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.
One solution to this problem is a new type of primary care called “Direct Primary Care.” Under this arrangement, patients struggling to manage multiple chronic health conditions pay their physician a flat monthly fee, usually $100 to $150 a month, for all their primary care needs. This pays for all office visits and office procedures, and the insurance company only gets billed when a specialist is involved or when the patient goes to the hospital for surgery and other more serious procedures.
Direct Primary Care seems to work well for both patients and physicians because it gives the doctor a financial incentive to do everything he or she can to keep that patient as healthy as possible. Instead of the usual 10 minutes per patient, the doctor will often spend an hour or more with the patient, especially initially, to really understand his or her problems. Initial assessments can often last several hours, during which the doctor does a detailed patient history and assesses the complex social and emotional factors affecting the patient’s health. No time is spent billing the insurance company.
Remember, under our current bill-for-procedures health care system, most primary care physicians have thousands of patients in their practices and must see each one as quickly as possible in order to bill enough office visits and procedures to earn even half the money earned by a specialist like a cardiologist. In contrast, a Direct Primary Care physician needs only about 500 patients in his or her practice to make a good living, and because of the lower case load, these patients now have much greater access to the physician.
Face-to-face appointments last as long as is needed, and the doctor is completely familiar with the patient’s needs and life challenges. The physician now has the time to educate, to motivate, and to focus on helping the patient make the behavioral changes that are oftentimes so crucial to his or her well-being — stopping smoking, for example, or losing weight and eating better.
When a referral to a specialist is needed, the Direct Primary Care doctor calls the specialist ahead of time to discuss the patient’s situation and then spends time discussing the patient’s follow-up needs with the specialist after the visit. Truth be told, this is the kind of healthcare that most physicians want to practice — it’s the reason most of them went into medicine in the first place.
In the new book, The Future of Health-Care Delivery: Why It Must Change and How It Will Affect You, author Stephen C. Schimpff, MD, tells the story of one chronically ill patient who went from needing 23 different prescriptions from four different doctors, to needing just seven prescriptions — all because one Direct Primary Care doctor took the time to examine the patient’s needs closely and coordinate his care. The patient’s health and quality of life improved dramatically as a result.
I know of a Direct Primary Care physician in my own Salt Lake City area who spent many years as a traditional physician. Frustrated by having to see patients for only minutes while having to spend hours fighting with their insurance companies, he took a sabbatical. After seeing a television story about Direct Primary Care, he realized that’s the kind of medicine he’d always wanted to practice, so he set up his own Direct Primary Care office.
Each month, this doctor invites his patients to join him for a healthy free lunch, where he teaches them about this marvelous miracle called the body and how to take care of it. Who says there’s no free lunch? This doctor makes great use of them to incentivize his patients to learn how to stay healthy.
There is a lot that employers can do to curb the inevitable cost increases projected as a result of the implementation of the Affordable Care Act. Employers are in a pivotal position to drive market incentives back into healthcare in an effort to slow down future increases. Consumer driven health insurance is just one of many strategies employers can use.
Darrell Moon is CEO of Orriant, a wellness-program provider serving companies nationwide.
I really like this website. I understand insurance here in America is going up with new changes. In my country insurance is different, not like here in America. I thank you for the information. Here it was easy for me to understand.
I just read your article and one phase, in particular, jumped out at me: “We go to the doctor and pay our copay, and never have to worry about what it really costs for health care.” Although you did not explicitly state this, your reasoning seems to be that if Americans paid more for health care, they would demand lower prices (or shop around for them) and this would in turn force efficiencies which would result in lower health care costs. My question is: what would ensure that, in the face of higher costs at the doctors’ office, Americans would not simply skimp on basic preventive care thereby leading to more serious and expensive problems down the road? You also mentioned the use of HSAs to incentivize individuals to be prudent purchasers of health care. What would happen to sick people with HSAs who simply made ill-informed healthcare purchasing decisions (or received bad medical advice) and spent all of their money poorly? Would we leave them without treatment in order to “disincentivize” poor health care spending?
Higher prices ARE causing people to simply stay away from the doctors. It is happening right now among self-pays like myself. “… prudent purchasers of health care…” In practical terms, what does that mean? I would say in real life, people will forego medical care until they are no longer able to function. And as far as HSAs are concerned, they are irrelevent to probably 20% of our population. One final … why do you say, “… in the face of higher costs at the doctor’s office, …”? Are you speaking hypothetically? If not, why would costs be higher? What would cause that?
