005, according to a study
by the University of Minnesota’s State Health Access Data Assistance
Center. Insurance costs jumped from $8,271 to $10,778 for the average
family. Rising insurance costs drove 36,000 employers to drop insurance
coverage for employees altogether, causing 4 million people to lose
employer-sponsored insurance.
As we previously noted,
families-not employers-suffer the most when insurance costs increase.
Employers continued to pick up the same percentage-about 76 percent-of
insurance premiums between 2001 and 2005. At the same time, average
family incomes during this period grew at an anemic three percent,
suggesting that rather than give employees more money, employers gave
more money to insurance companies instead.
Topics: Health Insurance | Comments Off
By Jim Van Wyck | April 30, 2008
The Wall Street Journal’s health blog skeptically examines a Kaiser study that suggests it is increasingly common for couples to marry mainly so that one spouse could gain eligibility for the other’s health insurance.
**********
Will You Marry Me for
Health Insurance?
Posted by Jacob Goldstein
Seven percent of Americans said that in
the past year they or someone in their household decided to tie the
knot mainly so one spouse would be eligible for the other’s health
coverage.
That astonishing figure came from a survey out today from the Kaiser Family Foundation, a nonprofit group that looks at health policy issues.
Is marrying for health-care convenience the new marrying to get a Green Card? After we took a look at the math, we weren’t so sure. Here’s why.
There are 114 million households in America,according to the Census Bureau.
So the Kaiser survey suggests that in 7% of those households — about
eight million total — someone decided to get married in the past year
mainly because of health benefits.
But the total number of marriages in 2005, the most recent year for
which complete national figures are available, is only 2.25 million, according to the National Center for Health Statistics.
That puts the total number of people who get hitched — for love, for
money, for health insurance, for whatever — at about 4.5 million
annually.
It’s tricky to make a precise jump from “households” to individual
people or marriages, but it’s clear that the numbers don’t add up,
Mollyann Brodie, the foundation’s vice president for public opinion
research, told the Health Blog. She suggested people may have
interpreted the question more broadly both in terms of time (beyond the
past year) and space (beyond their immediate household).
“What people are good at reporting is their perception,” she said.
“The broad implication is the cost of health care is important enough
that benefits are part of peoples’ life decisions.”
Topics: The Uninsured | Comments Off
By Jim Van Wyck | April 22, 2008
The New York Times has an interesting article
on some of the challenges that early retirees face in finding health
insurance. The article notes that for most people-especially those with
no existing medical concerns-”the best, least-expensive option is to
buy an individual policy” rather than opt into COBRA coverage through
an employer. The story focuses on a couple in their early 60s who
decided to leave their jobs before they were eligible for Medicare who
were able to find an individual insurance policy for about $400 a
month, which was about half the cost of paying for COBRA coverage. The
couple did, however, have to spend some time shopping around due to
some minor pre-existing medical conditions.
The article also offers another key point for early retirees: When
leaving a job, individuals have 60 days to start COBRA coverage-that
is, opt to pay to remain on an employer’s plan-or else lose the option.
As the Times notes, many early retirees may want to opt into COBRA
initially until they have found coverage elsewhere.
Topics: Individual Health Insurance | Comments Off
By Jim Van Wyck | January 25, 2008
USA Today has a story (reprinted below)
about the shift of more and more employers
towards a defined contribution model of providing health insurance.
Just as retirement and pension plans moved
from defined benefit to defined contribution in the 1980’s,
health care benefits will change in this direction.
****************
Employers put health coverage in workers’ hands
By Julie Appleby, USA TODAY
Nick
Trikolas plans to drop health insurance for his employees and give them
money to buy their own coverage. He says doing so will put him in the
vanguard of a movement by employers searching for answers to rising
health costs.
“This may be the future of
health insurance,” says Trikolas, CEO of Ilios Partners in Chicago,
which plans to switch its 100 employees from group to individual
coverage this year.
BUSINESS BEAT: Small Business front page | Company News
As
health insurance costs continue to rise, some employers are adopting a
controversial new approach: ending group coverage and giving employees
$50 to $200 or so a month to help them buy their own.
The
shift is touted as a lower-cost way for employers to offer workers some
kind of health coverage, while making smaller and more predictable
financial contributions toward that coverage. Like other companies
considering the switch, Ilios will pay a portion of employees’ medical
costs into tax-free accounts that workers can tap. It also will provide
a link to an independent website where workers can compare price quotes
from a variety of insurers.
