Federal lawmakers need to focus on what’s driving health care costs in America that in turn contributes to the rising cost of health coverage.
That’s according to a group of health care industry executives who gathered for a recent roundtable conversation organized by MiBiz. They also said that health care needs more cost transparency and consumerism.
Participating in the roundtable were:
- Shannon Enders, partner at Lakeshore Employee Benefits
- Bob Hughes, principal of Advantage Benefits Group Inc., who hosted the discussion in downtown Grand Rapids
- Cynthia Moore, a benefits attorney at Dickinson Wright PLLC
- Dominick Pallone, executive director of the Michigan Association of Health Plans, which sponsored the roundtable
- E.J. Pearson, president of West Michigan Association of Health Underwriters and regional sales executive at Varipro, a third-party benefits administrator in Kentwood
- Kelley Root, regional sales director for retention and new business at Blue Cross Blue Shield of Michigan
- Megan Schmidt, vice president of client sales and services at Priority Health
Here are some highlights of the discussion.
What are employers to make of what Congress is doing right now on health care?
Pearson: I just think that there’s no real addressing the root of the problem, which is controlling cost. It’s more health insurance reform and banging up on the insurance companies and talking about agent commissions and things that just aren’t really coming to the root cause, and that is how to manage cost.
Pallone: I think the fits and spurts that we’re seeing from Congress and the U.S. Senate has caused more harm than good at this point. We’re watching very closely, very concerned with both versions that are out there. A lot of the focus seems to be on shifting financial responsibility on Medicaid from the federal government to the state government and then trying to find ways to stabilize the individual marketplace and small group marketplace. We’d much prefer that they focused on that latter half and really help states out with that stabilization effort. It would go a long way, but the start-and-stop process that’s been ongoing, the no clear answers, the uncertainty, it’s chaotic right now and plans are having to try to price products without really knowing what the regulatory future looks like.
Root: I would say from our perspective, keeping in mind the guiding principles of affordability and access for Michigan citizens … we would definitely have some concerns around the continuation of the funding of the CSRs (cost-sharing reductions). Without that, you’re going to see some pretty significant rate increases.
Moore: The way I look at the bills is they’re just kind of tinkering on the fringes of what the problem is, which is the cost of care and the cost of claims. There was some truth, some legitimacy, to the Democrat argument. This really is a giant tax cut funded by huge cuts to Medicaid over the long term, which is very concerning and it doesn’t address access and affordability. A lot of that, I think, is driven by the fact that this is being enacted through the reconciliation process, so they can’t really look at this on a global basis, which is really what they should be doing.
Hughes: The current Obamacare is not sustainable. Insurance companies are dropping out because they’ve been adversely selected against, because a lot of these people are gaming the system based on the way the rules have been set up with the low penalties and no pre-existing conditions. (The insurance companies) are getting slaughtered, and that’s why the loss ratios are so high. They’re not getting the young people. The current thing is going to crash and burn. You have to change it, and any potential change, just like the original one, doesn’t address the cost issue. It’s insurance reform. It’s not addressing the cost through additional transparency on prescription drugs, PBMs (pharmacy benefit managers), nor where the consumer typically gets care.
Enders: Health insurance is expensive because health care is expensive. There’s nothing being done to address that. I think pretty much everyone just said that already, right? I think that’s the key. Another thing, I kind of have come to expect the political fighting, the posturing and getting on TV and the bad-mouthing. Both parties do it.
Does what we’re going through right now give rise to talk about a single-payer system in the years ahead?
Hughes: I think it’s raised the conversation because they set up Obamacare so poorly that people think that’s the only thing that can fix it. Well, they didn’t address the real issues and made the current payer system even worse than it was before. But single-payer is definitely not the solution. I mean, all you have do is look around at the countries that are using it and all the supplemental policies they lie on top of that and their costs.
Pallone: Some of my favorite conversations with friends are when they bring up single-payer. I’ll ask them what they mean by that. No one can quite define what it is that they’re talking about.
Enders: Well, yeah they do. Free. ‘I want free health care.’ That’s what they mean.
Pallone: And then I usually say, ‘You mean like the VA?’ Because everybody loves the VA system in our nation, right? So I think without choice, without competition, we’d really be missing some of the advances that we’ve had, some of the innovation that providers and payers have brought to the space. Pure single-payer system I just can’t see as being an effective way to deliver health care in our nation.
What’s getting too much focus in this broader debate and what really needs to change?