Hi tomd39, it seems like we both have the same questions. I was actually hoping that Mr. Moon would provide us with some guidance on his phrasing (“prudent purchasers of health care”). In general, when I have heard people say this, they are talking about shifting risk away from insurers to the insured. The thinking seems to be that costs are high because now “we go to the doctor and pay our copay, and never have to worry about what it really costs for health care”, so insured individuals don’t have any “skin in the game” (again, this is the author’s phrasing). Whereas (the theory goes), if the insured were required to choose wisely from a limited pool of healthcare monies (e.g., an HSA) or pay more than a measly $15 co-pay at the doctors’ office, they would shop around, be forced to demand more for less, etc. This is what (I believe) the author was driving at when he talked about people becoming “prudent purchasers of health care”. The author did not explicitly say all of this, so I posted my original question to understand where he was coming from. Personally, I am a bit skeptical about the “prudent purchaser” theory but Mr. Moon seems like a smart guy, so I was hoping to get his response. (I may be insane but I feel like Mr. Moon, amended the fifth paragraph of his article to address this – either that or I just didn’t read his article well enough the first time.) In light of all of this, I hope that my original questions make more sense. On a final note, it appears that you have some direct experience (as a self-pay) with paying out of pocket for medical care and, as a result you are not going to the doctor. (I am truly sorry about that.) My big concern when I hear about plans to make others into “prudent purchasers of health care” is that rather than becoming prudent, people just stop seeking out medical care and small manageable medical problems become big, messy, costly medical problems.
It is interesting being a self-pay, though I have to amend that by saying I am part of a co-op with 20,000-30,000 others that all help each other pay their bills. We ARE partly responsible for negotiating a discounted price from our providers, though. Here lies the rub. Doctors in northern Illinois do NOT and WILL NOT negotiate price with self-pays. They have a basic 20% off their insurance-based pricing and that’s it. Health Care Blue Book? Forget it. If you are not part of an established network, you pay. That is what discourages me from following through on health issues. I hate to part with my own money unless I absolutely have to.
Barry – We are in complete agreement that the change is uncomfortable, but necessary. See – You have to get comfortable with being uncomfortable to disrupt health – http://www.kevinmd.com/blog/2012/07/comfortable-uncomfortable-disrupt-health.html
Adapt and thrive, or resist change and die.
Dr. Oates –
Two initiatives that Dr. Gawande describes in his article that I referenced relate to hip replacements and remote monitoring of ICU’s. Both are clinician led yet they still encountered resistance and even hostility from some of the doctors, and, in the latter case, nurses. Maybe as more doctors become salaried employees of large hospital systems, progress will come faster and more easily.
I agree with you that efforts to improve quality and reduce costs need to be clinician led but even then people need to learn to do things differently and there is an unavoidable learning curve that can be uncomfortable in the early going. Most of us are naturally resistant to change if it makes our life more difficult in the short run even when the long term benefits are significant. It usually needs backing from senior management to move it along and those who are unwilling or unable to adapt may need to find work elsewhere.
As the fee-for-service gravy train slows and the payment system switches to so called pay for value mechanisms, the big health system’s profit centers become cost centers. Then it will quickly become untenable to continue to subsidize their primary care practices that will be little more than feeders to what become the new cost centers. The train is leaving the station, and most are still looking around for their coal shovels that are the solutions further reducing primary care capacity.
Most doctors value quality and improvement over autonomy and independence. What they don’t like is the hubris of well-intended but often clueless decision makers from the outside attempting to second guess or question the clinician’s process within environment the outsiders little understand. Progress will come more quickly to the enlightened enterprises that understand that decision making needs to come from the clinicians with guidance from I.T and administration… not the reverse.
First, I agree with you about the benefits of using more NP’s.
As for obesity, I don’t think genetics, brain chemistry, etc. has changed any over the last 30 years or so but the obesity rate in the U.S. increased significantly and the U.S. has the highest rate in the world. I think it has more to do with the proliferation of fast food restaurants, the upsizing of portions in restaurants and the longer term downward secular trend in the cost of food as a percentage of the typical middle class budget.
With respect to the 50% of the population that accounts for 3.5% of healthcare costs and, for that matter, the 25% of the population that incurs no healthcare costs at all in a given year, nobody can predict whether or not they will be in that group at the start of the year. Anyone can suffer serious harm in a car accident, sports injury or even from being a crime victim. I have no problem with high deductible insurance plans but you better have the money to cover the deductible if you have unforeseen significant medical expenses even though you thought you were healthy.
Most important, though, the big dollars in healthcare are in hospital based care, both inpatient and outpatient, imaging, prescription drugs, long term custodial care and home health care. Primary care is small bore in the scheme of things from a healthcare cost standpoint.
