Consumer Driven Healthcare

Impact of Unemployment and the Economy on Single Payer System

The Healthcare Blog posted an interesting article on the impact of unemployment rates on the push toward a single payer / universal healthcare system. 

Hit the jump here: [The Healthcare Blog]

How will HSAs fare in today's economy?

Given the recent stock market contraction and the “state of emergency” in several financial services firms, one has to wonder what impact this might have on the adoption of HSA accounts.  Let’s look at it from the stakeholders’ perspective:

Consumers
With tighter times it makes sense that “spenders” will increase and “savers” will decline and that elections will be reduced to pay for food and fuel at home.  It is also likely that some consumers who have invested their HSA dollars in the stock market will lose enough to create the unplanned gap in coverage that many employers have feared in the past. 

Employers
With budgets tight they will seek solutions like HSAs to reduce their overall healthcare costs and/or shift these costs to employees.  On the other hand it is possible that employers and consumers may be concerned about putting these healthcare dollars at risk in the stock market or with the financial health of the banks that hold these assets.

Health Plans
If you believe like I do that even after the election there will be little change in the overall “format” for healthcare in the U.S., it is likely that costs will rise and covered lives will decline, making low-premium plans and thus HSAs a more sought-after offering.

Banks
There is a fairly consistent need for deposits, and HSAs are a natural way of boosting balance sheets.  On the other hand, capital-strapped banks are in no position of pushing out new healthcare products.

To summarize, poor economic conditions and reduced confidence in our financial institutions will increase the number of HSA accounts but reduce contributions, balances, and the overall satisfaction of CDHPs.

NCPA White Paper: Everything You Think You Know About Health Care Is Wrong

This white paper from Linda Gorman and R. Allen Jensen at the National Center for Policy Analysis does a nice job of assessing some of the myths and stereotypes about the healthcare system in the U.S. 

If you are in the heatlhcare space, I will bet that you have heard (or even proclaimed) at least a few of these.  Consumers as well as "the Industry" both need more information, more review of that information by experts, and more visibility of it, to make good decisions about which solutions will ultimately reduce / flatten cost and increase / maintain standard of care.

All of these claims are refuted:

• People without health insurance have no access to care. 
• Insuring people will eliminate uncompensated care. 
• Health insurance is unaffordable for individuals.
• Medicare has lower admin costs than private insurers, whose costs are as much as 30 percent of revenue.
• Electronic Medical Records reduce cost and increase quality. 
• Evidence-based medicine reduces cost and increases quality.
• Care coordination and case management lower costs.
• Because the U.S. spends the most per capita on healthcare, it "spends too much."
• The U.S. spends more money and has poorer outcomes than health systems in other countries.
• More spending on the indigent will improve health outcomes.
• Integrated health care systems will lower costs.
• People are better off if their health insurance policies have lower deductibles and pay for routine care.
• The uninsured get their care at the emergency room, driving up costs for everyone.
• Centralizing administration will lower costs.
• Insurance company profits increase the cost of care.
• More peventative care for individuals will save money.

The authors prescribe three components for successful reform:

1. A vibrant and competitive free market for private health care, with wide choices for treatment and various ways to pay for them, and a wide choice of private health plans.
2. Consumer-directed health care initiatives are superior to first-dollar coverage, especially under insurance programs designed and controlled by government.
3. A review of government control of medical practices is needed to substantially reform government programs, introduce incentives that eliminate waste, and reduce costly and unneeded administrative and regulatory burdens.

An interesting read with solid analysis behind it.  [State Health Care Reform:  Key Questions and Answers via NCPA]

4th Annual White House HSA Briefing: The Numbers

There were quite a few nuggets of data from the 4th Annual White House HSA Briefing that may provide some guideposts.

The points came in fast and furious - I remember at one point in the meeting wishing I had brought a tape recorder. 

Also, I have done my best to seperate the facts from the prognostications. 

