CDHPs Becoming More Popular
Evidence continues to mount that an increasing number of employers offered health savings accounts or health reimbursement arrangements this year in an effort to stem rising health care costs, according to a recent poll by Spencer’s Benefits Reports.
The percentage of employers offering an HSA rose to 28% in 2006 from 12% in 2005, and the percentage of employers offering an HRA climbed to 18% from 9%. In addition, 64% of firms provided flexible spending accounts this year, up from 57% last year.
However, few employees are signing up for CDHPs. The average participation rate was only 3.1% for HSAs, 4.5% for HRAs and 21% for FSAs, Spencer’s discovered. Despite worker disinterest, 55% of employers intend to offer an FSA within the next 12 months, while 41% plan to provide an HSA and 23% plan to offer an HRA.
The reasons cited most often by employers for moving to a CDHP are reducing costs (41%), providing a savings vehicle for employees (19%) and offering more choices to employees (16%). The average annual, per-employee cost for health care is more than $6,700, according to the survey, which involved 121 firms with more than 440,000 workers.
Article provided by BenefitNews 11-28-06.
More Employers Establish Wellness Programs To Help Reduce Health Care Costs
Insurers and self-insured employers nationwide "are creating programs that employ 'health coaches,'" health professionals who "help employees manage illnesses and lifestyle issues," in an effort to reign in health care costs, the Los Angeles Times reports.
Coaches use claims data to find employees who have, or are at risk for, chronic illnesses such as asthma, diabetes and cancer. The coaches contact workers to offer informational brochures and tips for remembering to take medication. They also help employees find a doctor or clinical trial for a specific condition.
Information provided by Kritz, Los Angeles Times, 11/20.
Health Risk Assessments Reduce Medical Bills
Wellness programs and health risk assessments can reduce individual health care costs by hundreds of dollars per year, according to a new study from Thomson Medstat, which does consulting and auditing for employers.
Medical costs were between $101 and $648 less per year for Medicare recipients who participated in an employer-sponsored wellness program and used a health risk assessment, Thomson Medstat finds.
“Strategic health care interventions can improve senior citizens’ health and reduce health care costs,” says Ron Ozminkowski, director of health and productivity research at Thomson Medstat.
The study, published in the November issue of the Journal of Occupational and Environmental Medicine, examined the health care costs associated with wellness programs offered to 59,324 retirees and their aged dependants. Researchers assessed the participants’ use of health care services from 1996 through 2002.
Information provided by BenefitNews, November 21, 2006
Electronic Medical Records Use May Rise
Health care advocates have long encouraged physicians to switch to computerized medical records, saying they could improve patient care and increase efficiency.
Doctors, however, have been more concerned about the high price tag -- often more than $20,000 per physician for software, hardware and Internet connections -- as well as having to maintain a computer network.
Surveys estimate less than 20 percent of doctors have fully automated their offices.
The Associated Press - 11-19-06
Studies Show Shift In Health Benefits, Attitudes
Consumers want more coverage and choice in health care, but don’t want to pay higher insurance costs, according to a new study. Researchers at the University of Chicago polled 1,500 Americans. The survey was published in Health Affairs and released Tuesday at a press briefing in Washington, D.C.
More than three-quarters of people without health insurance reject the idea of mandating that it be purchased, researchers found. Overall, consumers are increasingly supportive of making people pay more for unhealthy behavior. Forty-three percent of Californians said obese people should be charged higher premiums, compared to 28% nationally.
Meanwhile, researchers from the University of Michigan found a steady erosion in health benefits over the past decade. About 20% of workers in firms that offer insurance are not eligible, Health Affairs reports. About 25% of private-sector employees worked in firms that offered retiree health benefits in 2003, down from 32% in 1997. A study by Yale and Harvard universities warns that trends are leading to the “graying” of group health insurance, in which the population of workers with job-based coverage is becoming old and wealthy faster than the population overall.
Despite intense cost pressures, firms covering more than 90% of the nation’s workforce view health benefits as an important tool to attract and retain qualified workers, according to another study from the Center for Studying Health System Change and the Commonwealth Fund. Moreover, the majority of firms agreed that all employers should share in the cost of health insurance, either by covering their own workers or by contributing to a fund to cover the uninsured.
Article provided by BenefitNews - November 16, 2006.
All NEW 2007 IRS HSA Deductibles, Maximum Out-of-Pocket and Contributions
In 2007, the maximum contribution that can be made to an HSA for individuals with single coverage will be $2,850, up from $2,700 in 2006, while the maximum contribution for those with family coverage will rise to $5,650, up from $5,450 this year.
Additionally, the maximum out-of-pocket expense—including deductibles—that employees with single coverage can be required to pay will rise to $5,500, up from $5,250 in 2006, and to $11,000, up from $10,500, for those with family coverage.
The minimum deductible of the high-deductible health insurance plan to which HSAs must be linked will increase to $1,100, up from $1,050, for individuals with single coverage, while the minimum deductible for those with family coverage will increase to $2,200, up from $2,100.
The new limits reflect increases in the cost of living.
The "catch-up" contribution for individuals age 55 and older will be $800 for 2007.
Prescription Drugs | More Companies Encourage Increased Use of Generic Medications
A "growing number" of U.S. companies "are trying harder to push generic [prescription] drugs on their employees," as generic medications often cost 80% less than their brand-name equivalents, the Wall Street Journal reports.
According to the Journal, the "concerted push comes in part" because of an increasing availability of generic drugs and as companies try to reduce increasing medical costs.
