Texas Coalitions Inc.

Health Policy Matters® Price Transparency

2006-02-24T15:45:00.000-06:00

The need for price transparency is the hottest conversation right now in the world of consumer directed health care. I hear pleas for more information in my radio interviews, from people writing us through our website, and in talks around the country, most recently yesterday in Milwaukee.
Coincidentally, the Milwaukee Journal Sentinel carries an article today about Humana getting into the pricing act, allowing subscribers to compare estimated prices for 30 inpatient and six outpatient operations and tests.
"The health plan's Web site, for instance, shows that prices for a colonoscopy can range from $940 to $1,150 at Milwaukee Endoscopy Center to as much as $2,500 to $3,050 at Froedtert Memorial Lutheran Hospital and $2,890 to $3,530 at Columbia St. Mary's, Ozaukee Campus," the Sentinel reports.
"It also shows that the price for a hip replacement can range from $20,600 to $41,800, depending on the hospital."
Aetna was the first major insurer to disclose its negotiated prices to consumers, beginning in Cincinnati last August. These Aetna members can go online to find out the negotiated rates for hundreds of office visits, diagnostic tests and minor procedures "provided by 5,000 individual physicians and physician groups in Cincinnati, Dayton and Springfield, OH, Northern Kentucky and Southeast Indiana."
For instance, an internist in the University of Cincinnati area charges Aetna or its members $161.32 for a visit from a new patient with moderate to severe problems, while another physician a few blocks away charges $132.23 for the same office visit. The first doctor also charges $41.89 for a chest X-ray taken from two angles, while the latter's price is $34.34.
The next phase in price transparency must come directly from physicians, who voluntarily post their prices so consumers can know directly and up front the full cost of a visit or procedure, and from hospitals. Hospitals will be forced to figure out what their costs actually are so they can give price-conscious patients an estimated price range for procedures.
One of the forces driving this will be insurance policies that pay a fixed fee for procedures, giving policyholders an incentive to find the best doctors and the best value. (And people will be smart enough not to go to the cheapest provider if his track record is bad and they wind up back in the hospital with complications.)
Competition will surely drive this movement: Hospitals in particularly competitive cities are beginning to see the opportunities to offer package pricing for surgeries to patients from other cities and states and to pick up the price of a hotel room for a family member to stay during the hospitalization.
And this is old news, but hospitals should not discount the emerging competitive threat of medical tourism from sophisticated modern hospitals in Thailand, India, and even the Carribean, as 60 Minutes reported last year.
President Bush clearly sees the pricing issue as the linchpin to the success of Health Savings Accounts, hosting a public forum on the issue and follow up meeting last week at the White House with the CEOs of the major insurance companies.
He had "a little visit with people in the insurance industry and the healthcare industry and the business industry to encourage transparency." Aka the bully pulpit.
The president has asked HHS Secretary Mike Leavitt to develop a voluntary program that would publicize the prices healthcare providers charge for their services. But if health care providers don't cooperate voluntarily, there's always the threat of legislation.
"I know members of Congress are working on a bill. It would be better this be done with people saying, 'Oh, we understand it's important to be transparent.' There's always a bill out there in case volunteerism is not quite as strong as it should be," Mr. Bush said.
We do hope we don't have to go there.
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Grace-Marie Turner

Growth in health insurance premiums slows

2005-09-15T18:06:00.000-05:00

New evidence confirms that health care inflation is easing, even if the cost burden still feels heavy for employers. Health premiums increased an average of 9.2% this year, down from 11.2% in 2004, according to a new survey of 2,995 employers by the Kaiser Family Foundation and the Health Research and Educational Trust. The 2005 figure ended a four-year streak of double-digit increases, but foundation president Drew Altman cautioned employers to not be fooled by the abatement in inflation: "We’ve seen these dips before. These rates of increase always bounce back. We should beware of reformers who promise too much, however sincere they may be." For single coverage, the average annual premium was $4,024 this year, compared to $3,695 last year. On average, employers picked up 85% of the tab this year, while workers paid 15%. For family coverage, the average annual premium was $10,880 this year, compared to $9,950 in 2004. On average, employers shouldered 75% of the bill this year, while workers contributed 25%. High costs have scared some small businesses away from insuring workers, with 60% of all employers offering health coverage this year, down from 69% in 2000, the survey finds.

Census: Texas is tops for lack of health coverage

2005-08-30T20:12:00.000-05:00

LATEST NEWS
Austin Business Journal - 2:19 PM CDT Tuesday
Census: Texas is tops for lack of health coverage
Texas led the United States last year for the percentage of people without health insurance, the U.S. Census Bureau reported Tuesday.
In 2004, Texas had the country's highest proportion of people without health insurance -- 24.8 percent, according to the Census Bureau. That's down from 25.2 percent in 2003, when Texas also held the No. 1 spot among the states.
Last year, two neighboring states followed Texas for the number of residents without health insurance -- New Mexico, 21.5 percent, and Oklahoma, 20.1 percent.
Minnesota had the lowest figure for uninsured residents, 8.5 percent.
In 2004, 45.8 million Americans -- or 15.7 percent -- were without health insurance, according to the Census Bureau. The percentage was unchanged from 2003.
Nationwide last year, the uninsured rate was 32.7 percent for Hispanics, 19.7 percent for blacks, 16.8 percent for Asians and 11.3 percent for whites, the bureau says.
The percentage of people covered by workplace-based health insurance declined from 60.4 percent in 2003 to 59.8 percent in 2004, according to the bureau.