One of the huge challenges in healthcare, I think, is that so many doctors treasure their autonomy and independence. They don’t like being second guessed or questioned. Many are hostile to collaboration even when it promises to improve patient care and reduce costs at the same time. If you haven’t already seen it, I recommend Dr. Atul Gawande’s latest New Yorker article titled “Big Med.” While positive change is not impossible to achieve, it’s likely to be a long hard slog.
I salute any and all attempts to improve the patient experience. This is certainly a better model for many clinicians now burning out in the primary care space. But how is this going to address the fact that in less than 2 years, we are going to have millions of angry patients with insurance cards with no place to go and little to no access to their health records? Let’s face the current realities:
1. Clinicians are mostly consolidating into larger groups that are currently acquiring largely siloed EHRs and/or processes that have often lowered their capacity to actually see patients. This on the verge of needing to bring 32,000,000 more patients into a system of declining payment per patient visit.
2. Clinicians in smaller practices are currently gravitating to siloed EHR products often lacking a sustainable business model beyond a limited venture capital supply.
3. Public HIEs without sustainable business models beyond their government funding.
Is not limiting the current supply of primary care practitioners to a population of 500 patients only going to make this imminent crises worse?
“The median income for a PCP is approaching $180,000— half earn more.
Median income for an NP is around $100,000 — probably shoudl be raised to $120,000.”
Payment to docs and NPs/PAs is a relatively small part of the expense in providing primary care. Overhead (approaching 70%) doesn’t change, regardless of the degree the provider has hanging on the wall.
Factoring in increased referrals by mid-levels and the fact that they also are now avoiding primary care, the savings are miniscule to non-existent.
I suggest increasing the supply of NPs so their median income can be reduced to $80,000 , then by being transparent with patients the income of the PCPs can also be reduced to $80,000
Based on supply and demand law, by oversupplying primary care providers, their income can be reduced to $60,000 or even lower.
See my other post comment.
If we are not hit by a bus at an early age, virtually all of us will need very
expensve specialized care at some point in time.
We won’t always belong to the 50% of the population that spends 3.5% of heatlhcare dollars.
And we don’t know when we will move into the other group— when we are
fairly young and develop MS? When we are in our 40s and develop
cancer? When we develop Alzheimer’s earlier than most people?
Or what about when our 2-year-old is diagnosed with cancer and needs
10 years of treatment before finally dying?
All of the wellness counseling and good behavior in the world will not spare us.
Tragedy may not strike until we are over 65 and on Medicare– no longer an employer’s problem. But as we live longer, we are probably going to have ot merge Medicare with health insurance for people under 65, with younger
and older Americans pooling their money together.
The good news is that we can break the curve of health care inflation– as we are already doing– by reducing unncessary treatment, and over-paying for
Paying for a PCP at an average of $180,000 a year when a nurse practioner could meet our needs is just one example.
We are also overpaying for
so many ineffective treatments that go under the name of “choronic disease management” or “wellness counseling” –including obesity counseling. The research shows that when obese people diet and exercise under a doctor’s supervision–and are fully compliant–98% put the weight back on .
We haven’t solved the mystery of obesity. In fact, evern people who are 20 or 30 pounds overweight at age 50 are rarely able to take the pounds off and keep them off. Weight is all tied up with body chemsitry, brain chemistry,
genetics, etc. in complicated ways that we simplly don’t understand very well.
WE have a better shot at dealing with childhood obesity–particularly babies.
Babies that are nursed exclusviely for 12 months are 30% less likely to be
obese as young children or as adults.
Trying to shame an 8-year-old into losing weight is much harder, and often
cruel. (Depending on his genetics, brain chemistry, body chemistry etc.)
By contrast, we can help people stop smoking–and our “wellness”
dollars should be put into free smoking cessation programs, with free
medications, nicotine patches, etc. But in this country, mostt of the people who smoke are low-income, are we’re just not as interested in them.
Sorry to go on at such length.
You seem truly well intentioned, but I’m afraid you’re living in a bubble that little
as tom says has little to do with reality for most people.
And we do not want to tackle our health care problems class by class, with large companies worrying about the relatively affluent while the rest of the population suffers.
We’re all in this together–we have to pool our resources
The best way to make primary care more affordable–for everyone– is to make much greater use of nurse-practioners.
The median income for a PCP is approaching $180,000— half earn more.
Median income for an NP is around $100,000 — probably shoudl be raised to $120,000.
The ACA provides funding for many more NPs (and nursing school teachers.)
Today, Cornell University provides most primary care to students and others mainly through NPs. (My son was a grad student there for 4 years and only saw NPs–even when he was hit by a care. He was very happy with the care, as was everyone he knew.
