HSC’s John Gabel (kind of a “neutral” in the debate) is out with a new study suggesting something that I think is true. The take up of CDHPs by workers offered them in a choice with other products (HMOs. PPOs) is slow. And that’s because they’re not being appropriately compensated with premium reductions in their take-home pay to off-set the much higher-deductibles.
And of course this goes back to how employees buy their health care in the first place—mostly unconsciously via their employers, not knowing the actual cost of their premiums. If you want a long lecture on why this makes employees poor purchasers of insurance, attend any Alain Enthoven Stanford Business School class.
The likely evolution of all this is that workers will find the deductibles and co-pays for their PPO and HMO products increasing to the level of the HDHPs pretty soon. That’s how employers will “get out” of health care benefits—until the possible day when they all look at each other and say “OK let’s drop them totally and let the government take over.” Which is what they all want, but no one is quite ready to make the first move.
But because the HDHP is becoming an evolution of the PPO product that already exists, the argument will about choice will soon be moot. Karen Ignagni may well say that all (or actually 30%) the new small employer HDHP buyers were uninsured, but it’s pretty obvious that most (70%) of the new HDHP wielding employees were people with PPOs before who are being forced into HDHPs by their employers. And that’s certainly what’s happening with Intel and other larger employers who are “offering” HDHPs.
However this news release is most remarkable for this quote from Ignagni: “Ignagni said the plans are popular in certain niches but that it was too soon to say if they will gain wide acceptance.” She’s actually telling the truth! Mark that one down in your diary.
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I think what neimon meant was that most people are never in a postion to make good choices, and for that, when they need a pension or healthcare, it’s not there for them -at all. That’s the punishment. Important life issues such as healthcare and pensions should not be viewed as other market choices like Betamax or VHS. There’s no point creating winners and losers when the taxpayer may have to bail out the loser.
neimon;
I’m not clear how “bad choices” = “punishment”
“what they all want, but no one is quite ready to make the first move”
Matt, I agree this is what a growing number of employers want (and I think issue-fatigue is becoming an important factor in the trend).
But I am curious why you think no one wants to make the first move.
Large employers, at least, discuss this issue all the time among themselves and in trade groups and with their consultants. If this is a consensus, why are none of the large employers quite ready to make a move? What do you think is necessary to prompt some movement?
A number of employees will be no better at managing their healthcare finances than they are their retirement finances. Not everyone has that sense. Not everyone can understand the incredible complexity or acronyms and hidden gotchas.
Yah know. There are a heckuva lot of people who DON’T treat life like a business, and I really don’t understand why we don’t recognize that, nor do I get why we insist on punishing them. This is why markets are sometimes a lousy way to decide something.