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TECH/CONSUMERS/HEALTH PLANS: Not much employer backing for HSAs

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Those of us who feel that the CDHP movement is largely being used as cover by employers for reducing the benefits (i.e. compensation) that they’re paying employees will not be too surprised by this new analysis. The source, Vimo, though is somewhat surprising for two reasons. First, it’s a little technology start-up that’s providing comparison shopping for health, and second—as is clear when you listen to the interview I did with CEO Chini Krishnan—they are more than favorably disposed to the notion of individuals doing their own shopping for not just health insurance but all types of medical goods and services. So it’s hard to imagine them benefiting from bad news about HSAs. Yet what they’ve discovered, confirming research done by the more usual suspects such as HSC,  is that as employers convert their benefit offerings over to the HDHPs, they are not funding their employees’ HSAs.

Here’s the key part from their analysis:

First, the difference (in numbers) between HDHP (3,168,000) and HSA (820,000) means that there are a lot of individuals within the group and individual markets who aren’t opening HSAs, even though they’re entitled to them. Second, HSA asset levels are also lackluster. The same AHIP study lists the average HDHP deductibles as HDHPs $2,378 for single coverage and $4,760 for family coverage. The average HSA balance in the Inside Consumer Directed Care survey ($1,180) is less than fifty percent of the average deductible for single coverage.The simple fact is that HSA creation and asset levels are lagging HDHP enrollment by a significant margin.

And realistically given that some people are funding their full HSAs, given that the average is well below half the maximum, the median HSA account probably contains close to $0. What’s going on then? Well Vimo knows the answer.

Certainly there are immediate and significant savings available when companies or individuals migrate to HDHPs. This cost differential can be pocketed as a one time gain, or it can be used to fund most or all of the HDHP deductible by depositing the difference into an associated Health Savings Account. It would seem that many employers are opting for the one time gain.

If you’re in a business which depends on these accounts and CDHPs being adopted by a bunch of happy consumers, you can see that there is plenty of potential for angst amongst employees who discover that the move to the CDHP is basically telling them that they have to dip into their own pocket for something the company used to provide. In what is a very considered and well  put-together report—which I’d recommend you read all of—Vimo discusses the impact of this “transfer” on both consumers and employers. And true to their business model they are squarely on the side of looking out for consumers and employees.

I approve of them telling the truth, even if it’s a truth that opponents of the CDHP movement will highlight. After all, if this thing is done wrong, the longer term political consequences may be a future in which there is no such thing as a high-deductible plan or HSA—and that will leave Vimo with a whole different business problem.

HEALTH PLANS/POLICY: Underwriting–pernicious and ridiculous

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Lisa Girion in the LA Times kicks butt and takes names, exposing the individual insurance market for the fake gong-show that it is. She found a member of the LA insurance commission rejected by all three major health insurers in the state because of asthma. Of course THCB readers got my own extremely personal perspective on this process last year when one insurer totally rejected me, while another gave me the best underwritten rate—while both were looking at the same information!  That’s even better proof that the current system is a lottery.

We need one pool.

HEALTH PLANS/TECH: Looks like the Deal’s over–or is it?

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So it looks like from Justen Deal’s website that he’s essentially going to be fired in absentia by Kaiser. My assumption is that he knew this was going to happen all along, and was essentially preparing the way for some kind of entry into politics and/or law career. Kaiser too seems to yet again be getting unnecessarily gummed up about the whole thing—for example according to Deal having people from the insurer side handle the case, rather than from the medical group which he works for.

I don’t know much about employment law, but I do know that California is an “at-will” state, which means that you can fire anyone for basically any reason. It’s obvious from Halvorson’s reaction, let alone the exasperated comments from Permanente’s Andy Wiesenthal on THCB, that they had no further interest in communicating with Deal after he went public, and didn’t want him around. So I don’t see why that didn’t happen straight away. Making up a (fake?) policy about “not abusing the email system” is basically a waste of time.

Deal seems to be appealing to a base of supporters within KP in order to “right” the ship. But if there really is malfeasance and/or an Enron-type meltdown going on within KP over HealthConnect–as opposed to normal teething problems from a huge IT installation (which as you know I suspect to be very, very unlikely) –the best route would be to go to those people who do oversee non-profits. That is regulators and the politicians who supervise them.

Given the various issues that Kaiser is having with the State DMHC over other aspects of its behavior , I suspect that Deal must be involved in some protracted discussions with local politicians. After all if there really is financial mismanagement going within KP, then Chuck Grassley is interested in this type of thing, as is Pete Stark.

If on the other hand, Deal is not pursuing those options, then I’m a little curious as to what this whole thing has been about. As an appeal to the massed ranks of KP employees about HealthConnect might seem appropriate if it was a worker’s collective, but it’s hardly likely to sway the board. Unless of course there’s something going on in the works that we can’t see.

HEALTH PLANS: Embarrased non-profit insurers still trying to hide the money

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A long time ago (1993)  in a universe far, far away pharma companies were somewhat concerned about public perceptions of their profits. Bob Leitman (long time at Harris, now at Greenfield) told me how, on a visit to a pharma company long subsumed into a bigger one, he went to the bathroom in the new building. He was staggered at the quantity of marble inside. When he remarked as much to his client, the reply he got was “well we had to hide the money somewhere!”

