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September 2006
Pricing Health Care? It's Not That Easy.
Health insurers are aggressively marketing medical policies with high deductibles which are intended to motivate Americans to shop for medical care, as they do for cars or computers. But basic data about what services cost generally aren't available. Medical providers and insurers consider this to be highly sensitive competitive information, and their contracts require that it remain secret. That leaves consumers with more financial responsibility for their care but without the tools to manage these expenses.
This wasn't a problem until recently - currently tens of millions of workers with traditional insurance are bearing more of the cost of medical care as benefits are reduced, a long-term trend. Also new programs such as consumer-driven health plans shift more financial responsibility to individuals and families, forcing them to pay more attention to what they're spending.
Government and insurance industry officials are moving to address the information gap. Medicare has taken a leadership role in making data about the cost and quality of medical care more readily available. In a groundbreaking move this spring, Medicare began posting on the Internet what it pays for 30 commonly performed hospital procedures, with similar data for ambulatory surgery centers due out later this year.
Also, 32 states, including Illinois, have passed laws requiring hospitals to report what they charge for various procedures, according to an April survey by the American Hospital Association. But most states' efforts are hobbled by a notable shortcoming: The data will reflect the list prices for medical procedures, not the discounted rates negotiated by insurance companies on behalf of their customers.
The obstacles to making medical prices available are significant. The health-care industry has a strong tradition of secrecy and is enormously fragmented and is worried that pricing data could be misinterpreted. The greatest impetus for change, it turns out, is coming from insurance companies eager to sell new policies and gain a competitive advantage in the evolving marketplace.
They're trying several approaches. United Health Group plans by the end of the year to assign restaurant-style ratings to all hospitals in its networks based on their level of "cost efficiency" and quality of care. In another approach, Aetna launched a pilot project a year ago that allows customers to view negotiated prices for primary care doctors and specialists. Prices were listed for more than 100 procedures cities across the country.
The Chicago Tribune, August 10, 2006
Domestic Partner Health Benefits Gain Ground
Slightly more than half of Fortune 500 companies now offer domestic partner health insurance benefits, according to the Human Rights Campaign Foundation. As of June 1, 253, or 51%, of the Fortune 500 companies provided benefits to employees' same-sex domestic partners, according to "The State of the Workplace for Gay, Lesbian, Bisexual and Transgender Americans 2005-2006" report released.
Other survey findings include:
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86% of Fortune 500 companies now include sexual orientation in their nondiscrimination policies.
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Eighty-one Fortune 500 companies now include the terms "gender identity" and/or "gender expression" in their nondiscrimination statements-10 times the number that had such policies in 2001, the report found.
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Seven states now prohibit discrimination in the private sector based on both sexual orientation and gender identity or expression, and 10 more on sexual orientation alone.
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11 cities and California have enacted an "equal benefits ordinance" that requires contractors doing business with the public entities to provide health care coverage for the domestic partners of their gay and lesbian employees.
Business Insurance, June 29, 2006
Family Health Care Costs Rise 9.6%
A recent report from Milliman Inc. stated that health care costs for the average family of four enrolled in a typical employer-sponsored preferred provider organization plan grew 9.6% from 2005 to 2006 to a national average of $13,382. This year's increase follows four previous years of increases averaging 9.7%, according to the "Milliman Medical Index 2006."
The report found that the biggest contributor to the increase was outpatient treatment costs, which surged 12.6% between 2005 and 2006. This was followed by hospital inpatient costs, which grew by 9.3%; pharmacy costs, which climbed 8.3%; and physician costs, which increased 5.9%.
Of the $13,382 total average spending, employers paid about $8,362, while employees paid about $5,020, including $2,810 in payroll deductions for premium contributions and $2,210 in medical cost-sharing including co-payments and deductibles. Employee cost sharing was highest in pharmacy benefits, at about 24%, compared with overall average medical cost sharing of 17%, the report noted.
Despite the increased cost sharing, however, employees' share of medical cost dollars has increased at a slower rate than employers' costs in every year since 2002 except for 2003, the Milliman report pointed out.
The medical costs measured by Milliman included the number, type and cost of health care services in four areas: inpatient hospital, which represented 30% of total costs in 2006; outpatient hospital, 16%; physician services, 36%; pharmacy, 14%; and miscellaneous services, which represent 4%.
Business Insurance, June 30, 2006
HSAs May Not Deliver Company Savings
A new study on Health Savings Accounts (HSAs) stated that they may not provide the medical spending relief some executives expect. Sponsored by the Commonwealth Fund and published this week in the policy journal Health Affairs, the study, "How Much More Cost Sharing Will Health Savings Accounts Bring?" concludes that compared to traditional healthcare insurance, HSAs - and their accompanying high-deductible health plans (HDHP) - would reduce cost sharing among many employees, rather than stimulate it.
The study says that typical health plans in the market today already incorporate substantial cost sharing, and companies conduct periodic reviews of their traditional plans to control consumer spending. So the reduction in medical spending that most company executives expect from implementing HSA/HDHP will not likely materialize.
What's more, the only growth in cost sharing is likely to come from the midrange spenders, those employees that spend between $700 and $6,100 on health care during the year. More important, the workers responsible for half of all medical spending would see no change, or a decline, in cost sharing at the margin and on average. That's because introducing maximum out-of-pocket limits while raising deductibles - a trend that is happening in many companies - allows big spenders to quickly reach the threshold at which insurance coverage kicks in.
The new findings probably won't stop the migration to HSAs/HDHPs, however. In January, enrollment by employees and individual consumers in HSA-eligible insurance plans topped 3 million, more than triple the number in March 2005, accounting for 2 percent to 3 percent of all health-care insurance plans in the country according to America's Health Insurance Plans, an association of insurers. The percentage is expected to rise to 25 percent in the next five years.
CFO.com, July 17, 2006
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