Credits for this information go to:

• Julie Goon, Special Asst. for the President for Economic Policy
• Steve Preston, Small Business Administration
• Tom Reeder, U.S. Dept. of the Treasury
• Congressman Paul Ryan R-WI
• Congressman Chris Cannon, R-UT
• Roy Ramthun, HSA Consulting Services
• Bob Patricelli, Evolution Benefits
• JoAnn Laing, Information Strategies (including predictions for '08)

Coverage

• 4.5 million consumers with an HSA at the end of 2006 (Old news - '07 numbers available soon)
• 27% of those were previously uninsured - a key stat demonstrating that HSAs are a potential solution for the uninsured

Broker and Agent Adoption

• In 2006, <10% of brokers had HSAs in the initial proposal but 50% had them in their final proposal
• In 2007, 26% of brokers had HSAs in the initial proposal and 69% had them in their final proposal

Custodians

• In 2005 there were 48 HSA custodians
• In 2007 there were 2000+ HSA custodians

Buyer Demographics

• 79% of healthcare decisions, including the decision to open an HSA are made by females
• Of minorities, Asians are more likely to open an HSA, and African Americans are less likely

Employer Offerings and Funding

• 24% of employers offered HSAs in 2007
• 40% of employers provided funding for an employee HSA, and 21% funded 50% or more of the year 1 deductible (Treasury Dept.)
• By 2012, employees will be paying 50% of their health insurance
• Employers, including government at the national, state and local levels as well as large public companies like GM, the New York Times and others, are using HSAs as key bargaining tool
• Employers are increasingly altering their plans to attract the healthy and avoid the sick

Assets and Balances

• The average balance of HSAs that are 2 or more years old is $4,300 - the prediction last year for this statistic was $4,400
• Some legacy banks are seeing average balances of $4,900
• Some investment banks ("Savers") have average balances of $7,600
• The current estimate is that in the U.S. you will need $225,000 in retirement to pay for healthcare

Line of Credit

• There was a 4x increase in credit lines on HSAs
• A year ago this was 1 in 80 accounts, today it is 1 in 20 accounts.

Insurance / Payor Impacts

• Expect to see lower premiums on HDHPs because of lower loss claim rates
• It is also predicted that multi-year insurance products will be launched by some carriers

Contrbution Limits

• Contribution limits for 2009 are estimated to increase to $3,000 single / $5,950 family

Compliance

• There are definitely changes coming to the non-descrimination and comparability rules very soon.

How Do They Compare?

ReformPlans.com (The World Health Care Congress' Forum) has a nicely summarized comparison of the key differences between the candidates, interest groups, state plans, and even proposals in play in other countries.  Hit the Jump Here: [ReformPlans.com Comparison Grid]

BearingPoint: Universal Health Coverage? Lid...Blown...

BearingPoint, a consulting firm at the forefront of the convergence between healthcare and financial services, has made some bold predictions about the impact a Universal Healthcare plan (at the core of several candidates' healthcare strategy) would have on HSA growth.  Along with a nice in-your-face summary of the daunting issues facing the industry, they published what they see in the crystal ball for the year 2012.  Here are the numbers to remember:

• 30%:  Amount of payer revenue spent on administrative overhead
• 30%:  Enrollment in HDHP and HSA plan designs for commercially insured population
• Huge Receivables: The impact this will have on healthcare providers' need for real-time access to eligibility information
• $4 Trillion: Healthcare spending - much of which will be moving over the card networks
• $200 Billion:  The HSA assets that banks and investment managers will be overseeing
• 87%:  Employers offering consumer-directed accounts

Read on for the full press release.  [via BusinessWire: BearingPoint Predicts Rapid Expansion of Health Savings Accounts if Universal Health Coverage Programs are Adopted]

Status Quo - Even Tougher Than Arnold?

When I read this IBD article it immediately created a painful visual of good 'ole Uncle Sam sitting on a thin steel fence with a wince on his face.  The political argument between more government involvement, universal healthcare, price controls, and competition, consumerism, and tax incentives seem to make the fence thinner and sharper every year. 

Status quo, you are a strong and worthy adversary. 

Even though there were a number of things I had issues with in the Governator's seemingly terminated-before-the-movie-even-started (sorry) plan to reform healthcare in California, you have to give him credit for putting a real plan together and trying to affect change.  At this point any reform plan is going to have opponents lined up for miles - even those that agree with the underlying strategy will vote against reasonable or compromise legislation these days if they feel it "doesn't do enough". 

In any case, no one wants to pay another dime for healthcare, not employers, not taxpayers, not insurance companies, not the providers, not you, and surely not me.  Reducing costs is the only way to change the equation.  The good news is there are signs that the sharp trends higher are slowing, but in order to reverse it in this generation some radical plans from some (unelectable?) radical thinkers will be required.  [Investor Business Daily: A Clear Choice]