If
broadly adopted, the new model would represent a fundamental shift in
health coverage in the USA. Most people with health insurance are in
group plans offered by their employers.
Critics
say the change would end the long-standing, implicit social pact to
provide coverage to sick and healthy workers alike in favor of a more
Wild West, go-it-alone approach that could benefit young and healthy
workers but leave those older and sicker unable to get medical
insurance.
That’s because ending group
coverage removes a key protection in group insurance plans. Insurers
cannot reject members of group plans for health reasons, and everyone
in the group pays the same premium.
In most
states, insurers can reject individual applicants for health reasons
and can charge widely varying premiums based on the applicant’s age,
health history and other factors. Only in a handful of states, such as
New York, Massachusetts and New Jersey, must insurers sell coverage to
everyone, regardless of their health.
“What
scares me is it’s tempting for an employer who may have one or two sick
employees to say, ‘You’re not my problem, try to get coverage from the
state,’ ” says John Hickman, an Atlanta attorney who advises businesses
on their benefit plans. “It could leave a lot of people without
coverage.” He says the new model could work if Congress passes national
rules requiring insurers to take everyone, regardless of his or her
health.
The idea comes as the percentage of
employers providing insurance shrinks and the number of uninsured
Americans grows. Last year, 60% of employers offered group coverage,
down from 69% in 2000. The number of uninsured rose to 46.6 million, up
from 44.8 million in 2005.
Large companies
use group coverage as an important recruitment and retention tool, but
smaller firms struggle more with costs and are less likely to offer
group coverage.
Proponents of individual
coverage, including Paul Zane Pilzer, whose Zane Benefits firm offers
services that help employers make the switch, say most workers will be
able to buy coverage on their own.
The
healthiest, Pilzer says, will get coverage for less than they pay now.
Monthly premiums can be less than $100 for some younger, healthier
people but several times that for others.
“The
healthy employees don’t have to pay for sick employees,” says Pilzer, a
software entrepreneur and author. He says employers can save money
because they contribute a set amount per employee — often far less than
they pay for group coverage.
Sara Rosenbaum,
a law professor at George Washington University School of Public
Health, says offering money toward individual policies “may be somewhat
helpful for workers in businesses that have never been able to offer
insurance coverage,” but it is a “radical step backward” for those who
decide to cancel group policies.
She says
proponents may mislead employers into thinking individual and group
coverage are the same, when there are often striking differences.
“Many
employees may find themselves shut out of the individual market,”
Rosenbaum says, “and even if they can get in, the coverage is
dramatically less than what they can get in group products.”
Reimbursement accounts
Though
no one tracks the number of employers who send workers out on their
own, it is only a fraction of the total number who offer health
insurance. Pilzer says he has more than 100 clients; his company sets
up and manages tax-free medical reimbursement accounts for the clients’
employees. He sold his first company to Steve Case’s Revolution Health,
which offers the service through Sam’s Club.
“This
is a multibillion (dollar) opportunity,” says Vik Kashyap, founder of
Canopy Financial. Last month, Canopy began a similar reimbursement
service and steers workers to insurers who sell individual health
policies.
The insurance industry has
acknowledged the difficulties some people face in getting coverage. In
2007, officials in California and Connecticut fined several insurers
for canceling individual policies after patients racked up large
medical bills.
A proposal released last month
by America’s Health Insurance Plans, the industry’s lobbying arm,
called on states to create guaranteed-access plans that would make
insurance available to people with serious medical conditions.
The
group said insurers should provide coverage to those who aren’t sick
enough to qualify for the state plans. And, it said, insurers should
not cancel policies solely because applicants provided incomplete
medical information, so long as any omissions were unintentional.
Because
individual policies are tied to each applicant’s medical history,
insurers can limit or exclude certain conditions. For example, an
insurer may offer a person with hay fever a policy that excludes
coverage of any upper respiratory condition. “Something as simple as
hay fever may mean you are not covered if you get pneumonia,” Rosenbaum
says.
Bosses offer assurances
Like
some other employers contacted, Trikolas says he doesn’t expect his
employees, who are mainly in their 20s and 30s, will have a problem
qualifying for individual insurance. If any do, he says the company
will help them find coverage.