In many European countries pediatric nurses care for most children most of the time. After initial “well-baby visits” pedicatricians only see sick children.
Nurse midwives deliver the vast majority babies. (As a result, many fewer inductions and C-sections, which is not only less expensive, but better for mother and baby.)
Research suggests that NPs are particularly good at chronic disease management.–the major weak spot in our heatlh care system. (They are ess likely to lecture, bully or try to shame. They have been trained that “comfort” is as important as “cure” People who choose to become nurses rather than doctors (whether male or female) are a self-selecting group. Less likely to be
extremely competitive A+ students from high income famlies. They take more time with patients. They listen more.–rather than ordering a battery of tests, which iis what med students are taught to do.. (This is key to diagnosing, as Jerome Groopman, Clifton Meader and many other doctors make clear.
PCPs who work with them tell me that in some areas, with certain patients, NPs are better.
free up time so that a PCP can spend more time with a patient who actually
needs an M.D.’s care.
NPs are the future.
High-deductible plans and concierge medicine are the past. They
will continue to appeal to the
very wealtlhy. But they will have to buy high-deductible plans that
cover all “essential benefits” including dental and vision for children,
prenatal care and delivery, mental health care, drug addiction , etc– and 60% of the costs with a relatively low cap on how much anyone can be asked to
pay in co-pays and deducitbles. (If memory serves, it’s around $5,000 for a family.) High-deductible plans also won’t be able to impose an annual or lifetime limit on payouts.
As a result, under the ACA these high-deductible plans will be much more expensive than they are today.
Under reform legislation, only people under 30 will be able to buy
low-cost castrophic insurance. This won’t change because we need to have 98% of the population — particularly wealtheir and upper-middle-income people who tend to be healthier than the majority– contributing their premiums to
the comprehensive insurance people. Otherwise, insurance won’t be affordable.
Of course, if a wealthy couple wants to , they can choose not to buy
comprehensive (essential benefit) insurance and pay the penalty. But the Congressional Budget Office estimates that only about 1.4% of the popoulation will do that–and with good reason.
If the ealthy decide to opt out of the insurance pool,t means they’ll wind up paying as much as $13,000. (For weatheir
American the penalty winds up being a percentage of adjusted gross income
minus exemptions.It’s capped at the cost of a Bronze plan which CBO estimates will cost a couple $12,500 to $13,000 in 2015.
If their income is $500,000, in 2016 they would owe
2 1/2 percent of income or $12, 500.
Plus, they would have to pay the premium for their high deductible insurance,
and out of pocket expenses from their health savings account–of from other funds. .
(Health savings accounts, by the way, are a tax haven for the very wealthy.
They can use other money for medical expenses and let the money in their HSAs compound, tax-free, then leave the money to their children.
This is one way that more and more of the nation’s wealthy is being concentrated in the hands of a relatively small gorup of famlies.
The Affordable Care Act restricts health savings accounts, and in the future,
I wouldn’t be surprised to see them disappear altogether.
As a nation we just can’t afford tax havens for the very wealthy. Many in Congress realize this– fiscal conservatives as well as liberals.
Primary care should be redefined. I suggest the following.
Reduce the yearly salary of Nurse Practitioners to $80,000.
Reduce the yearly salary of Primary Care Physicians to the same $80,000 since they basically provide the same value to the patient as the Nurse Practitioners do.
Significantly reduce the number of very expensive (to taxpayers) residency places for Primary Care Physicians and increase the number of training spaces to Nurse Practitioners.
By producing oversupply of Nurse Practitioners their yearly income can be reduced to $60,000 or even lower (to be more consistent with the income of other highly trained professionals like engineers or lawyers).
Oversupply of lawyers already has resulted in a appropriately low yearly income.
Allow specialists to have high income. Well done knee replacement or brain surgery has no comparison to one hour of smoking cessation counseling done by Primary Care Physician.
Be transparent and inform patients that the value provided to them by Nurse Practitioners is the same as the one provided by an unnecessarily expensive Primary Care Physicians.
Nurse Practitioners have their own malpractice insurance, can prescribe most medications, and have already proven their place in the modern medicine.
This goes by another name as well, boutique or concierge medicine. For patients with serious chronic conditions who require ongoing management and intervention, the model makes good sense. It does provide financial incentives for the provider to keep the patient healthy while also centralizing coordination of care at a single medical site/provider. My only criticism is that it shouldn’t be limited solely to primary care physicians. In many instances endocrinologists or cardiologists may be better suited to coordinate patient care given their in depth knowledge of the underlying chronic conditions.