The Moral Hazard Myth

2005-08-29T10:01:00.000-05:00

THE MORAL-HAZARD MYTH
by MALCOLM GLADWELL
THE NEW YORKER MAGAZINE
The bad idea behind our failed health-care system.
Issue of 2005-08-29Posted 2005-08-22
Tooth decay begins, typically, when debris becomes trapped between the teeth and along the ridges and in the grooves of the molars. The food rots. It becomes colonized with bacteria. The bacteria feeds off sugars in the mouth and forms an acid that begins to eat away at the enamel of the teeth. Slowly, the bacteria works its way through to the dentin, the inner structure, and from there the cavity begins to blossom three-dimensionally, spreading inward and sideways. When the decay reaches the pulp tissue, the blood vessels, and the nerves that serve the tooth, the pain starts—an insistent throbbing. The tooth turns brown. It begins to lose its hard structure, to the point where a dentist can reach into a cavity with a hand instrument and scoop out the decay. At the base of the tooth, the bacteria mineralizes into tartar, which begins to irritate the gums. They become puffy and bright red and start to recede, leaving more and more of the tooth’s root exposed. When the infection works its way down to the bone, the structure holding the tooth in begins to collapse altogether.
Several years ago, two Harvard researchers, Susan Starr Sered and Rushika Fernandopulle, set out to interview people without health-care coverage for a book they were writing, “Uninsured in America.” They talked to as many kinds of people as they could find, collecting stories of untreated depression and struggling single mothers and chronically injured laborers—and the most common complaint they heard was about teeth. Gina, a hairdresser in Idaho, whose husband worked as a freight manager at a chain store, had “a peculiar mannerism of keeping her mouth closed even when speaking.” It turned out that she hadn’t been able to afford dental care for three years, and one of her front teeth was rotting. Daniel, a construction worker, pulled out his bad teeth with pliers. Then, there was Loretta, who worked nights at a university research center in Mississippi, and was missing most of her teeth. “They’ll break off after a while, and then you just grab a hold of them, and they work their way out,” she explained to Sered and Fernandopulle. “It hurts so bad, because the tooth aches. Then it’s a relief just to get it out of there. The hole closes up itself anyway. So it’s so much better.”
People without health insurance have bad teeth because, if you’re paying for everything out of your own pocket, going to the dentist for a checkup seems like a luxury. It isn’t, of course. The loss of teeth makes eating fresh fruits and vegetables difficult, and a diet heavy in soft, processed foods exacerbates more serious health problems, like diabetes. The pain of tooth decay leads many people to use alcohol as a salve. And those struggling to get ahead in the job market quickly find that the unsightliness of bad teeth, and the self-consciousness that results, can become a major barrier. If your teeth are bad, you’re not going to get a job as a receptionist, say, or a cashier. You’re going to be put in the back somewhere, far from the public eye. What Loretta, Gina, and Daniel understand, the two authors tell us, is that bad teeth have come to be seen as a marker of “poor parenting, low educational achievement and slow or faulty intellectual development.” They are an outward marker of caste. “Almost every time we asked interviewees what their first priority would be if the president established universal health coverage tomorrow,” Sered and Fernandopulle write, “the immediate answer was ‘my teeth.’ ”
The U. S. health-care system, according to “Uninsured in America,” has created a group of people who increasingly look different from others and suffer in ways that others do not. The leading cause of personal bankruptcy in the United States is unpaid medical bills. Half of the uninsured owe money to hospitals, and a third are being pursued by collection agencies. Children without health insurance are less likely to receive medical attention for serious injuries, for recurrent ear infections, or for asthma. Lung-cancer patients without insurance are less likely to receive surgery, chemotherapy, or radiation treatment. Heart-attack victims without health insurance are less likely to receive angioplasty. People with pneumonia who don’t have health insurance are less likely to receive X rays or consultations. The death rate in any given year for someone without health insurance is twenty-five per cent higher than for someone with insur-ance. Because the uninsured are sicker than the rest of us, they can’t get better jobs, and because they can’t get better jobs they can’t afford health insurance, and because they can’t afford health insurance they get even sicker. John, the manager of a bar in Idaho, tells Sered and Fernandopulle that as a result of various workplace injuries over the years he takes eight ibuprofen, waits two hours, then takes eight more—and tries to cadge as much prescription pain medication as he can from friends. “There are times when I should’ve gone to the doctor, but I couldn’t afford to go because I don’t have insurance,” he says. “Like when my back messed up, I should’ve gone. If I had insurance, I would’ve went, because I know I could get treatment, but when you can’t afford it you don’t go. Because the harder the hole you get into in terms of bills, then you’ll never get out. So you just say, ‘I can deal with the pain.’ ”
One of the great mysteries of political life in the United States is why Americans are so devoted to their health-care system. Six times in the past century—during the First World War, during the Depression, during the Truman and Johnson Administrations, in the Senate in the nineteen-seventies, and during the Clinton years—efforts have been made to introduce some kind of universal health insurance, and each time the efforts have been rejected. Instead, the United States has opted for a makeshift system of increasing complexity and dysfunction. Americans spend $5,267 per capita on health care every year, almost two and half times the industrialized world’s median of $2,193; the extra spending comes to hundreds of billions of dollars a year. What does that extra spending buy us? Americans have fewer doctors per capita than most Western countries. We go to the doctor less than people in other Western countries. We get admitted to the hospital less frequently than people in other Western countries. We are less satisfied with our health care than our counterparts in other countries. American life expectancy is lower than the Western average. Childhood-immunization rates in the United States are lower than average. Infant-mortality rates are in the nineteenth percentile of industrialized nations. Doctors here perform more high-end medical procedures, such as coronary angioplasties, than in other countries, but most of the wealthier Western countries have more CT scanners than the United States does, and Switzerland, Japan, Austria, and Finland all have more MRI machines per capita. Nor is our system more efficient. The United States spends more than a thousand dollars per capita per year—or close to four hundred billion dollars—on health-care-related paperwork and administration, whereas Canada, for example, spends only about three hundred dollars per capita. And, of course, every other country in the industrialized world insures all its citizens; despite those extra hundreds of billions of dollars we spend each year, we leave forty-five million people without any insurance. A country that displays an almost ruthless commitment to efficiency and performance in every aspect of its economy—a country that switched to Japanese cars the moment they were more reliable, and to Chinese T-shirts the moment they were five cents cheaper—has loyally stuck with a health-care system that leaves its citizenry pulling out their teeth with pliers.
America’s health-care mess is, in part, simply an accident of history. The fact that there have been six attempts at universal health coverage in the last century suggests that there has long been support for the idea. But politics has always got in the way. In both Europe and the United States, for example, the push for health insurance was led, in large part, by organized labor. But in Europe the unions worked through the political system, fighting for coverage for all citizens. From the start, health insurance in Europe was public and universal, and that created powerful political support for any attempt to expand benefits. In the United States, by contrast, the unions worked through the collective-bargaining system and, as a result, could win health benefits only for their own members. Health insurance here has always been private and selective, and every attempt to expand benefits has resulted in a paralyzing political battle over who would be added to insurance rolls and who ought to pay for those additions.
Policy is driven by more than politics, however. It is equally driven by ideas, and in the past few decades a particular idea has taken hold among prominent American economists which has also been a powerful impediment to the expansion of health insurance. The idea is known as “moral hazard.” Health economists in other Western nations do not share this obsession. Nor do most Americans. But moral hazard has profoundly shaped the way think tanks formulate policy and the way experts argue and the way health insurers structure their plans and the way legislation and regulations have been written. The health-care mess isn’t merely the unintentional result of political dysfunction, in other words. It is also the deliberate consequence of the way in which American policymakers have come to think about insurance.
“Moral hazard” is the term economists use to describe the fact that insurance can change the behavior of the person being insured. If your office gives you and your co-workers all the free Pepsi you want—if your employer, in effect, offers universal Pepsi insurance—you’ll drink more Pepsi than you would have otherwise. If you have a no-deductible fire-insurance policy, you may be a little less diligent in clearing the brush away from your house. The savings-and-loan crisis of the nineteen-eighties was created, in large part, by the fact that the federal government insured savings deposits of up to a hundred thousand dollars, and so the newly deregulated S. & L.s made far riskier investments than they would have otherwise. Insurance can have the paradoxical effect of producing risky and wasteful behavior. Economists spend a great deal of time thinking about such moral hazard for good reason. Insurance is an attempt to make human life safer and more secure. But, if those efforts can backfire and produce riskier behavior, providing insurance becomes a much more complicated and problematic endeavor.
In 1968, the economist Mark Pauly argued that moral hazard played an enormous role in medicine, and, as John Nyman writes in his book “The Theory of the Demand for Health Insurance,” Pauly’s paper has become the “single most influential article in the health economics literature.” Nyman, an economist at the University of Minnesota, says that the fear of moral hazard lies behind the thicket of co-payments and deductibles and utilization reviews which characterizes the American health-insurance system. Fear of moral hazard, Nyman writes, also explains “the general lack of enthusiasm by U.S. health economists for the expansion of health insurance coverage (for example, national health insurance or expanded Medicare benefits) in the U.S.”
What Nyman is saying is that when your insurance company requires that you make a twenty-dollar co-payment for a visit to the doctor, or when your plan includes an annual five-hundred-dollar or thousand-dollar deductible, it’s not simply an attempt to get you to pick up a larger share of your health costs. It is an attempt to make your use of the health-care system more efficient. Making you responsible for a share of the costs, the argument runs, will reduce moral hazard: you’ll no longer grab one of those free Pepsis when you aren’t really thirsty. That’s also why Nyman says that the notion of moral hazard is behind the “lack of enthusiasm” for expansion of health insurance. If you think of insurance as producing wasteful consumption of medical services, then the fact that there are forty-five million Americans without health insurance is no longer an immediate cause for alarm. After all, it’s not as if the uninsured never go to the doctor. They spend, on average, $934 a year on medical care. A moral-hazard theorist would say that they go to the doctor when they really have to. Those of us with private insurance, by contrast, consume $2,347 worth of health care a year. If a lot of that extra $1,413 is waste, then maybe the uninsured person is the truly efficient consumer of health care.
The moral-hazard argument makes sense, however, only if we consume health care in the same way that we consume other consumer goods, and to economists like Nyman this assumption is plainly absurd. We go to the doctor grudgingly, only because we’re sick. “Moral hazard is overblown,” the Princeton economist Uwe Reinhardt says. “You always hear that the demand for health care is unlimited. This is just not true. People who are very well insured, who are very rich, do you see them check into the hospital because it’s free? Do people really like to go to the doctor? Do they check into the hospital instead of playing golf?”
For that matter, when you have to pay for your own health care, does your consumption really become more efficient? In the late nineteen-seventies, the rand Corporation did an extensive study on the question, randomly assigning families to health plans with co-payment levels at zero per cent, twenty-five per cent, fifty per cent, or ninety-five per cent, up to six thousand dollars. As you might expect, the more that people were asked to chip in for their health care the less care they used. The problem was that they cut back equally on both frivolous care and useful care. Poor people in the high-deductible group with hypertension, for instance, didn’t do nearly as good a job of controlling their blood pressure as those in other groups, resulting in a ten-per-cent increase in the likelihood of death. As a recent Commonwealth Fund study concluded, cost sharing is “a blunt instrument.” Of course it is: how should the average consumer be expected to know beforehand what care is frivolous and what care is useful? I just went to the dermatologist to get moles checked for skin cancer. If I had had to pay a hundred per cent, or even fifty per cent, of the cost of the visit, I might not have gone. Would that have been a wise decision? I have no idea. But if one of those moles really is cancerous, that simple, inexpensive visit could save the health-care system tens of thousands of dollars (not to mention saving me a great deal of heartbreak). The focus on moral hazard suggests that the changes we make in our behavior when we have insurance are nearly always wasteful. Yet, when it comes to health care, many of the things we do only because we have insurance—like getting our moles checked, or getting our teeth cleaned regularly, or getting a mammogram or engaging in other routine preventive care—are anything but wasteful and inefficient. In fact, they are behaviors that could end up saving the health-care system a good deal of money.
Sered and Fernandopulle tell the story of Steve, a factory worker from northern Idaho, with a “grotesquelooking left hand—what looks like a bone sticks out the side.” When he was younger, he broke his hand. “The doctor wanted to operate on it,” he recalls. “And because I didn’t have insurance, well, I was like ‘I ain’t gonna have it operated on.’ The doctor said, ‘Well, I can wrap it for you with an Ace bandage.’ I said, ‘Ahh, let’s do that, then.’ ” Steve uses less health care than he would if he had insurance, but that’s not because he has defeated the scourge of moral hazard. It’s because instead of getting a broken bone fixed he put a bandage on it.
At the center of the Bush Administration’s plan to address the health-insurance mess are Health Savings Accounts, and Health Savings Accounts are exactly what you would come up with if you were concerned, above all else, with minimizing moral hazard. The logic behind them was laid out in the 2004 Economic Report of the President. Americans, the report argues, have too much health insurance: typical plans cover things that they shouldn’t, creating the problem of overconsumption. Several paragraphs are then devoted to explaining the theory of moral hazard. The report turns to the subject of the uninsured, concluding that they fall into several groups. Some are foreigners who may be covered by their countries of origin. Some are people who could be covered by Medicaid but aren’t or aren’t admitting that they are. Finally, a large number “remain uninsured as a matter of choice.” The report continues, “Researchers believe that as many as one-quarter of those without health insurance had coverage available through an employer but declined the coverage. . . . Still others may remain uninsured because they are young and healthy and do not see the need for insurance.” In other words, those with health insurance are overinsured and their behavior is distorted by moral hazard. Those without health insurance use their own money to make decisions about insurance based on an assessment of their needs. The insured are wasteful. The uninsured are prudent. So what’s the solution? Make the insured a little bit more like the uninsured.
Under the Health Savings Accounts system, consumers are asked to pay for routine health care with their own money—several thousand dollars of which can be put into a tax-free account. To handle their catastrophic expenses, they then purchase a basic health-insurance package with, say, a thousand-dollar annual deductible. As President Bush explained recently, “Health Savings Accounts all aim at empowering people to make decisions for themselves, owning their own health-care plan, and at the same time bringing some demand control into the cost of health care.”
The country described in the President’s report is a very different place from the country described in “Uninsured in America.” Sered and Fernandopulle look at the billions we spend on medical care and wonder why Americans have so little insurance. The President’s report considers the same situation and worries that we have too much. Sered and Fernandopulle see the lack of insurance as a problem of poverty; a third of the uninsured, after all, have incomes below the federal poverty line. In the section on the uninsured in the President’s report, the word “poverty” is never used. In the Administration’s view, people are offered insurance but “decline the coverage” as “a matter of choice.” The uninsured in Sered and Fernandopulle’s book decline coverage, but only because they can’t afford it. Gina, for instance, works for a beauty salon that offers her a bare-bones health-insurance plan with a thousand-dollar deductible for two hundred dollars a month. What’s her total income? Nine hundred dollars a month. She could “choose” to accept health insurance, but only if she chose to stop buying food or paying the rent.
The biggest difference between the two accounts, though, has to do with how each views the function of insurance. Gina, Steve, and Loretta are ill, and need insurance to cover the costs of getting better. In their eyes, insurance is meant to help equalize financial risk between the healthy and the sick. In the insurance business, this model of coverage is known as “social insurance,” and historically it was the way health coverage was conceived. If you were sixty and had heart disease and diabetes, you didn’t pay substantially more for coverage than a perfectly healthy twenty-five-year-old. Under social insurance, the twenty-five-year-old agrees to pay thousands of dollars in premiums even though he didn’t go to the doctor at all in the previous year, because he wants to make sure that someone else will subsidize his health care if he ever comes down with heart disease or diabetes. Canada and Germany and Japan and all the other industrialized nations with universal health care follow the social-insurance model. Medicare, too, is based on the social-insurance model, and, when Americans with Medicare report themselves to be happier with virtually every aspect of their insurance coverage than people with private insurance (as they do, repeatedly and overwhelmingly), they are referring to the social aspect of their insurance. They aren’t getting better care. But they are getting something just as valuable: the security of being insulated against the financial shock of serious illness.
There is another way to organize insurance, however, and that is to make it actuarial. Car insurance, for instance, is actuarial. How much you pay is in large part a function of your individual situation and history: someone who drives a sports car and has received twenty speeding tickets in the past two years pays a much higher annual premium than a soccer mom with a minivan. In recent years, the private insurance industry in the United States has been moving toward the actuarial model, with profound consequences. The triumph of the actuarial model over the social-insurance model is the reason that companies unlucky enough to employ older, high-cost employees—like United Airlines—have run into such financial difficulty. It’s the reason that automakers are increasingly moving their operations to Canada. It’s the reason that small businesses that have one or two employees with serious illnesses suddenly face unmanageably high health-insurance premiums, and it’s the reason that, in many states, people suffering from a potentially high-cost medical condition can’t get anyone to insure them at all.
Health Savings Accounts represent the final, irrevocable step in the actuarial direction. If you are preoccupied with moral hazard, then you want people to pay for care with their own money, and, when you do that, the sick inevitably end up paying more than the healthy. And when you make people choose an insurance plan that fits their individual needs, those with significant medical problems will choose expensive health plans that cover lots of things, while those with few health problems will choose cheaper, bare-bones plans. The more expensive the comprehensive plans become, and the less expensive the bare-bones plans become, the more the very sick will cluster together at one end of the insurance spectrum, and the more the well will cluster together at the low-cost end. The days when the healthy twenty-five-year-old subsidizes the sixty-year-old with heart disease or diabetes are coming to an end. “The main effect of putting more of it on the consumer is to reduce the social redistributive element of insurance,” the Stanford economist Victor Fuchs says. Health Savings Accounts are not a variant of universal health care. In their governing assumptions, they are the antithesis of universal health care.
The issue about what to do with the health-care system is sometimes presented as a technical argument about the merits of one kind of coverage over another or as an ideological argument about socialized versus private medicine. It is, instead, about a few very simple questions. Do you think that this kind of redistribution of risk is a good idea? Do you think that people whose genes predispose them to depression or cancer, or whose poverty complicates asthma or diabetes, or who get hit by a drunk driver, or who have to keep their mouths closed because their teeth are rotting ought to bear a greater share of the costs of their health care than those of us who are lucky enough to escape such misfortunes? In the rest of the industrialized world, it is assumed that the more equally and widely the burdens of illness are shared, the better off the population as a whole is likely to be. The reason the United States has forty-five million people without coverage is that its health-care policy is in the hands of people who disagree, and who regard health insurance not as the solution but as the problem.