“I can guarantee you that no company would leave those people high and dry,” Trikolas says.
David
Davis, executive vice president of Sweet and Sassy Franchising, which
franchises salon and spa services aimed at girls ages 5 to 12, says his
company plans to introduce the Canopy program this year and end its
group coverage. Davis, whose company is based in Southlake, Texas, says
the main goal is to give workers more options.
“We
have employees who have families with young kids, some have older kids
and some employees are single,” Davis says. “Those scenarios present
widely varying health care needs. Something like this gives us and our
employees a little more flexibility.”
What happens if some can’t get coverage?
“Currently,
we don’t have any issues like that at all,” Davis says. “We’ll have to
address that if it occurs. As we bring new people on, we’ll get a
better sense of how it will work. We may jump into it and say it’s the
best thing we’ve ever seen, but we will evaluate that as we go.”
Canopy’s
Kashyap says most people can get insurance. Those who cannot, he says,
should be looked upon like bad drivers, who have to pay more for auto
insurance. He expects health insurers, possibly with the help of
government or employers, ultimately will develop coverage for
higher-risk people.
“There are some people in
the minority who will be adversely impacted, but the system in general
is designed for the majority,” Kashyap says.
Bret
Berneche, chief executive officer of Cardinal Homes in Wylliesburg,
Va., used Zane benefits to help get health insurance for himself and
his 112 employees.
In August, Berneche told his employees that their group health insurance would end that month.
Between
premium increases and mounting state and federal rules, offering
insurance was costing the company too much — $846,000 a year.
“It was certainly a blow,” Berneche says. “The choice was having the health plan we had or going out of business.”
After
he canceled the group plan, he heard about Pilzer’s program and signed
on. Cardinal puts $100 to $200 a month into each employee’s health
reimbursement account.
Even if Berneche
carries out his plan to nearly double the size of his company, he still
expects to save at least $360,000 this year with the new program. Zane
Benefits handles the accounts and reimburses employees out of their
individual accounts for medical expenses.
Many
employees were able to buy individual policies for less than the
monthly amount put in by Cardinal, Berneche says. The money also can be
used for eyeglasses, dental care and other medical expenses.
“I
don’t know if everyone bought insurance. But there are various ways to
get some kind of health coverage, through state programs and self-pay
programs and catastrophic insurance programs,” he says. “Everyone here
has a health reimbursement arrangement that they can spend the way that
best suits their families’ needs.”
Though some pay less for premiums than they did under the company-subsidized group plan, others, including Berneche, pay more.
He
and his wife, Dorothy, both in their 40s, pay about $900 a month in
premiums, and each has annual deductibles of $5,000, meaning that’s
what they pay before coverage kicks in each year. The cost of
prescriptions adds $200 to his monthly costs. He says his total costs
are at least $1,000 a month more than under his group policy. Still, he
says, “I am happier today with this program … than I was before.”
Berneche
says he can talk more openly with company employees about health
issues. He does not feel as constrained by federal and state rules and
has more control over health costs.
“I had to worry about that every year,” Berneche says. “We’re no longer in the health care business.”
Legal issues
Legal
questions remain about whether to classify this hybrid coverage as
group or individual policies. Consumer protections are not as strong in
individual plans because states allow them more leeway than group plans.
Berneche
had to certify on his individual insurance application that his company
was not reimbursing him. Yet the contributions his company provides are
at least a partial reimbursement.
In Virginia
and many other states, policies sold as individual plans have different
rules on what they must cover and how applicants can be scrutinized.
The
Department of Labor and the Treasury Department are considering whether
federal rules that apply to group insurance also apply in programs such
as Zane’s, in which an employer makes a contribution but doesn’t offer
a group plan, a statement from the Department of Labor says.
For
instance, says Mila Kofman, a health policy professor at Georgetown
University, “what happens if an employee can’t buy an individual
policy” but others in the company can? “Then you have a potential
violation of the non-discrimination provisions” in federal law.
Daryl
Richard, a spokesman for UnitedHealth, says, “A number of groups,
including brokers, insurers and government agencies, are seeking to
fully understand the nuances of how individual and employer-sponsored
coverage may best work together in compliance with both state and
federal regulations.”
The main goal, he says, “is finding ways to make health coverage available to as many Americans as possible.”
