Long time lurker, some time commenter, first time diarist. Please bear with me.
In an article from the June 2009 issue of HR Magazine entitled "Redirecting Health Coverage," Robert J. Grossman presents a case study of Humana, which moved all its employees to a consumer-directed healthcare plan (CDHP). The article is trying to be an upbeat success story, geared to the beleaguered HR executive who is struggling with the rising cost of providing health insurance to employees. However, I just don't have enough spackle to cover the holes, not the least of which is the grand irony of one of the largest insurers in the country finding the cost of providing said insurance to its own employees unsustainable.
Article is here. A few excerpts follow.
I've been having a very hard time keeping the fair use block quotes down to a minimum, but here we go.
In the beginning....
It was 2000, and Humana, one of the largest U.S. health insurers, was up against a cash crunch on health costs, as many clients were. Annual outlays were $51 million and growing; the previous year, costs had jumped 19 percent. Hathcock told McCallister to plan for a 15 percent surge and to brace for more double-digit increases down the road.
Wait, Humana is up against a cash crunch providing health insurance? Aren't they the ones who set the rates? Can't they just charge themselves whatever they want? Where's the employee discount?
Anyway, they set out to devise a new, more cost effective plan. The result was a Consumer Directed Healthcare Plan (CDHP), with a companion HSA (health savings account), which is sort of like a 401(k) for medical expenses. The plan goes something like this.
OK, you're sick or have an accident. But before you get the care you need, you better have done your homework. No, wait, you better have prepared a dissertation. And a business plan, because two of the components of the new program are "consumerism" and "financial literacy."
Consumerism. The aims are twofold: to transform health care "users"—those who give little thought to the necessity of or the actual costs of medical services—into informed consumers who seek to determine the value, quality and effectiveness of health care before they buy it, and to make sure employees have something to gain financially by acting prudently. Consumer-directed health plans (CDHPs) set high out-of-pocket deductibles for participants before the plans begin reimbursing for outlays.
"Users" vs. "consumers" is a false premise in this situation. Everyone should be able to "give little thought" to the necessity or cost of services. Health care should just be there when we need it. It's a basic human right. It's not like buying a toaster or a TV.
And how is one supposed to "determine the value, quality and effectiveness of health care before" one buys it? If you get sick or injured, you don't know what you need, until you need it. Do I have to research chemo vs. radiation now and decide the efficacy and cost of each just in case I get cancer?
Financial literacy. Plan participants should be given tools and information for analyzing the actual costs of their health care options and should be encouraged to spend enough time at the task, McCallister says. "The average person spends 16 minutes each year deciding what benefit plan to choose. How can anyone make an informed judgment when they spend so little time?"
Hey, I'm all for financial literacy and informed judgment, but if you or a family member is sick, you should be concentrating on getting well, not adding stress by having to "analyz[e] the actual costs of . . . health care options," while you're also doing battle with the insurance company, which you know you will. You should be using your informed judgment on the treatment options you're discussing with your doctor, not gambling with your health and finances deciding whether you can live with the $3,000 or $5,000 deductible.
CDHPs are just a complicated, administratively burdensome way to push the cost back on the employee. How administratively burdensome? Look at the labor Humana has to put in just to keep explaining things.
In addition, Humana has a team of 275 employees—selected from 600 volunteers—who answer questions. Last year, recruiter and team member Melissa Marciszko spent about 30 minutes each, one-on-one, with 200 associates. "When someone is really upset," she says, "I try to explain the program to them and get their buy-in. I put things in context. They think they’re getting less than they did before under their old coverage, which may or may not be true. Many will break even or even save money. But even if it costs them more, they’re still getting something while a lot of employers are eliminating health care coverage totally. And they have total security after they’ve spent the deductible."
Bold is mine. You're just lucky to have this crappy plan at all. And jeezus on a popsicle stick, how much is it costing Humana anyway to have 275 "volunteers" taking time away from whatever it is they usually do to have to keep explaining the plan and mollifying the other employees?
Sprinkled throughout the article, hoping we won't notice I suppose, are references to grumbling in employee surveys, pushback, complaints (only a few thousand though).
A side bar titled "Consumer-Directed Health Plans: By the Numbers" wraps up with this:
Critics of the CDHP approach may argue that it’s just a cost shift from employer to employee, but it’s not, says Ted Nussbaum, director of Group and Healthcare Consulting in North America for Watson Wyatt in Stamford, Conn. "Employees pay more at the point of care but less in premiums. Overall, they may pay a little more, but it’s not a significant amount. More important, it’s a way to lower costs overall by asking employees to take better care of themselves."
Again, my bold. Wait a minute Ted, you just said it's not a cost shift and then you said overall the employees may pay "a little more." And you left out all the time the employee has to spend doing analyses, cost comparisons, managing their HSA and submitting claims for reimbursement.
It was surely not the intent of this article, but Humana's example makes a clear and cogent case for single payer health coverage.