Here Is the “Maine” Thing I Want to Say

2005-08-24T16:12:00.000-05:00

From the Institute for Policy Innovation (IPI)Number 2.34August 23, 2005

While she was the First Lady, Hillary Clinton dreamed of a utopian health care system (maybe she still does!). Socialist schemes are always accompanied with lofty promises: everyone will be covered and costs will be lower.
The reality, though, is far different. Single-payer systems always cost more — always. They may spend less, but don’t confuse spending less with costing less. And the care they provide is typically substandard. Look at the systems in Canada and Britain for glowing examples of how care slips under statist health care programs.
Maine is playing Soviet roulette with its Dirigo Health insurance program that was created in 2003 to eliminate the uninsured problem in the state. As the nation watches this experiment in foolishness to see how the state is going to provide for the uninsured, cut costs and improve care, the program, launched only last summer, is already costing 11 percent more per member than was originally budgeted.
The Statehouse News Service is reporting that “Earlier this year, it was estimated the agency would need in excess of $40 million in the next fiscal year to keep going.”
“We can’t spend more than we have,” Dirigo Director Karynlee Harrington has said.
When governments reach that point, they rarely scale back. Almost invariably they make sure that they have more. The way to do that, of course, is to hike taxes.
Dirigo is also failing to enroll as many Mainers as its supporters expected. Why? It’s expensive. Employees and employers actually have to buy Dirigo plans, and both are finding them to be too costly.
The Maine Heritage Policy Center reports that an employee making $25,000 a year with a family of four has “about $226 deducted from his or her $480 gross weekly paycheck.”
Ouch! Since when did spending your paycheck on health insurance constitute a good deal? Especially when families can buy much more affordable policies in other states that haven’t “fixed” the problem like Maine has.
The state is supposed to pay back part of the cost, but that’s not much help when the subsidy doesn’t arrive on time. That would be consistent with other single-payer systems, though, since they never deliver on their promises.

