Healthcare Debate at Benefits Selling Expo Proves Provocative
April 2007
The third annual Benefits Selling Expo was
held in Dallas, March 21–23, 2007. Highlights included over 400 attendees, 19
sessions, 80 exhibitors, and keynote speakers Sarano Kelly, Scott Halford, and
Tony Dorsett.
by Robin Olson
IRMI
Well-attended sessions covered topics such as health savings accounts (HSAs),
long-term care insurance, retirement planning, disability insurance, voluntary
benefits, sales techniques, selling points of self-funded health plans, limited
medical plans, critical illness policies, and building a better Web site.
One of the most stimulating and entertaining sessions I attended was entitled
"Industry Debate: Heavyweights Tackle Health Care." Participants included the
referee, Dennis Storey, editor of Benefits Selling,
along with debaters Sharon Alt of Alt Benefits Consultants, Inc., and Jim Christenson,
of Emerson, Reid and Co. Each speaker made an opening statement, with the focus
on the pros and cons as well as the future of consumer-driven health care (CDHC).
Consumer Driven Health Care
What exactly is CDHC? This acronym refers to health insurance plans that
allow members to utilize personal HSAs, Health Reimbursement Arrangements (HRAs),
or related medical payment products to pay medical expenses directly, while
they benefit from the protection of a high-deductible health insurance policy.
High-deductible policies cost less per month than low-deductible policies, but
the user needs to pay more up-front monies for medical procedures. One report
indicates that 3 to 6 million people participate in these plans, constituting
approximately 3 percent of the commercial health insurance market.
Studies indicate that people who procure high deductible policies are typically
either in their 20s or between the ages of 50 and 65. Young adults tend to purchase
the coverage if they are unable to access health insurance through their job
or they are self-employed. Older adults often buy high deductible plans to provide
protection against major catastrophic illnesses, such as a heart attack or cancer.
These adults are typically healthier and are more concerned with reducing their
health insurance premiums.
Carol Alt is a strong supporter of CDHC, saying that the current system is
not sustainable due to the rapidly rising cost of health insurance. She believes
this system gives patients greater control over their health. In her mind, CDHC
keeps premiums in check by engaging consumers in evaluation of the costs and
benefits of health care services—particularly for lower-priced services. Without
CDHC as an option, Ms. Alt believes that healthcare insurance will continue
to skyrocket, increasing the chances that the federal government will intervene.
As she states, "consumers must feel the pain with high deductible plans in order
for changes to occur to the system." Her arguments were quite convincing, particularly
concerning the current U.S. health insurance affordability crisis.
Jim Christenson, in contrast, is not a fan of CDHC. He believes that these
plans will not ultimately reduce the costs of health care. Mr. Christenson contends
that consumer shopping for health care is illusory, based in part on his own
experience in shopping for cardiac care. "You can’t shop for price," he remarked,
"because no one wants to divulge their prices. The doctors don’t divulge their
costs, the hospitals don’t divulge their price, and the health insurance companies
don’t divulge their financials. There is a major transparency problem concerning
this issue."
Mr. Christenson related that the median U.S. family income is $46,000. With
this figure as a yardstick, a "$1,000 deductible is much, much too painful."
One of the big concerns is that with a high deductible, many people might delay
in going to the doctor, delays that could ultimately result in a seemingly simple
doctor visit turning into a hospital emergency room visit. In his opinion, high
deductible plans are typically chosen to simply save on the employer’s costs,
not to make healthcare coverage more affordable for the average American family.
Mr. Christenson argues that the representation that consumers are actually
in control of their healthcare costs in CDHCs is deceptive. In many cases, consumers
have little choice about emergency services and numerous chronic conditions.
Most healthcare decisions are delegated to the providers and physicians. Another
concern is that the plans are too expensive to administrate and too complex
for consumers to understand. Unfortunately, he did not offer strong alternatives
to these plans in the wake of rapidly increasing health insurance costs.
So how well do CDHCs actually work? A 2006 Rand Corporation study found that
most employers save at least 10 percent on their health costs. A small percentage
reported savings as much as 25 percent, although it can be argued that some
of this "savings" may simply be a shift in expenses to the employees. The Rand
study went on to state that employees enrolled in the plans appear to be cutting
back on their health care. Studies indicate a 4–15 percent decrease in spending
for those without an HSA in their plan and a 2–7 percent reduction for those
employees with an HSA. The report concluded that some consumers, in fact, did
not go to the emergency room for problems that did not require it. Conversely,
some people were delaying the necessary care and thus potentially endangering
their health.
The good-natured repartee between Ms. Alt and Mr. Christenson eventually
came to a conclusion, with each continuing to make their arguments for and against
CDHCs. The "Industry Debate: Heavyweights Tackle Health Care" session was certainly
a hit with the attendees. Although neither contestant scored a decisive knockout,
I would give Carol Alt the decision by a hair.
Opinions expressed in Expert Commentary articles are those of the author and are
not necessarily held by the author’s employer or IRMI. This article does not purport
to provide legal, accounting, or other professional advice or opinion. If such advice
is needed, consult with your attorney, accountant, or other qualified adviser.