Oh, I believe the facts as you present them. I just doubt our system is able to implement anything this good. Sorry for the confusion.
This does nothing for the self-employed or unemployed or small business. May be a great idea for the few large companies, but does not solve the healthcare crisis in this country. Healthcare should be removed entirely from the employment realm.
tomd39, you are right that alone it does not solve the healthcare crisis in this country. However, it is one piece of a much larger puzzle that can and will solve our country’s health care crisis. I could not agree with you more that perhaps the number one reason we have a healthcare cost crisis in this country is because healthcare moved into the employment realm after the end of World War II. It has created the absence of a healthcare market place where economic market forces create what they do best; increase value at the most efficient price. I left running hospitals because of the blatant lack of checks and balances that I saw in what I describe as a healthcare industry, not a healthcare system. That said, employers do have a very real need that is met by offering heath insurance benefits to employees; attract and retain quality employees. The problem is that most employers have this misguided impression that there is nothing they can do to change the the industry, and yet nothing could be further from the truth. Employers want 1) to attract and retain quality employees, 2) healthy and productive employees that better meet customer’s needs, 3) insurance to be there when there is a significant event and 4) a health care system that does not cost an arm and a leg. The problem is, because of the lack of checks and balances, all the financial incentives in the industry are to keep things the way they are. Financial incentives got us in the mess we are in, they will be the key that gets us out of this mess. We have the best medical services in the world, with the proper market forces in place we could create better care for half the price. A great example of this being successful is described in a book I just finished reading, “The Company That Solved Health Care” by John Torinus. (http://johntorinus.com/book/). If you are interested in more pieces to the puzzle on how we can create better health for half the price go to http://www.OrriantVoice.com where you will find numerous articles by those who are leading this charge here in the US.
“…proper market forces …” I am fully convinced that the standard supply and demand model of capitalism does not work for healthcare. We need a paradigm shift to meet the needs of all, not just the employed of major corporations. And if we have “the best medical services in the world,” why is the average lifespan of someone in the U.S. 3 years less than Canada?
murders, low birth weight babys due to drug addicted mothers, less sedentary lifestyle, better diets. Compare obesity rates.
Could it have something to do with affordable health care available to all in Canada but not in the U.S.?
Standard supply and demand does not exist in American healthcare. To have that work, the individual purchaser (demand) must actually be spending their own money. Why is laser eye surgery 1/10 the cost it was when first introduced, and it’s 5 times safer too.
Do you really believe that only the people who die in America don’t have health insurance. If you are diagnosed with a serious illness, your best place for treatment is in the US. If that was not the case, then Americans would go to Canada for health care services – it is clearly the opposite.
Our average lifespan is lower because of our lifestyle, not because everyone doesn’t have health insurance. Everyone in the US has access to health care – it’s health insurance that some don’t (and some don’t choose to) have.
I realize this is an old thread… I couldn’t disagree more with your ideas about how to “fix” health care in this country. You think employers have a very real need that is met by offering health insurance benefits. It should have nothing to do with your employer. Why should my employer get to choose my health care providers by selecting which insurance program to offer? Insurance shouldn’t be lumped by employer groups in the first place. You are complicit with the scheme because your business requires participation through the employer vehicle. You sell your product to business owners as a way for them to save on their costs. The employee has no choice in the matter. You pretend that by participating the employee gets a reduced premium but your sales pitch clearly states (as did your website until recently) that non compliant employees will pay for the program. That is actually illegal and you know it. (Guessing thats why you removed it from your site). I don’t agree with your forced to comply plan. Sounds a little too familiar doesnt it?
I agree with personal responsibility in health care and think HSA’ s are perfect. For those who think they leave out 20% of the population. I would say that is a pretty comprehensive plan that could be augmented by the concierge type plan for the “heavy users”.
The incentives are lined up correctly in a HSA. The incentives are backwards in your business model. You actually win financially when people become non compliant. Which is why you have created mathematical speed bumps to “help” victims become non compliant. i.e. a previous 3 week limit on entering goals when the required check in call is usually done monthly or 6 weekly. Interestingly a 75% participation rate is required to be deemed compliant.
This plan is condescending and insulting to the majority of us who are responsible for their health choices.
People don’t be fooled by this company. It does not have your interests in mind and is no more in your corner than the insurance companies they are in bed with.
I’m happy to tell everyone I know what a horrible company Darrell Moon has created.
This sounds a bit too good to be true.
Some times the best answers are right in front of us. If you would like to know more about the physician in Salt Lake that I mentioned in the article, go to http://www.pfpslc.com/.