Employers need more information on worker health

2005-08-19T17:30:00.000-05:00

Employers need more information on worker health

Half of employers do not know the full costs related to employee health and disability issues, according to a new study from the American Association of Occupational Health Nurses.
The study was conducted in early 2005 to uncover the perceptions executive managers have of occupational health nurses and insights into their thoughts on employee healthcare.
More than 100 executives from various industry backgrounds completed the one-on-one interviews.
The study also found that 72 percent of executives said keeping employees healthy is crucial to business success and feel it is their duty to keep employees safe and well.
The most common signals that indicate the need to hire an occupational health nurse are a high injury or illness rate, high absenteeism, to decrease worker's compensation and government mandates and compliance.
"Understanding the employer mind-set of employee health is imperative for the occupational health industry to effectively make an impact," said Susan Randolph, president of AAOHN.
The survey also found that companies who said they did have information available to assess the true costs of employee health issues were the most active in offering activities such as employee health and wellness programs.

Medical Bills Hit Even the Insured

2005-08-11T08:42:00.000-05:00

By Karen PallaritoHealthDay ReporterWed Aug 10, 7:02 PM ET
WEDNESDAY, Aug. 10 (HealthDay News) -- Millions of American families have trouble paying their medical bills or erasing their medical debt, even when they have health insurance, a new analysis reveals.
Almost two out of five adults -- an estimated 77 million people -- had medical bill and debt problems in 2003, analysts at The Commonwealth Fund reported Wednesday.
Uninsured individuals were twice as vulnerable, the study found. But having health insurance did not prevent financial hardship: The majority of adults who had bill problems and medical debt said they were insured at the time their difficulties began.
"What this study really shows is that people who are insured are also sharing medical burdens, and the type of insurance they have isn't adequately covering their out-of-pocket costs, and so their care is not being met," said study author Michelle M. Doty, a senior analyst at The Commonwealth Fund.
"Almost everybody but the really well-off are at risk here," added Carol Pryor, a senior policy analyst at The Access Project in Boston.
The new analysis helps to substantiate results of a widely publicized Harvard bankruptcy study that found many people were insured when they incurred the medical debt that contributed to their financial ruin.
It also raises a difficult question: Why are so many insured folks struggling with medical bills and debt? Doty and her colleagues implicated "gaps" in coverage, including high cost-sharing and a lack of key benefits, such as prescription drug coverage.
As an example, 49 percent of adults with deductibles of at least $500 a year had medical bill and debt woes, while 32 percent of those who had deductibles of less than $500 reported similar difficulties.
"The trend toward higher deductibles in employer plans may have gone too far," Karen Davis, president of The Commonwealth Fund, noted in a statement.
Not so, countered Dan Perrin, executive director of the HSA Coalition, a Washington, D.C.-based outfit that advocates the use of health savings accounts (HSAs) to keep health insurance affordable. By switching to a high-deductible health insurance plan, people can cut their monthly premiums and set aside some of the savings to cover their out-of-pocket costs, he added.
"The idea is to take money out of that check that's going to your insurance company, and put it in your account instead," he said.
Using data drawn from a 2003 health insurance survey, Doty and colleagues assessed the extent of Americans' medical bill-paying problems and current or accrued medical debt. In the survey, people were asked whether they had difficulty paying or were unable to pay their bills, whether they had been contacted by a collection agency about owing money for medical bills, and whether they had to change their way of life significantly to pay their medical bills.
"We weren't talking about luxury items you weren't able to purchase because of your medical bills," Doty noted.
Beyond creating financial hardships for families, medical bill and debt problems can cause people to forgo needed care. Even after adjusting for insurance, income, health status and other variables, people with medical bill and debt problems were much more likely to not fill a prescription, not see a doctor or skip recommended tests, treatments or follow-up visits, the study found.
"When people accumulate medical debt, they're embarrassed to go back (to the doctor)," Doty said.
As health plans respond to rising health-care costs by placing limits on coverage and raising patients' cost-sharing, policymakers must consider the plight of the nation's "underinsured," the authors concluded.
"We can no longer just add people (to insurance rolls) and think, 'Well, now they're insured,' without really looking at what they're getting when they are insured," Doty said.
More information
The Center for Studying Health System Change examines access to care and medical bill problems.
Copyright © 2005 HealthDay. All rights reserved.The information contained above is intended for general reference purposes only. It is not a substitute for professional medical advice or a medical exam. Always seek the advice of your physician or other qualified health professional before starting any new treatment. Medical information changes rapidly and while Yahoo and its content providers make efforts to update the content on the site, some information may be out of date. No health information on Yahoo, including information about herbal therapies and other dietary supplements, is regulated or evaluated by the Food and Drug Administration and therefore the information should not be used to diagnose, treat, cure or prevent any disease without the supervision of a medical doctor.
Copyright © 2005 Yahoo! Inc. All rights reserved.

Insurers Expect Slowing Growth In Medical Costs

2005-08-10T08:12:00.000-05:00

By DINAH WISENBERG BRINDOW JONES NEWSWIRESAugust 9, 2005; Page D7Major health insurers continue to see stable or slowing growth of medical costs, recent corporate earnings reports and forecasts show, and the slowing medical-cost trends are reaching employers.WellPoint Inc., Aetna Inc., UnitedHealth Group Inc., Humana Inc. and PacifiCare Health Systems Inc. have reported steady or moderating medical-cost trends in their commercial health plans.Generally, the companies are reporting slowing growth in pharmaceutical expenses, stable increases in physician costs, slightly moderating outpatient pricing expansion and flat hospital inpatient demand, according to J.P. Morgan analyst Scott Fidel. Humana's hospital costs are an exception, as the company reported an increase in inpatient utilization.Employers, which have been passing on more expenses to workers, are seeing some health-cost pressure ease. In June human-resources consulting firm Hewitt Associates said U.S. health maintenance organization rates for 2006 are expected to rise at their most moderate pace nationally in more than five years.WellPoint, the largest U.S. managed-care company by membership, said medical-cost growth continued to slow in the second quarter. The company expects such costs to rise by less than 9% this year, about one percentage point better than in 2004.In reporting its second-quarter results, Aetna noted that it started the year forecasting commercial medical-cost growth of 8.5%. By the end of the first quarter, Aetna had lowered that view to a range of 8% to 8.5%. In the second quarter, Aetna's medical costs rose at a rate near the low end of that range, Chairman and Chief Executive John Rowe said.UnitedHealth Group expects its growth in medical costs to remain at 8% or lower with no meaningful increase for the rest of the year, and for 2006 to remain roughly in line with the 2005 range.Humana attributes part of its slower growth trend to a change in the mix of plans it is selling, said Regina Nethery, investor-relations vice president.