Topics: Individual Health Insurance, Individual Plans | Comments Off
By Jim Van Wyck | January 23, 2008
This story is about an elementary 5 item checklist.
When used, it saved 1500 lives and more than $200 million dollars.
Physicians generally hate checklists.
It’s beneath their dignity to have such things assist the practice of medicine.
When you read the article below,
take note of the last section, because that’s where
the Empire Strikes Back, and research into efficient checklists was halted.
**********************
January 22, 2008
Personal Health
A Basic Hospital To-Do List Saves Lives
By JANE E. BRODY
This is a call to arms for everyone who may someday be hospitalized, or who has a relative who may someday be hospitalized — which is to say everyone.
These days, to spend time in the hospital is to be at risk of contracting a hospital-acquired infection. Some of these infections can be life-threatening. But there is a simple way to make that hospital stay safer, devised by Dr. Peter J. Pronovost, a physician-researcher at Johns Hopkins.
The method — a five-item checklist to assure that proper precautions are taken to prevent infection — has been thoroughly tested, first at Johns Hopkins and later in 108 intensive-care units in Michigan, where it succeeded beyond anyone’s wildest dreams in saving lives and reducing costs for patients who received the major fluid tube called a central venous catheter.
According to Dr. Pronovost, whose findings in Michigan were published in The New England Journal of Medicine on Dec. 28, 2006, about half of intensive-care patients receive these catheters; about 80,000 a year become infected and 28,000 die, with an economic cost of $2.3 billion.
Five Simple Steps
Using the checklist, in 18 months the average I.C.U. at these diverse hospitals reduced its catheter-related infection rate to zero, from 4 percent. All told, the checklist saved more than 1,500 lives and nearly $200 million. The program itself cost only $500,000.
Dr. Pronovost, a professor of anesthesiology and critical care medicine, said in an interview that he distilled the five steps from a 64-page federal document on controlling hospital-acquired infections. When inserting a central venous catheter, doctors should do the following:
1. Wash their hands with soap.
2. Clean the patient’s skin with chlorhexidine antiseptic.
3. Put sterile drapes over the entire patient.
4. Wear a sterile mask, hat, gown and gloves.
5. Put a sterile dressing over the catheter site.
To someone on the outside, this list may seem like a no-brainer. But in the crush of crisis medicine, one or more of these steps is often neglected, sometimes with disastrous results. What made the program work in Michigan was continuous — and anonymous — collection of data. The hospitals were monitored on their use of the list, their rates of infection and their feedback to medical personnel to show what was working and where gaps remained in quality care.
The task now is to expand the checklist concept to other procedures and to get hospitals throughout the country to adopt it. New Jersey and Rhode Island are already planning to use it. And following a report on the checklist in the Dec. 10, 2007, issue of The New Yorker by Dr. Atul Gawande, a surgeon at Brigham and Women’s Hospital in Boston, Dr. Pronovost said he had been approached by health care authorities in California, Washington and Tennessee seeking the program for their states. Spain is adopting the program nationwide, and the World Health Organization is hoping to take it global.
As Dr. Pronovost explained, medical research must go beyond understanding the biology of disease and devising effective therapies.
“We have to assure that we deliver those therapies safely and effectively, but research examining 300 quality measures showed that patients receive adequate therapy only about half the time,” he said.
“My approach was to figure out what it takes to change behavior,” Dr. Pronovost said. “This represents the biggest opportunity to improve health — making sure that what we know works is delivered safely, effectively and efficiently.”
Coincidentally, a report in the Jan. 15 issue of Clinical Infectious Diseases by Dr. Sanjay Saint and colleagues at the Veterans Affairs Ann Arbor Healthcare System and the University of Michigan stated that 1 percent of hospital patients fitted with a urinary catheter developed a urinary tract infection. Forty percent of all hospital-acquired infections are urinary.
Dr. Saint’s national study “found no strategy that appeared to be widely used to prevent hospital-acquired urinary tract infections.” Nearly half of hospitals had no system telling them which patients had a catheter, and three-fourths had no system to show how long the catheter was in place or whether it had been removed. Furthermore, fewer than 10 percent of hospitals used any system to remind doctors to check daily on whether a patient’s catheter was necessary; the longer one is in, the greater the likelihood of infection.
A nationally imposed checklist for safe urinary catheter insertion and removal could sharply reduce the risk to patients and the costs of hospital care.
