By: Health Insurance
Submitted: 2009-12-14 15:52:26 | Word Count: 813
Small businesses, hammered by stiff premium increases, are badly in need of a better business model for providing health care to their employees.
They won't find it in the so-called reform of health care being rammed through Congress by Democratic leadership. The pending legislation is all about reforming insurance access, not reforming cost.
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Small businesses in Wisconsin are getting notices of premium increases that are the biggest in memory. Scott Fuller, a consultant with Associated Health Group, called it "the worst year I have ever seen."
Other insurance brokers for small businesses concur. The percentage increases for the coming year have been in the mid-teens and even higher.
Because Congress doesn't comprehend cost management, its legislation probably will make matters worse for insured businesses. An actuarial analysis by insurer Wellpoint Inc., parent company of Blue Cross Blue Shield of Wisconsin, concluded that the most likely merged version of the House and Senate proposals would jack up premiums by 17% for a small business with eight employees of average age and health status.
That will come on top of the current premium hikes. Not a pretty picture.
The political response by supporters of access reform will be to blame insurance companies, both for flawed analysis and for the increases. The premiums, however, merely reflect the underlying cost structure of the health care industry, and who and what it is mandated to cover. Fail to deal with the basic cost elements and you have a recipe for hyperinflation.
The profits of the insurers are not the issue. The cost drivers are the issue.
As for the quality of the analysis of the congressional concoction, I'll go with the Blue Cross portrayal any day over that of political spinmeisters. There really is a train coming down the tracks for insured businesses.
You can't add lots of unhealthy people to the insurance pools and expensive coverage requirements without causing inflation.
The sad part of this saga is that premiums and taxes don't have to be jacked up to provide universal access. Savings could pay the bill.
Three platforms for real reform of costs and care in the private sector have demonstrated that costs not only can be contained, but also lowered. They are:
Consumer responsibility. High-deductible plans with offsetting health accounts get people's heads in the game. With the right tools in consumers' hands, like price and quality transparency, costs drop 20% to 40%.
Primacy of primary care. Put care in the hands of family doctors - who stress prevention, wellness and chronic disease management as a matter of course - and costs drop by as much as one-third. Holistic care at the primary level keeps people out of the hands of expensive specialists and hospitals except when necessary.
Centers of value. Hospital corporations that practice lean disciplines are shown to reduce errors sharply and provide prices that are one-third lower than organizations that aren't lean. Smart payers steer their business to those value-based centers.
The confluence of those three fundamental reforms offers hope for all businesses, including small companies. In my view, the new element in the provider array that makes a better model possible is doctors who offer primary care for a retainer. That structure is a game changer.
Big companies like Quad/Graphics Inc. can hire their own primary doctors and thereby control the front end of the health care world. But small and midsize firms haven't had that advantage.
Now though, they can hire what some call a concierge doctor for an annual fee of perhaps $1,500 per member. (At Serigraph, 105 people signed up to be part of just such a pilot.) It can be offered free to employees and family members.
Then the small firm can purchase a high deductible insurance policy at, say, the $5,000 level to provide catastrophic coverage. A health savings plan can be in the mix as well. To catch the third reform, the contracted doctors will steer to centers of value for secondary and tertiary care.
Several insurance brokers have confirmed that such a concept should provide better care and sharply lower total costs per employee.
David Kracht, also an Associated Health Group consultant, calls it "bikini coverage" that provides essential coverage at the bottom (primary care) and top (catastrophic). The skimpy in-between is where health savings accounts take over.
Congress thinks top-down mandates. The private sector thinks innovation. The former seldom works in an affordable manner over the long term. The latter always works.