U.S. Reps pass association health plan bill

2005-07-27T09:06:00.000-05:00

U.S. Reps pass association health plan bill
The U.S. House of Representatives yesterday passed a bill that would help smaller employers band together to provide health insurance at the lower prices associated with larger populations. Now, it needs to pass the Senate before President Bush, an AHP supporter, signs it into law.
The Small Business Health Fairness Act of 2005 requires AHPs to maintain certain cash reserves and comply with other solvency requirements. The Labor Department could shut down a self-insured plan deemed to be fraudulent, or a state could do so if the plan is fully insured.
But while supporters, such as the National Federation of Independent Businesses, say AHPs would encourage small employers to offer health benefits and reduce the number of uninsured Americans, opponents believe the plans would open up businesses - and, by proxy, advisers - to fraudulent companies looking to make a quick and dishonest buck.
In fact, some 400 brokers were sued two years ago after an insurance company marketing plans similar to those stipulated in the congressional bill duped the advisers and their clients and decamped with premiums from 30,000 participants, leaving them with about $50 million in unpaid claims.
Last week, researchers from Georgetown University released a report that alleges that the legislation would create a regulatory vacuum that would allow scammers to flourish and threaten Americans' coverage and financial security. Report author Mila Kofman called the bill " a license to steal," based on "self-reported information and self-regulation." "The regulatory approach contemplated in the AHP legislation would leave many businesses and workers at the mercy of scam operators," she explains. "The consequences are predictable: bankruptcy, delayed or foregone medical care, and loss of coverage for America's businesses and workers."

Blogmaster note: Currently in Texas, Small Employers Health Coalitions are producing savings to small employers that appear to be twice the amount that proponets of AHP's expect.
As always, details: www.texascoalitions.com

REPORT WARNS OF FRAUD FROM AHPs

2005-07-26T14:01:00.000-05:00

Report warns of fraud from AHPs
Federal association health plans would make businesses more vulnerable to scams, warns a new report from Georgetown University. AHPs would allow small employers to band together to provide health insurance at the lower prices associated with larger populations. Supporters say they would encourage small employers to offer health benefits and reduce the number of uninsured Americans. A bill to establish federal governance for association health plans, introduced by Rep. Sam Johnson (R-Texas), is scheduled for a vote before the U.S. House this afternoon. The Small Business Health Fairness Act of 2005 requires AHPs to maintain a certain cash reserves and comply with other solvency requirements. The Labor Department could shut down a self-insured plan deemed to be fraudulent, or a state could do so if the plan is fully insured. Report author Mila Kofman called the bill “ a license to steal.” It is based on “self-reported information and self-regulation” and “crooks won’t be notifying the feds of lying, cheating, and stealing,” she explains. “The regulatory approach contemplated in the AHP legislation would leave many businesses and workers at the mercy of scam operators. The consequences are predictable: bankruptcy, delayed or foregone medical care, and loss of coverage for America’s businesses and workers.”

Small businesses unite for health care coverage

2005-06-10T18:05:00.000-05:00

6/7/2005 4:42:45 PMBy: Allie Rasmus
www.news8austin.com

Click here to view video

Grapevine Market owner Chuck Huffaker wants his business to join a health care coalition.

The security of health insurance is an unaffordable expense for one out of three working Texans, the Texas Department of Insurance reports.
For small business owners, that’s especially hard.
During the 78th legislative session in 2003, lawmakers remedied the problem by changing the state's insurance laws. Small businesses that have fewer than 50 employees are now allowed to band together to form a small business insurance coalition.
Chuck Huffaker, owner of the Grapevine Market in North Austin, said health insurance is one of his company's greatest expenses and it keeps him from hiring more full time employees.
When the store first opened, it cost about $36,000 a year to provide health care for all 10 full time employees. In the last six years the costs have doubled to $70,000.
For many small businesses, health care costs are so high it's a luxury they can no longer afford.
“Many small businesses have difficulty getting rates that are affordable because the insurance companies are in a position to legally charge them a higher rate,” Kirk Watson of the Greater Austin Chamber of Commerce said.
According to the Texas Workforce Commission, about 90 percent of Austin area businesses employ fewer than 50 people.
If newly formed health care coalitions have more than 10 people combined, the rates go down.
"It's just like any large corporation. The more employees you have the better breaks you get. So if you can put more people under one plan you can get bigger breaks,” Huffaker said.
So far Texas businesses have already formed one working insurance coalition with seven employers and 22 employees. Huffaker said he hopes his business will be the next to join. "If we can get into a coalition with a lot more employees under one program, I think it can save us a bunch of money in the long run," he said.

Texas Coalitions News Video

2005-06-10T17:55:00.000-05:00

Helping Small Businesses, Its Employees

06/07/05 - 10:18 pm Link AvailableHelping Small Businesses, Its Employees
The rising cost of health insurance has crippled many small businesses impacting everything from job growth and the wages of Austin workers to what businesses can do in the community.
A new program aims to give small businesses a boost when it comes to providing health insurance at a lower cost for their employees.
Chuck Huffacker is a partner at Austin's Grape Vine Market.
He knows providing good health insurance for the shop's full time employees is critical if he wants to thrive and remain competitive, but the rising costs have forced him to make tough choices.
"It's really escalated a lot to the point where now we have to start looking at how we are going to combat that expense?" Huffacker said.
When the market opened in 1999, it cost $36,000 that year to cover the insurance premiums of 10 employees. This year that price tag jumped to $70,000.
"Do we have employees start paying in on it? Do we drop our coverage down so that it's a lot more out of pocket for our employees which we don't want to do?" Huffaker said.
As it is, insurance companies can charge small businesses up to 20 percent more than larger ones, but a first of it's kind coalition is about to change that.
"This is good for the city of Austin. This is good for society. This is good for all of us," Ron Mullen with Texas Coalitions Inc. said.
The Greater Austin Chamber has joined forces with Texas Coalitions Inc. The partnership allows employers with less than 50 employees to join forces with other small companies to get better health insurance rates.
"This is the most exciting thing that I've seen since I've been in the business to sincerely help small businesses save on their health insurance," Mullen said.
One small business has already cut its insurance costs by $17,000. It's money the Greater Austin Chamber hopes will be used to grow small businesses and the local economy.
The Greater Austin Chamber of Commerce says the rising cost of health insurance has been the number one concern for small business owners and a reason many have not hired.
For more information on this program, check out the Greater Austin Chamber of Commerce Web site.

www.texascoalitions.com

Chamber unveils wellness program for small businesses

2005-06-10T17:49:00.000-05:00

LATEST NEWS
Austin Business Journal - 2:46 PM CDT Wednesday

The Greater Austin Chamber of Commerce wants area small businesses to stay healthy.
With that in mind, the chamber, along with Texas Coalitions Inc., has created a first of its kind health coalition for small businesses.
Dubbed, the Greater Austin Chamber Health Coalition Program, it was made possible by the passage of House Bill 897 during the 2003 session of the Texas Legislature.
The bill allows smaller employers with fewer than 50 employees to join together to form a coalition group and obtain rates from any small group insurance carrier offering coverage in Texas, which often translates to lower costs for small business employers.
"For years now, we've been told that securing, keeping and paying for health insurance is one of the most difficult problems facing small business," says Bobby Jenkins, president of ABC Pest and Lawn Services and chamber vice chairman for small business. "Our task force researched countless plans and programs before deciding that this provides the greatest advantage for our members."
According to the chamber, joining a coalition means risk and costs are spread among more people in the group. This means a six-employee business that had been paying about $42,000 per year in health insurance coverage before HB 897 passed, will receive an annual rate of $24,800 by joining the coalition with six other companies.
According to Texas Coalitions Inc., those savings are possible because risk is spread over a larger group and administrative loads are reduced, and insurance companies are permitted to include additional "loads" in the rates for smaller employer groups to cover costs for administering these groups.
The highest loads are for groups of two to nine insured employees, which are as high as 20 percent by law.
Each coalition group chooses the plan and the carrier, and rates are determined by the group census on age, sex, location, dependents and medical conditions.
"As part of a five lawyer firm, I understand that running a small business can be a challenge," says Kirk Watson, chairman of the Chamber of Commerce and founding member of Watson, Bishop, London and Brophy PC.
"The biggest challenge small businesses face is providing health insurance for our employees. The cost of health insurance impacts every decision we make about hiring," Watson says. "Most employers can obtain lower premiums by joining a coalition instead of purchasing their own company plan. It's a program that should help us create jobs by helping our small businesses control one of their greatest costs."
The Greater Austin Chamber of Commerce is the first in the country to offer the coalition option to its members. More information about the coalition can be found on the chamber's Web site (www.austinchamber.com). © 2005 American City Business Journals Inc.
All contents of this site © American City Business Journals Inc. All rights reserved.