But checklists need not be limited to reducing the risk of hospital-acquired infections. As Dr. Gawande and Dr. Pronovost explained, they could be used to enhance the safety of surgery and anesthesia, the treatment of patients with heart disease, diabetes, pulmonary diseases like asthma and a host of other conditions where certain approaches to care have been scientifically established as most effective but are still often neglected.
What You Can Do
The federal Office for Human Research Protections recently ruled that because this quality-control program constituted research on human subjects, every participating hospital must first get approval from its institutional review board. That ruling did not halt the use of checklists in the Michigan hospitals where they had become part of routine care. But it did stop the collection of data based on the lists, which Dr. Gawande described as “the driving force behind the effectiveness of the program,” until each hospital’s institutional review board approved it.
These boards meet monthly, bimonthly or quarterly. Sam Watson, executive director of the Michigan Hospital Association’s Keystone Center for Patient Safety and Quality, a sponsor of the Michigan checklist program, said the need for their approval could seriously delay the use of checklists for other aspects of medical care, like preventing hospital-acquired urinary infections — something his center has been working on with Dr. Saint.
Dr. Gawande suggested that consumers write to their members of Congress and the Department of Health and Human Services, asking that the ruling be reversed. Dr. Pronovost suggested that consumers let Congress know that checklist programs “could have a profound impact on their health,” ask local hospitals whether they are using checklists to reduce infections, and write to state hospital associations asking for a statewide effort to reduce infections.
In addition, Dr. Pronovost said, hospital patients should be their own advocates, armed with their own checklist and asking medical personnel whether they are using it “to help assure that I don’t get an infection” or asking, “Do I still need this catheter?”
Topics: Healthcare Reform | Comments Off
By Jim Van Wyck | January 8, 2008
Jason Schifrin, on the always-excellent Healthcare Economist blog, has a solid roundup of various health reform plans of the major Democratic candidates now running for their nomination.
***********
So
you’re a Democrat and you don’t know who to vote for. Which of the
Democratic candidates has the best plan for health care reform? This is
what I will discuss today.
Similarities
All of the Democratic candidates support the following actions:
- Expanding SCHIP/Medicaid to cover more of America’s uninsured.
- Providing more subsidies for households who can not afford health care.
- Providing a minimum standardized insurance benefit package.
For instance, both the Clinton and Obama websites claim that insurance
benefit packages will be similar to those offered through the Federal
Employees Health Benefits Program (FEHBP). This is the plan members of
Congress have.
- None of the candidates has proposed to end the tax deductible status of employer-provided health insurance.
- All support guaranteed issue (i.e.: The right to
purchase insurance without physical examination; the present and past
physical condition of the applicant are not considered.).
- Although none of the candidates’ websites explicitly state this, all must raise taxes to finance these expanding benefits.
- All three will offer employers the choice of providing health
insurance for employees or contributing a percentage of their payroll
towards the costs of the national plan.
Differences
A chart may be helpful here:
|
Obama |
Edwards |
Clinton |
| Insurance mandate? |
N |
Y |
Y |
| Expand SCHIP? |
Y |
Y |
Y |
| Guaranteed issue? |
Y |
Y |
Y |
| Community Rating? |
? |
Y |
? |
| Insurance subsidies? |
Y |
Y |
Y |
| End tax deductibility of employer-provided ins? |
N |
N |
Y |
| Begin tax deductibility of individual ins? |
N |
N |
N |
| Regional Purchasing |
N |
Y |
N |
| Allow drug imports? |
Y |
? |
? |
| Expand HSA? |
N |
N |
N |
- Clinton and Edwards both support insurance mandates. Obama is trying to expand coverage to more and more people but is not mandating coverage.
- Edwards proposes the creation of a regional purchasing system which
he names “Health Care Markets.” This system will be available for all
individuals who do not have employer provided insurance. According to
the Edwards website “non-profit purchasing pools that offer a choice of
competing insurance plans. At least one plan would be a public program
based upon Medicare.” The Obama and Clinton plans aim for more
government regulation as well as the offering of public health
insurance to individuals, but do not involve regional purchasing.
- Obama states that he would allow the importation of pharmaceuticals
from developed nations. I have not seen where the other two candidates
stand on this issue.