Apparently lots of non-profit insurers are now having the same problem

Blue Cross of Northeastern Pennsylvania said it will spend $175 million to bolster health care systems in the region and support a proposed medical school in Scranton, though the use of the money drew fire from critics of the health insurer’s expected $420 million surplus.

HEALTH PLANS/TECH: PHRs–Can this woman ever tell the truth?

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Time for the Karen Ignagni lie of the day.

It comes in a session during which AHIP and the Blues talk about their sponsorship of a common model for PHRs (or at least for payer-based PHRs). It’s hard to know how she manages to slip in a whopper during a session that’s relatively non-controversial—or at least one supporting an initiative that most of us think is a good idea. (Even if there are grave doubts as to whether health plans really believe in portable health data or records that can be moved from plan to plan, or even could put it together if they did believe it—it’s clear that Kaiser, which is way, way ahead of these guys, has no idea about portability).

Here’s the lie. She says that there are 70m people using online PHRs now. When called on it, she doesn’t bother to justify her numbers. She then says that soon 100m will have access to these from health plans. That number is so wrong, it’s just amazing. Harris and Forrester both think that much fewer than 5% of the population (e.g. less than 15 million) have got PHRs, and Markle and Manhattan disagree but both say that the potential market is between 20m and 60m. So how does she come up with 70m people having one already? Who the hell knows? It must be a derivative of the number of members for whom their plan has a web site they can create an account on (most of those Wellpoint members with WebMD, by the way). I’m prepared to bet her annual salary that the total number of people who have ever actually visited a health plan web site is less than 70 million. After all that would constitute more than 50% of all Internet users.

And would it really hurt her to tell the truth? Which is that health plans have been really weak about creating PHRs and could have done it 5 years ago and chose not to! (Yes, I know I’m bitter). Is their record thus far really that embarrassing? (It is, actually, but no where near as embarrassing as the rest of the industry’s performance in the last 5 years!) What’s changed is that now they realize the time has come to do something before it gets done too them, and now they say they will get us to the PHR land there very quickly. I happen to think that they have a good shot, but can’t for once Ignagni just tell the truth about the progress so far? I guess we know the answer.

(Note: slight edits to end para made 12/15 when I noticed it didnt make sense!)

HEALTH PLANS/POLICY: Kaiser Permanente’s plan to cover all Californians

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Kp
The plan is interesting in that it seems to basically contradict the AHIP plan that Halvorson was touting last week. That one called for subsidies for low income workers to buy into private health plans. This one calls for a state sponsored first dollar coverage plan in addition, plus an individual mandate plus a pay or play tax, plus two different pools for the non-poor to buy high deductible plans from (again both state sponsored). At least I think it’s what they’re saying. The major problem with this plan is that it’s so damn complicated I couldn’t figure out which special interest group was going to get the angriest, as it gets ignored by the rest of the public. It is worth noting that pay or play was turned down at the ballot box (2004) recently in this state and the version that was turned down had an exemption for small businesses. No such exception would exist under this plan. So maybe some anger (read: opposing political contributions) there…(are you watching WalMart?)

It’s also worth noting that they, like the Mass guys and everyone else look at the Medicaid and SCHIP enrollment levels, say “why don’t all those poor people just enroll in the plans that they’re already entitled to enroll in?” They seem to see that as a source of free (Federal) money. Well if they all did, then that money would actually have to come from somewhere…which is why those programs are under-enrolled to start with.

Still this is a serious effort. They’ve even done sums and everything. And we’re starting to count these policy documents by weight now, which indicates that it’s all getting somewhat serious and is picking up as a political issue.

POLICY/POLITICS/HEALTH PLANS: Igleheart, Glasscock, pussycats

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After a little prompting (i.e. 30 minutes after I posted a blog comment asking why it wasn’t up) Health Affairs has posted a letter I wrote two days ago in response to John Iglehart’s interview with Larry Glasscock in its web exclusives section. I already had some in depth discussion about that over here on THCB, so my letter attempts to use the rifle rather than the shotgun. Let me (and HA) know what you think.

HEALTH PLANS/POLICY: John Igleheart is a pussy

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In a Conversation With Larry C. Glasscock, the CEO of Wellpoint, John  Igleheart has either been massively restricted by Glasscock’s PR handlers or has revealed himself to be a complete pussy.

A little history: having been a senior exec at CareFirst (Blues of DC), Glasscock took over the fast growing regional Blues plans based around Anthem BCBS in Indiana, took them for-profit and made himself a fortune. A great American success story.

He then merged Anthem with the big other for-profit Blues agglomeration, Wellpoint which was run by Len Schaeffer, in 2005. I’ve had a fair bit to say about the variance between Len Schaeffer’s high-fallooting rhetoric and the actual on the ground performance of his company. Glasscock appears no better. And in many ways, he’s been much worse.

I’m not saying that Igleheart should necessarily have gone after him for the fact alone that he made $25m last year (not to mention the millions more in stock)—after all Wellpoint stock has done very well. But given that certain other health plan CEOs are in some hot water for their outright greed and fraudulent behavior, it might just have come up.

Continue reading…

POLICY/HEALTH PLANS: Yet more debatable data on CDHPs

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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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