The 2013 adjusted figures for high-deductible health plans (HDHPs) and health savings accounts (HSAs) included in this Client Action Bulletin were released by the IRS earlier this year and are provided here for convenience.
According to a survey by Americas Health insurance Plans (AHIP) the number of individuals insured by high-deductible health plans (HDHPs) in conjunction with health savings accounts (HSAs) grew 18.4% this year to 13.5 million from 11.4 million in 2011. AHIP data shows that this type of consumer-driven health plan (CDHP) has increased gradually since it was introduced in 2004. Read more about AHIP’s survey at Workforce.com. You can also read the entire survey here.
One question arises from the aforementioned survey: Do CDHPs help reduce costs? Jack Burke and Rob Pipich’s detailed analysis on high-deductible plans found that when adjustments are made for typical risk and benefit factors, CDHPs deliver cost savings that are modestly better than non-CDHPs. Here is an excerpt:
“Most employers we examined showed savings in the CDHP plan before adjusting for risk and plan design characteristics; however, the bulk of the apparent savings was explained by these adjustments. After adjustments, the reduction in combined employer and employee costs averaged 4.8% before accounting for the utilization-dampening impact of the high deductible. Accounting for the high deductible made the reduction 1.5%. Some employers showed significantly greater reductions.”
This 1.5% reduction is what’s known as “induced utilization” and is a key element of CDHPs. For more, read Milliman’s complete Consumer-Driven Impact Study.
Given that the reform law mainly reforms the insurance market, it’s possible consumers believe insurers are going to be the best reference for what is changing, said Tim Lee, principal and consulting actuary in the Houston office of the consulting firm Milliman. “Nobody in any industry understands it better than people who work in the insurance industry.”
Robert Zirkelbach, spokesman for the health insurance trade group America’s Health Insurance Plans, said insurers have done what they can to help lower the cost of care, including creating disease management programs, providing incentives to take generic drugs and investing in health information technology.
Lee called the survey results about who should reduce costs “a combination of funny and surprising.”
He said there could be a couple of explanations for so many people saying insurers should take responsibility for cutting health care costs: One is that they may remember insurers’ success at cutting costs in the heyday of managed care in the 1990s, and they are willing to see some of those methods return.
Lee said consumers will require a great deal of education to remain open to changes that might keep them from seeing the doctor of their choice or create more hoops for their doctors to jump through.
“Ultimately, it’s going to be up to the doctor, the hospital and the consumer to control the cost,” he said.
But it might be giving the public too much credit to think they are ready for insurers to bring back tightly managed care, Lee said. It’s possible that consumers are considering only their own insurance premiums when it comes to health care costs: “What they may be thinking is, ‘Health care costs are manifested in my premium rate … so clearly the health insurance company must be responsible.’ “
Medical tourism has gotten a lot of ink. International healthcare expert Lisa Beichl explains how it is now becoming more accepted:
A $250,000 heart surgery in the United States costs approximately US$15,000 in India, including airfare and accommodations. As a result, a number of major U.S. insurance agencies and provider companies are offering coverage for a range of medical procedures performed internationally. It is easy to imagine how this could lay the foundation for a growing treatment alternative and possibly, depending on variables such as the future of Medicare and the concept of universal coverage, a sea change in the U.S. healthcare industry.
Going abroad for inexpensive medical care sounds like a great solution upon first inspection, but there are possible perils:
Important factors such as hospital reporting, medical residency requirements, the use of evidence-based medical guidelines, and even pharmaceutical nomenclature vary worldwide, and so a critical component remains unsolved: how to standardize the way patients, providers, and payers assess and manage the risks associated with this new medical frontier.
Mr. Schreiner is what’s known in the health care world as a “medical tourist.” No longer covered under his former employer’s insurance and too young to qualify for Medicare, Mr. Schreiner has a private health insurance policy with a steep $10,000 deductible. Not wanting to spend all of that on the $14,000 his operation would have cost stateside, he paid only $3,900 in hospital and doctor’s bills in Costa Rica.
The concept may be compelling, but there are risks. Health consumers are still limited in their ability to compare quality of care in different countries, though sound evidence is emerging. Lisa Beichl, international healthcare expert with the Milliman Care Guidelines, discusses this dynamic in a recent issue of Health Perspectives.
Ron Sims, Rich Moyer, Gail Graham, and Scott Armstrong continue to respond to Wednesday’s question about adoption of electronic health records.
Ron Sims: The original question was, “Who is going to come with the standards?” And I believe you’re going to see the Federal Government move on them with a great deal of aggression over the next couple of years, and there’s several reasons why. If you look at the issues that the three car companies face, one of the things that they’ve been raising on a pretty consistent basis is their healthcare costs, not only their pension costs, but their healthcare costs.
Will Fox, Principal and Consulting Actuary at Milliman; Scott Armstrong, Group Health CEO; Joe Scherger, MD, Consulting Medical Director at Lumetra; and John Hammarlund, Regional Administrator for the Centers of Medicare and Medicaid Services, all address this question.
Q: Where is the return on the investment for the patient’s pocketbook resulting from the savings involved in health care information systems and electronic health records? When can patients see some tangible, monetary benefits themselves? We’ve talked about benefits to the providers and so forth, what about the patient?
Will Fox: I think that’s a big key. How often, if ever at this point, are patients told what these things are going to cost? When they get an X-ray for back pain, do they know how much it costs?