In 2006, four top-selling brand-name medications became available in generic forms: cholesterol-lowering statin Zocor, antidepressant Zoloft, antibiotic Zithromax and the nasal spray Flonase. At least 11 more top-selling brand-name medication patents will expire by 2008, according to the Journal.
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CDHPs May Lower Out-Of-Pocket Costs
Consumer-driven plan participants are becoming more cost-conscious, benefiting financially from their plans and still getting the appropriate care, says a year-long study of first-time users of CIGNA HealthCare's consumer-driven health plans.
HRA and HSA members' total out-of-pocket expenses dropped from 19% of total health expenses to 16% after switching from a traditional plan, excluding the premium costs. The average CDHP premium contributions are 10% to 20% lower than premium contributions in traditional plans.
Information provided by BenefitNews - November 9, 2006
Most Workers Don't Use FSAs
While employers embrace flexible spending accounts, workers still are cautious about enrolling in them, according to a recent survey from the International Foundation of Employee Benefit Plans.
For instance, 90% of employers with a Section 125 plan provide an FSA; however, 73% report that only 39% or less of their workers use health care FSAs, and 68% say their participation rate in a dependent care FSA is 9% or lower.
“Although health care FSAs are a way for employees to have some control and save on taxes, employee participation rates are still relatively low,” says Pat Krajnak, director of reference and research services at the foundation, which studies the benefits and compensation industry.
“The low participation rate suggests that employees don't clearly understand the advantages of participating in a health care FSA,” she adds. Most participants use all the funds in their FSAs.
Roughly 62% of employers indicate that 7% or less of employees forfeited money in their health care FSAs, and less than 5% of employees forfeited money in dependent care FSAs. About 92% of health care FSAs are completely financed by employees. Meanwhile, 25% of employers with Section 125 plans give cash incentives or credits to workers who decline health insurance.
Article provided by BenefitNews - November 7, 2006
Pharmacy Giants Combine
CVS Corp. and Caremark Rx yesterday announced a merger agreement, combining the retail giant with one of the nation's largest pharmacy benefit managers. The combined business is expected to fill or manage over one billion prescriptions per year. The new company will be called CVS/Caremark Corp. and headquartered in Woonsocket, R.I.
Employers that use a PBM may want to closely examine that relationship. Sean Brandle, head of the pharmacy consulting group at The Segal Company, says, "The proposed merger of CVS and Caremark Rx signals a further shift in who controls the prescription drug market in the United States." It also brings into question the independence of PBMs and their role vis-à-vis retail pharmacy chains and other players in the market, he adds.
Mac Crawford, CEO of Caremark, comments, "This merger creates a significant platform to address the needs of both payers and consumers by providing high-quality, cost-effective services in a manner that is convenient, flexible and easy for the consumer to navigate and understand."
Tom Ryan, president of CVS, remarks, "CVS and Caremark will help manage the costs and complexities of the U.S. health care system, offering unparalleled access and driving superior health care outcomes, enhancing value for employers, health plans and consumers."
Article provided by BenefitNews 11-03-06.
Survey Examines Premiums, CDH Trends
Health care premium increases are slowing down, according to a survey of HMOs and PPOs serving the large and mid-group employer markets conducted by consulting firm Milliman.
HMO premiums for 2006 are up 6% from 2005, which is the smallest change since 1997. Similarly, PPO premiums increased 4% for a standard $250 deductible plan from 2005 to 2006. For 2007 renewals, HMOs anticipate premiums to jump 10% to 11%, while PPOs anticipate premiums to rise 12% to 13%.
Over the past few years, health care services were used more often at higher prices than in earlier years. Hospital inpatient stays have increased to 277 annual days per 1,000 members for HMOs this year, up from 230 in 2000. "The aging population could be contributing to this phenomenon," says Doug Proebsting, co-author of the survey.
HMO and PPO hospital inpatient costs per admission increased 8% from last year to this year, while professional fees rose 5% for HMOs and 9% for PPOs.
Although the survey indicates growth in consumer-driven health plans has been slower than insurers predicted in prior years, 97% of employers expect to offer a high deductible plan with an integrated employee account. CDH premium revenue will be 3.6% of all commercial premium revenue for health insurers in 2006, and insurers expect this amount to increase to 5.1% in 2007.
The study also indicates employers could lower annual premiums by $900 per member per year by increasing the deductible from $250 to $2,000.
Article provided by BenefitNews 11-2-06.
How to Design Consumer-Directed Plans for High-Cost Members
While critics of consumer-directed health (CDH) plans often argue the plans are designed primarily for healthy and affluent individuals, some health plan executives say it's possible to design CDH plans for high-cost members if proper incentives are in place.
If CDH plans are going to attract people who have a high utilization of health care and those with chronic diseases, they need to do four things, says Michael Parkinson, M.D., chief health and medical officer of CDH firm Lumenos, Inc., a subsidiary of WellPoint, Inc. The four elements are:
1) Pay 100% of preventive care services, including tobacco cessation, weight management, and desired physical activities programs.
(2) Ensure the CDH-plan accounts are "clinically credible." The question that patients will ask is, "Can I manage my family's health with that amount of money," Parkinson says.
3) Make sure that the out-of-pocket "bridge," which represents the amount the employee must pay before full coverage kicks in, is a "speed bump" and not a "Jersey barrier."
(4) Address the out-of-pocket issue first, and demonstrate clearly how it matches or is better than what the employee pays in his or her existing PPO or HMO.
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CDH.