Chamber's insurance plan could lower costs

2005-06-10T16:59:00.000-05:00

EDITORIAL BOARD
Friday, June 10, 2005
Health insurance might be within the financial reach of more Central Texas small businesses thanks to an initiative by the Greater Austin Chamber of Commerce.
We know that health insurance is prohibitively expensive for many employers that don't have enough workers to share costs or to spread risk. One rule of insurance is: the greater the risk, the higher the cost. So providing health coverage for a few, older employees carries a greater risk — and price tag — than covering a lot of employees of varying ages.
Under the Austin chamber initiative, companies with two to 50 employees will be able to join pools that will seek bids for coverage as if they were a single company, former mayor and chamber Chairman Kirk Watson told the American-Statesman this week. That essentially permits a group of small businesses to act as one larger company in purchasing employee health insurance. If it works, it will lower costs for all of those in the pool.
This certainly is a good effort by the private sector. But sky-rocketing health care costs are squeezing the budgets of employers, large and small.
It's an issue that can't be solved by the private sector alone. In Texas, 66 percent of uninsured people have jobs. In all, about one in five Texans don't have health insurance. Those numbers are only expected to grow if left unchecked. What does it mean to the rest of us that millions don't have health insurance?
The answer is in your wallet. People who are insured subsidize those who aren't. The cost of uninsured health care drives up the costs of premiums, according to a new survey by Families USA, a consumer advocacy group based in Washington, D.C. Its survey found that Texas was among six states whose premiums had increased at least $1,500 this year because of unpaid costs of the uninsured:
•In 2005, health insurance premiums in Texas for a family with private, employer-sponsored coverage are $1,551 higher because of the unpaid cost of health care for the uninsured. Premiums for individual health insurance coverage in Texas are $550 higher this year.
•By 2010, health insurance premiums for families with private, employer-sponsored coverage will be $2,786 higher because of unpaid costs for the uninsured. Premiums for individuals will be $922 higher by that time.
Those figures reflect the huge costs of health care for uninsured Texans, which totaled about $4.6 billion in 2005, according to Families USA. That means someone got sick, went to a doctor or emergency room, and either paid only a portion of the bill or didn't pay at all. To cover their costs, hospitals and private health care providers raised their prices on insurance companies, which in turn, passed those costs on to consumers.
We certainly urge small companies to take advantage of the Austin chamber program. But the escalating costs of health care also require the attention and resources of the state and federal governments.At the very least, Congress shouldn't cut programs such as Medicaid that cover the poor, and Texas should expand its Children's Health Insurance Program, which covers children of working families who can't afford health insurance.

Texas HMOs finally profitable, study finds

2005-06-06T08:16:00.000-05:00

Dallas Business Journal

From the June 6, 2005 print edition

State's HMOs come together for group effort to turn overall profit
Mary Ann Azevedo
Correspondent
Texas HMOs were profitable in 2003 and in the first half of 2004 despite a sharp decline in enrollment, according to a new statewide study. This is the first time the state's HMOs as a whole have been profitable since 1995.
In the five years between 1999 and 2003, Texas HMOs had losses of $1.2 billion. But in 2003, they recorded total net income of $162.2 million.
For the first six months of 2004 alone, Texas HMOs had net income of $119.8 million. Numbers for the second half of the year are not yet available.
"The sort of valley of losses that Texas HMOs went through was much more serious than in other states that I studied over a four-year period," says independent health care consultant Allan Baumgarten, who conducted the Texas Managed Care Review 2004. "But they've managed to increase premiums significantly."
Baumgarten analyzed data from a joint survey conducted by the Department of State Health Services, the Texas Hospital Association and the American Hospital Association to come up with the net income figures. He publishes similar reports for California, Colorado, Florida, Illinois, Michigan, Minnesota, Ohio and Wisconsin.
Baumgarten found that in 2003, Texas HMOs collected an average of $222.55 in premium revenue per commercial member per month, an increase of 16.4% from $189.32 in 2002 -- representing the third straight year of double-digit increases. In the past three years, HMOs have increased their premium revenue by 59.3% for an average of nearly 20% per year.
"HMOs were able to get employers to pay that much more partly because there are fewer competitors in the market," says Baumgarten. "It's a very serious concern."
Meanwhile, enrollment in Texas HMOs plunged by 16% in 2003 to 2.7 million. Enrollment continued to drop in the first six months of 2004 -- another 9.4% to 2.4 million.
"There are about 760,000 fewer Texans in HMOs than at the end of 2001," says Baumgarten, who points out that the last time HMO enrollment in Texas was below 2.5 million was in 1996.
"The general direction was anticipated as a continuation of a trend that started several years ago," Baumgarten says. "However, the velocity of the extent of the decrease was a little surprising."
The biggest enrollment decrease occurred in commercial (employer group) plans, which dropped by 800,000 lives.
"Several factors are contributing to decreased HMO enrollment," Baumgarten says. "Employers are trying to find other options such as PPO plans and are also wanting plans with more cost-sharing. Also, the HMOs themselves are less eager to assume the risk for insurance."

Small Business Guide to Afforable Healthcare

2005-04-25T07:53:00.000-05:00

Providing health insurance for employees is one of the biggest challenges facing small business owners. In 2003, almost half of all small businesses experienced health insurance premium hikes of more than 15 percent, according to a survey conducted by the , a nonprofit foundation that provides information on health-care issues to policymakers and the public.

In general, small businesses are the ones shouldering a disproportionate share of rising health-care costs. "Providers of health insurance to small businesses can't dilute their risk by spreading it over a large number of employees, so they compensate by charging the small guys higher per-employee rates," according to CFO.com, an online resource center for finance executives. Adding to the problem, many small business owners are finding themselves paying more for even less coverage.
That's been the case for St. Louis-based Vital Hospital Systems Group, a medical supply company with six full-time and two part-time employees. Because of continued premium increases over the past four years, the company has moved from a health-care plan requiring no employee contributions, to one with higher co-pays and a family deductible. During its most recent health insurance renewal process last September, Vital was forced to change providers in order to maintain the same coverage without a price increase.
"The question is, next year (at renewal time) are we going to be back to where we started?" said Carol Size, an administrator at Vital who oversees the company's benefits program.
According to Kaiser's research, 63 percent of all small companies -- those with three to 199 workers -- offered health insurance in 2004, down from 68 percent in 2001. "The cost of family health insurance is rapidly approaching the gross earnings of a full-time minimum wage worker," said Drew Altman, the foundation's president and chief executive.
With costs continuing to spiral out of control, what can small business owners do to make informed decisions when designing health insurance plans for their employees?
"They need to look at all the plan designs that are offered by various insurance companies. There are so many options now, that they really need to study them and understand what they're buying," said Richard Steinbaum, president of St. Louis-based Corporate Benefit Consultants Inc., which helps companies of all sizes design their employee benefit packages. "Many companies now are focusing on offering more than one plan design at the same time. You can offer a high-deductible program and a zero-deductible program."
Typically, Steinbaum said, the bigger users "pay up" for better coverage, while the people who are healthier tend to opt for the less expensive, less comprehensive plan.
Even with new plan design options and the movement toward "consumer-driven" health plans that offer health saving accounts, most employees tend to agree on which benefits they consider absolutely necessary, and which are more expendable.
"The benefits that most people find necessary are hospitalization, and coverage for prescriptions and doctors' visits," Steinbaum said. "That's what people think about in health insurance. Life, dental and disability insurance -- those are faster to go."
Since there's strength in numbers when it comes to buying insurance, one of the first things a small business owner should do is see if any suitable group-purchasing arrangements exist, such as those offered by trade associations and local chambers of commerce, said Kevin Haugh, a spokesperson for the Institute for Health Policy Solutions.

In Texas, Small Employer Purchasing Coalitions, allowed by HB 897, can help accomplish this for small employers. Visit www.texascoalitions.com for details.

Top Ten Do's and Don'ts for New Small Employers

2005-04-03T14:19:00.000-05:00

Top Ten Do's and Don'ts
By Phil Holland,Founder,My Own Business, Inc. Reprinted from www.myownbusiness.org - Session 5: Small Business Insurance

TOP TEN DO'S

1. Bring an insurance agent into your start-up process and have policies in place.

2. Consider using an insurance agent who can handle all your insurance requirements.

3. Include excess liability "commercial umbrella" coverage for your business.

4. Use a broad form of business property insurance.

5. Consider a health insurance policy to recruit and keep good employees.

6. If you have employees consider carrying employment practices liability coverage.

7. Maintain a clean and safe environment in your work place.

8. Include your tenant improvements in your property insurance policy.

9. Increase all your insurance coverages appropriately as your business grows.

10. Consider maintaining a buy-sell agreement with your partners, funded by life insurance in the event of the death of a partner.

