HSA

A report published by the Institute of Medicine (IOM) on high-value health care attracted attention when it was issued last June. Authored by a group of eleven leading hospital executives, A CEO Checklist for High-Value Health Care describes programs at various hospitals that resulted in quality improvements and lowered costs. The report has a section called “Yield,” quantifying the extent of these improvements. These programs sound notable, and in fact I know some of the executives and hospitals involved, and would vouch that many significantly improved patient care.

But the report is less impressive when it tackles the cost side of the value equation, especially when it names cost control outcomes like: “days cash on hand increased from 180 to 202,” and “multiple years of 4-5 percent [hospital] margin.” Clearly, the hospitals improved their own bottom lines, but by how much did patient bills decrease? The hospital executives don’t account for that in the “yield.”

It seems this report defines “high-value” to mean highly valuable to hospital CEOs. Strikingly, though, the authors do not find it necessary to explicitly say so anywhere within the report. Perhaps they simply assume that a high-value checklist for hospital CEOs is automatically high-value to CEOs in other industries that are paying for services from hospitals. No offense to these well-meaning and highly accomplished hospital executives, but that is not always the case. Purchasers don’t see high-value health care in hospital cash flow or profit margins. They see value when they get the best service at the best price.

Continue reading “Why Employers Should Stop Worrying About Health Costs”

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The U.S. Supreme Court ruled on Jun 28th by a 5-4 vote to let the individual mandate portion of the Affordable Care Act (Obamacare) stand. Immediately following, a CEO of one of the nation’s largest insurance companies was asked if people can expect their premiums to go up as this law is implemented. The answer was yes.  So what can employers do to protect themselves from the inevitable?

One strategy for driving market incentives back into the healthcare system and driving down costs is called consumer-driven health insurance, and it is growing in popularity. Historically, the consumer or patient has had very little monetary skin in the game when it comes to the cost of healthcare. We go to the doctor and pay our copay, and never have to worry about what it really costs for health care.

Many employers are now trying to incentivize their employees to be as prudent a purchaser of health care as they are of any other product or service. And they’re doing this by offering high-deductible health insurance policies combined with health savings accounts, or HSAs.

For the 50 percent of patients who collectively spend only 3.5 percent of all healthcare dollars, it’s a fantastic alternative. Instead of paying the high premiums for a lower-deductible plan to the insurance company for care you don’t use — that’s money that goes out the window unnecessarily — you can store the money away, accumulating it every year until a health event occurs when you really need it.

To be sure, a big drawback to these high-deductible insurance plans is the negative impact they can have on the five percent of patients who spend 50 percent of all healthcare dollars. Many worry that high-deductible plans will increase the total cost of healthcare because those with chronic healthcare problems won’t get the help they need until their condition gets so bad that they are forced to seek help — when obviously the cost will be much greater. They have a very valid point.

Continue reading “Costs Continue to Rise. What Can Employers Do? The Answer May Be Direct Primary Care.”

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As the next act of the Massachusetts health care drama plays out on Beacon Hill, the same characters return to the stage with a tired script. The ostensible hero of the production, the patient, is left to watch the tragedy from the back row.

Legislation being debated on Beacon Hill ignores patient-centered health plans and health savings accounts, or HSAs, which are lower-premium insurance plans that direct pre-tax dollars into a bank account to cover an individual’s current health care and save money for future medical expenses. An HSA is the most direct way to engage patients in the health system. They cover out-of-pocket medical, dental, and vision expenses, are fully portable, and owned by individuals for their entire lives.

Unlike the self-interested solutions of insurers, providers, and government, HSAs are a proven way to contain the cost of care.

Nationwide, 11.4 million people of all ages and income levels purchase patient-centered plans, up over 250 percent from 2006, when they were created. Among HSA account holders, fully half earn less than $60,000; almost three-quarters have children; and about half are over 40.

Safeway, one of America’s largest supermarket chains, rolled out a patient-centered plan in 2006; per capita health care spending shrank 13 percent, and costs remained flat for four consecutive years.

Safeway’s plans have reduced employee obesity and smoking rates to roughly 30 percent below national averages. This health dividend is priceless as 70 percent of health care costs are directly related to lifestyle decisions.

Continue reading “Without Patient-Centered Health Plans, It’s the Same Tired Script”

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