Healthcare Economist’s Take
Electing a Democratic president will likely move us closer towards a
universal health system. Subsidizing health care will help poor
individuals afford the care they need. I like the egalitarian approach
of Democrats but this type of system will be expensive.
Many of the candidates propose that the federal government will
reimburse employer health plans for a portion of the catastrophic costs
they incur above a threshold. This may decrease insurance companies
incentive to provide inexpensive preventive care. For instance,
insurance companies have a large incentive to provide beta blockers to
reduce heart attacks, but if the federal government will pay for most
hospitalizations, than the incentive to provide this care diminishes.
While there is no one optimal standard for insurance
benefits, standardizing insurance benefits can help eliminate some of
the patient-third payer confusion of what will actually be reimbursed.
It will also help stop the insurance company practice of denying claims
to increase profits.
The one drawback to this system is that it is expensive. Taxes will
have to be raised. Although the candidates talk generally about
preventive care and EMR, without having individuals bear a significant
share of the marginal costs of medical care, medical spending will like
increase significantly.
The Healthcare Economist Democratic Pick: OBAMA
If you are a Democrat and are voting solely based on a health care
reform agenda, I endorse Obama. Obama does not mandate insurance
coverage. Instead, he is trying to make care more affordable without
telling individuals how to spend their money. Further, I
whole-heartedly agree that patients should be able to buy prescription
drugs from developed countries. Obama’s goal is to expand coverage
which still allowing significant choice. The Edwards plan is one step
away from nationalized health care.
Obama also has an explicit proposal to create and fund an
“independent institute to guide reviews and research on comparative
effectiveness.” Although the government may not be the best mechanism
for this, disseminating medical ‘best practice’ methods is vital to
improving medical quality.
The Obama plan will be expensive and either taxes will have to be
increased, or spending must be cut elsewhere. Still, Obama is the best
Democratic option.
Candidates’ Statement on the Health Care Issue
Topics: Federal Reform | Comments Off
By Jim Van Wyck | December 28, 2007
Kiplinger has a brief article that highlights some of the many advantages of HRAs (health reimbursement arrangements).
************
New Cachet for Health Reimbursement Accounts
Both employers and retirees like the flexibility that HRAs provide.
By Martha Lynn Craver, Associate Editor, The Kiplinger Letter
Look
for more employers and workers to go for health reimbursement
arrangements (HRAs) to replace traditional retiree health care benefits.
HRAs are funded entirely by the employer. Money in the accounts is
never taxed — it accumulates tax free. Distributions are also tax
free, as long as they are used to pay for qualified medical expenses.
Employers like HRAs because they offer a flexible middle ground.
While many companies have moved in recent years to eliminate retiree
health coverage altogether, others are looking for a way to retain some
kind of benefit, which can be a powerful recruiting and retention tool.
HRAs may be the answer for companies that don’t want an open-ended
commitment. “Employers want predictability and control over their
costs,” says Rick McGill of Hewitt Associates, a benefits consulting
firm.
Another attraction for employers is that HRAs are notional accounts,
which means that employers don’t incur any expenses until a retiree has
a claim, says David Speier, a consultant with Watson Wyatt Worldwide.
That’s a big bookkeeping aid. And it has advantages over the other
popular method of controlling costs, which is to put caps on premium
contributions for retiree health care. Of firms that still provide
retiree medical coverage, about half have instituted limits on what
they will spend per retiree, according to a survey by the Kaiser Family
Foundation. And of those, about 60% have reached their caps, which
means that retirees pay a bigger share of the premiums as time goes on.
In the next three years, an additional 23% of firms will hit their caps.
Employers may choose to put lump sums in HRAs at retirement or make
annual contributions to these accounts either during or after
retirement. Because employers have control over vesting and payout
rules with an HRA, they may allow an active worker’s HRA, with
accumulated funds, to carry over into his or her retirement.
HRAs provide flexibility to retirees as well. For example,
some retirees may choose to use the money to pay for medical coverage
until age 65, when Medicare kicks in. Any funds left over could then be
used to pay for a Medicare supplemental insurance plan and Medicare
Part D drug coverage. Retirees with coverage through their spouses can
let their HRA funds sit and grow, not tapping them until they both join
the ranks of the retired.
Topics: Health Reimbursement Arrangements (Section 105) | Comments Off
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Anxiety over becoming uninsured or paying higher premiums is causing