TOP TEN DON'TS

1. Do not consider self-insuring any part of your worker's compensation risk.

2. Don't fail to recognize regular employees as employees and not contract workers.

3. Don't overlook ongoing employee training on maintaining workplace safety.

4. Don't feel that you can't afford insurance. You can't afford not to have it.

5. Do not deal with contractors who can not furnish insurance certificates.

6. Do not permit your insurance policies to lapse for non-payment of premiums.

7. Do not deal with insurance providers with substandard ratings.

8. Do not withhold information from your insurance provider. Provide them with a complete picture of your risks.

9. Do not go "uncovered" (uninsured) in any category of insurable and significant risk. 10. Don't overlook flood or earthquake insurance if in an area of high risk.

10. Don't overlook flood or earthquake insurance if in an area of high risk.

Survey: Employers can cut health/medical costs

2005-03-29T08:23:00.000-06:00

Employers nationwide predict that they can save about 7 percent of their health care costs this year if they make design changes, drop a plan or change plan health care insurance providers.

If the employers stick with their current arrangements, however, costs will rise 10 percent, according to respondents to a national survey conducted by Mercer Human Resource Consulting.

About a fifth of respondents indicated they would increase employee cost-sharing such as deductibles, copayments, and out-of-pocket maximums. A fifth also said they would increase the percentage of premium paid by the employees. Fifteen percent said they would change health-care insurers.
Three percent of employers also indicated they would either deny coverage to a spouse or require a surcharge. Just about a 10th of all employers currently have such provisions.

(blog note) Texas Small Employers are utilizing Small Employer Health Insurance Coalitions to reduce cost while retaining the same level of Benefits. For more information about Small Employer Health insurance Coalitions as defined by HB 897, please visit > www.texascoalitions.com

New Employee Incentives

2005-03-18T13:02:00.000-06:00

A new survey by Watson Wyatt and the National Business Group on Health finds that employers are having success in controlling health costs by providing new incentives to get employees involved in decision making.
The survey said that 8% of 555 large employers surveyed now offer Health Savings Accounts and another 18% plan to offer them next year, with 47% considering them.

Other consumer-directed care options also are helping: 69% of companies are using disease management programs, up 50% from last year. And 40% offer lifestyle programs, like weight reduction classes - double last year's numbers. There are an endless number of ways to engage employees as partners in managing health costs. This is only the beginning.

Survey: Small Biz struggles to offer Healthcare

2005-03-16T12:58:00.000-06:00

Affordable healthcare remains a significant issue for small business owners, with three in four small business owners dissatisfied with the healthcare system in the United States today, according to a recent survey paid for by Wells Fargo & Co.

The same margin says the current healthcare system needs either major changes or a complete overhaul, according to Wells Fargo (NYSE: WFC), of San Francisco. Additionally, 71 percent of small business owners surveyed in Q4 2004 cited this as a critical priority for Congress and the President to address.

While the number of small business owners offering employee healthcare coverage increased from 2003 to 2004, more than 50 percent still do not provide healthcare for their employees. Of those, 22 percent also do not have personal health insurance. With the number of U.S. small businesses estimated at well over 20 million, this means that approximately three million business owners are not covered for major medical emergencies, according to the bank.

Six in ten small business owners surveyed who do not provide health insurance to their employees said they would be more inclined to do so if government incentives were available. Twenty-three percent have curtailed hiring and 27 percent have cut back on non-capital investments due to rising healthcare costs.

"Though small business owners remain optimistic about their future business success, these healthcare findings illustrate the challenges faced by small business owners," says Rebecca Macieira-Kaufmann, small business segment manager for Wells Fargo, in a written statement. "The cost of healthcare is a major concern, and these findings show the need for solutions that allow more small business owners to be able to provide health insurance for their employees."

Gingrich Pushes for Health Insurance Changes

2005-02-28T08:03:00.000-06:00

Erin Moriarty

Former U.S. House speaker and longtime Republican leader Newt Gingrich is working to change America's health-care system.

His agenda includes promoting consumer-driven health care and encouraging everyone to work for lower health-care costs.
"There is a dramatic migration to HRAs ... and HSAs," he said. "All the evidence we have so far is that it really brings costs down."
Health reimbursement arrangements (HRAs) are funds set aside by employers to fund qualifying medical expenses for employees. Unused funds roll over to the next year. Health savings accounts (HSAs) are employee- or employer-funded accounts that are coupled with high-deductible insurance plans and allow for the accumulation of tax-favored savings.
Gingrich said individuals need to take more responsibility for health care.
"Nobody ever washed a rental car. Let's talk about how we've turned health care into a rental car," he said at the Atlanta Association of Health Underwriters' Annual Benefits Forum in Duluth on Feb. 17. "The attitude is, 'It's not my problem, it's my employer's problem or it's my government's problem.' "
Gingrich said there is a significant and growing group of people who can afford to buy health insurance, but choose not to. He called for a program that would require the uninsured who are above a certain income level to either buy insurance or purchase a bond that would cover medical costs if they get sick.
"We're not going to let you sit around and play roulette," he said. "It's irresponsible."
Gingrich's group has offices in Washington, D.C., and Atlanta, and currently is working on a project for the state of Georgia.

Editors note: HSA and HRA plans are options availble to Texas Small Employers for Employees Group Health Insurance Plans as part of Small Employer Coalitions through Texas Coalitions, Inc. Details at www.texascoalitions.com

Study Connects Bankruptcies to Illnesses

2005-02-03T11:56:00.000-06:00

Study Finds Costly Illnesses, Medical Bills Trigger About Half of Personal Bankruptcies
By MARK JEWELL
The Associated Press
Feb. 2, 2005 - Costly illnesses trigger about half of all personal bankruptcies, and most of those who go bankrupt because of medical problems have health insurance, according to findings from a Harvard University study to be released Wednesday.
Researchers from Harvard's law and medical schools said the findings underscore the inadequacy of many private insurance plans that offer worst-case catastrophic coverage, but little financial security for less severe illnesses.
"Unless you're Bill Gates, you're just one serious illness away from bankruptcy," said Dr. David Himmelstein, the study's lead author and an associate professor of medicine. "Most of the medically bankrupt were average Americans who happened to get sick."
The study, to be published online Wednesday by the journal Health Affairs, distributed questionnaires to 1,771 bankruptcy filers in 2001 in California, Illinois, Pennsylvania, Tennessee and Texas. That year, there were 1.46 million personal bankruptcies in the United States.
More than 900 of those questioned underwent more detailed interviews about their financial and medical circumstances for what the authors say is the first in-depth study of medical causes of personal bankruptcies, which have risen rapidly in recent years.
Illness and medical bills were cited as the cause, at least in part, for 46.2 percent of the personal bankruptcies in the study. Himmelstein said the figure rose to 54.5 percent when three other factors were counted as medical-related triggers for bankruptcies: births, deaths and pathological gambling addiction.
The study estimates medical-caused bankruptcies affect about 2 million Americans each year, counting debtors and their dependents, including 700,000 children.
Most of those seeking court protection from creditors had health insurance, with more than three-quarters reporting they had coverage at the start of the illness that triggered bankruptcy. The study said 38 percent had lost coverage at least temporarily by the time they filed for bankruptcy, with illness frequently leading to the loss of both a job and insurance.
Out-of-pocket medical expenses covering co-payments, deductibles and uncovered health services averaged $13,460 for bankruptcy filers who had private insurance at the onset of illness, compared with $10,893 for those without coverage. Those who initially had private coverage but lost it during their illness faced the highest cost, an average of $18,005.
"We need to rethink health reform," said Dr. Steffie Woolhandler, a study co-author and associate professor of medicine at Cambridge-based Harvard. "Covering the uninsured isn't enough. We also must upgrade and guarantee continuous coverage for those who have insurance."
Susan Pisano, a spokeswoman for America's Health Insurance Plans, representing nearly 1,300 health insurance providers, said the study did not adequately explore the role that disability income protection plans and personal savings can play in helping someone with a medical problem avoid bankruptcy.
"It's very important to ask questions about what the financial stressors are for American families, but we don't think this study digs deeply enough," Pisano said.
The findings indicate medical-related bankruptcies hit middle-class families hard 56 percent of the filers owned a home, and the same number had attended college.
"Families with coverage faced unaffordable co-payments, deductibles and bills for uncovered items like physical therapy, psychiatric care and prescription drugs," Himmelstein said.
The study, funded by the Robert Wood Johnson Foundation, did not examine how many bankruptcy filers were from dual-income families where both partners had insurance, Himmelstein said.
Jeff Morris, resident scholar at the American Bankruptcy Institute, founded by Congress in 1982 to analyze bankruptcy trends, said the Harvard findings roughly mirror those of a 1996 ABI study in which 57 percent of bankruptcy filers cited medical problems as a primary bankruptcy cause. Respondents in that study were more likely to cite three other factors as primary causes, including easy access to credit, job loss and financial mismanagement.
Morris said he was aware of no data indicating that the Harvard study, which was based on 2001 bankruptcy filings, does not accurately reflect current trends in medical-related bankruptcies.
"Medical coverage is becoming more for catastrophic loss than for intermediate expenses," Morris said.
Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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Health Coverage Tax incentive offer is a correct move.

2004-12-27T08:42:00.000-06:00

12/20/2004

As the regular session of the Texas Legislature approaches next month, it might seem strange for state officials to be thinking about new kinds of tax cuts. After all, lawmakers want to replace the Robin Hood system of school financing, and that will require lots of new revenue from the state.

Yet Lt. Gov. David Dewhurst made sense last week when he proposed offering tax discounts to businesses that provide health care to employees. Dewhurst noted that 65 percent of all Texans without health insurance have jobs. He was speaking to the 19-member Task Force for Access to Health Care in Texas.
Legislators should consider Dewhurst's proposal. They could show that they value companies that provide certain benefits for their employees -- and that they want to welcome more of them to Texas.
Most larger employers in this state provide health insurance. But many small businesses and businesses with low-wage employees don't because the cost is too great for them.
Clearly, the Legislature also should study ways to help those employers find affordable health insurance. Those answers could range from reducing paperwork connected to health insurance to supporting industry-wide plans that cover the same kinds of employers.
Health insurance is a vital component of a thriving state. The Legislature should do all it can to ensure that more Texans enjoy this fundamental protection.

Seven Costly Myths About Managing Contract Workers

2004-12-14T08:39:00.000-06:00

Businesses can be led to believe they are saving costs by classifying workers as independent contractors instead of employees. Ultimately, this could be costly.
By Ronald E Wainrib, Esq.

Businesses across the country are continuing to cut costs by replacing employees with independent contractors. Some savings are certain--employers don’t pay employment taxes to the IRS or employee benefits to their workers. However, many hidden costs can reduce these savings or even erase them entirely.
This article focuses on seven legal myths, myths that can lead businesses to believe they are saving money by blinding them to the costly legal risks of hiring workers as independent contractors instead of employees. These myths result from being uninformed about the legal differences between employees and independent contractors. Shattering these myths is the best way to learn how these distinctions affect your business’s legal compliance and why companies should include these risks in any cost-cutting calculations.

Myth #1: Employers should use the IRS’s 20 Common-Law Factors Test to determine worker status as employee or independent contractor.
Reality: The IRS no longer applies its long-standing, much-publicized, and frequently used 20 Common-Law Factors Test to determine a worker’s status as employee or independent contractor. The IRS has replaced this test with a new approach that focuses on three categories to determine if a worker is an employee or independent contractor: Behavioral Control, Financial Control, and Type of Relationship. Companies relying on the 20 Common-Law Factors Test today risk costly fines and penalties for worker misclassification by IRS auditors.
The IRS is specifically targeting companies that have laid off employees to save costs and then hired independent contractors to perform the same work. Their incentive is the same as that of businesses being audited--the huge amounts of money not being paid in employment taxes. In short, employers’ savings become Uncle Sam’s losses, and Uncle Sam wants his money back! The answer lies in recognizing this risk and making sure that you are classifying your workforce properly, complying with the agency’s new tests.

Myth #2: Employers can avoid costly worker misclassification risks by complying with the IRS worker-status test.
Reality: The overwhelming focus on the IRS’s worker-status test by business and legal advisers has led many employers to believe they can avoid legal risks of worker misclassification entirely by pleasing Uncle Sam. However, the IRS’s worker-status test applies only when businesses need to determine worker status for employment-tax purposes. Precious little information is provided about the many other federal (and state) laws governing the workforce, yet each has its own test to determine worker status, and all differ from the new IRS approach. Four examples are:
Employee benefits: A 12-factor test determines whether a worker is an employee or independent contractor under ERISA, the federal law governing employee benefits.
Immigration: The Immigration Reform and Control Act (IRCA) applies a seven-factor test to determine worker status.
Employment discrimination: The Equal Employment Opportunity Commission (EEOC) applies a test based on the "right to control the means and manner of a worker's performance" in federal employment discrimination cases.
Wage and hour laws: The Fair Labor Standards Act (FLSA) applies an “economic realities” test, including six factors to determine whether the worker is economically dependent on the business to which the services are provided.
While it is important to learn the worker-status rules under the various laws and regulations governing the workplace, just knowing that all worker-status tests are not the same is an important first step in reducing legal risks.

Myth #3: You can avoid costly worker-misclassification liability by complying with federal statutes and regulations governing the workforce.
Reality: Even if your company complies with lengthy lists of laws and regulations governing the workforce, you still risk liability by misclassifying as independent contractors any workers who are considered to be "common-law employees" by our courts and the IRS.
Many high-profile worker-misclassification lawsuits, whose staggering costs to employers made national headlines, were based on courts’ findings that plaintiffs were common-law employees.
The IRS defines a common-law employee as “any individual who, under common law, would have the status of an employee . . . a person who performs services for an employer who has the right to control and direct the results of the work and the way in which it is done. For example, the employer provides the employee's tools, materials, and workplace, and can fire the employee.” Unlike independent contractors, “common-law employees are not self-employed and cannot set up retirement plans for income from their work.”
Courts and the IRS will find that workers are employees if they meet the common-law-employee criteria, whether they are hired as independent contractors, freelancers, or temporary or other “contingent” workers.

Myth #4: An employment contract expressly stating that a worker is an independent contractor means that the worker is an independent contractor.
Reality: In a series of recent cases, several appeals courts across the country have ignored or rejected employment contracts that expressly designated workers as independent contractors. These and other courts have considered written contracts less important than the actual working relationships, control of worker performance, and other factors when worker status is at issue.
In the landmark case Vizcaino v. Microsoft, the Ninth U.S. Circuit Court of Appeals held that Microsoft’s “permatemp” workers were common-law employees despite the fact that they had signed written agreements acknowledging that they were independent contractors.

Myth #5: Hiring CEOs, CFOs, and officers as independent contractors rather than employees is an acceptable, routine, legal business practice.
Reality: While hiring corporate chief executives as independent contractors may be a common, routine, and legal business practice, it carries its own legal risks for creditors, employees, and shareholders. The current corporate-accountability crisis is exposing these risks every day. Consider the Enron case. When Enron hired Stephen Cooper as its new CEO, his contract designated him an independent contractor, not a full-time employee. SEC investigators knew that the independent-contractor status would limit the new CEO’s fiduciary responsibility to the company and its creditors. This would have freed Cooper from fiduciary responsibility to the company and its creditors. They characterized the designation as “inappropriate” and (joined by the Florida State Board of Administration, an Enron creditor and shareholder) scolded the company for its independent-contractor designation. The SEC forced Enron to change Cooper’s contract status to “full-time employee” to promote corporate responsibility.

Myth #6: All contractors are the same when it comes to legal compliance.
Reality: All contractors are not the same. The IRS considers independent contractors to be self-employed. Each is a business owner with the right to choose from various forms of business entity, including a corporation. An independent contractor’s business entity can affect the potential liability of any company that hires or manages that person when legal disputes arise. Recognizing that all contractors are not the same can help reduce the cost of future potential legal disputes in contractor-workforce management.

Myth #7: Workers’ compensation policies protect employers from liability for work-related injuries suffered by employees, but not independent contractors.
Reality: This is true, and therefore the risks of potentially costly legal consequences also must be considered. Because independent contractors aren’t covered by an employer’s workers’ compensation plan, hiring independent contractors (or converting employees to independent-contractor status) can open the door to personal-injury lawsuits when contractors suffer work-related injuries.
Because they are not employees, independent contractors who are injured on the job can bring a personal-injury lawsuit alleging negligence, defective machinery or equipment, or other grounds for liability, just like any business customer or client. Employers must recognize the real costs of losing the protective shield that workers’ compensation provides against such lawsuits.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal option. Also remember that state laws may differ from federal laws.