Pearson: Way too much emphasis on premiums. It’s the single biggest topic all the time and, going back to what I originally said, it does not address cost or a culture of wellness. It does not address any of that. It’s just the hot button to get people all riled up. … If people utilized health care better, and the programs that we are talking about were actually implemented, then the cost will naturally at least moderate or go down.
In other words, they should address the other things that are driving the cost.
Pearson: Yeah, because if you’re not addressing those things, costs are going to go up no matter if you have a Republican or a Democratic bill. I mean, if you’re not addressing the elephant in the room of cost and cost control, then your premiums are never going to go down.
Are the premiums the symptom, not the disease, so to speak?
Pallone: And I think that’s a big part of what’s missing. We talked a little bit about health literacy, and the more informed a consumer can get, the better the consumer can be. I think we’re just starting to get there. We’ve got members in the room here, plans in the room here that are doing varying things to help consumers become more and more health literate and understand the value of the service. So we have this perverse focus on premiums because it is the elephant in the room. It’s the headline, but there’s no conversation about value.
Schmidt: We have to help people help themselves. That’s not really being addressed in any legislation that we’re seeing. Access to care is sort of the ticket to the door, it’s the ticket to the doctor. But to really address and help them navigate how to become well, how to navigate their lifestyle choices, understand that prescription drugs are not the end all, that you have lifestyle changes that you need to make, there’s so much more to the cost equation. That’s what we need to help consumers get to.
In the discussion of health and health care, does America need a little bit of tough love?
Hughes: Individual responsibility is an amazing thing.
Moore: As long as it’s coupled with the ability to make an informed health care decision. If we have those transparency tools so people can make an informed decision — and it would be great if those could be coupled with some measure of quality of care — if we could see both the cost and the quality coupled together, it’d be like consumer corporate health care and it would be fabulous.
Enders: Look where we’ve seen where the states have started implementing where if you’re over 18 and can work, you have to — or you give up food stamps. The food stamp population has dropped by three-quarters all around the country. Could we talk something like that into health care? To Bob’s point, I think that obesity is a bigger indicator of future cost than smoking. But we’re like a lazy nation. ‘Just give me another med. I don’t want to actually have to change anything that I’m doing.’
How are employers making benefit changes these days?
Schmidt: They are moving away from that top-dollar coverage. They are looking at deductible options not just to offset premiums, but I think they’re saying there’s opportunity for members to be consumers, for us to look at a cost-share. I, as an employer, can’t fund 100 percent of your premium anymore so we need to be in this together and I think it’s a partnership that they’re looking for with their employees to continue to add that value.
Root: (T)he demand for data analytics and being able to look at that to help make more decisions is definitely a trend we’re seeing, too.
Pearson: That’s how you actually tailor a wellness program. Gone are the days of just the canned wellness approach. Now you need to get the data to be able to tailor it toward your population versus just, you know, throw it at the wall and see what sticks.
Does that mean giving employers more data on how their benefits are working out so they can use that to make decisions?
Root: They’re looking for actionable analytics.
Hughes: Employers want more data so they can see specifically what’s going on in their group and they tailor things more custom to try to change outcomes.
Schmidt: They have to have that information. They’re owed that information, but I do think it has to be in a way that’s meaningful and actionable. Otherwise you get analysis-paralysis because there’s so much data you can get in health care.
What’s the single biggest misunderstanding about health care and health insurance?
Enders: That they’re not the same. I think those terms get lumped in together without understanding what health insurance is.
Schmidt: A misunderstanding being about what’s actually driving cost and that individual responsibility that’s there. So Bob mentioned that there’s things that are broken and being able to address transparency, but if you go back to what health insurance used to be, it was, ‘I’m going have a catastrophic claim, and I need to insure myself.’ Look at what it’s evolved to today: ‘I want it to cover everything and every provider, and I want to utilize it in any way that I want to, right, wrong, or indifferent. I don’t want to have to be a consumer, but I also want it to be at the lowest cost.’
Hughes: We underestimate the American consumer. When you put them in a position with the right information and the right financial incentives, they’ll get to the bottom of it, and they’ll become involved and engaged. I just think over the last 20 years, while we had good intentions, it’s coming back to haunt us.
Moore: Every time you add a benefit, the cost goes up. So what do we want our insurance to be? What should it be? Should it only be for catastrophic or major things? Should people really be expected to pay some of these costs from their own pocket? It’s a conundrum.
Let’s tackle that question. What should health insurance be?
Moore: I guess I liked it when it was just covering more of the catastrophic illnesses and injuries and maybe a small component of preventative services. Maybe you get $500 a year or something to go get your physical and deal with things, but the rest of it, I mean, you ought to be thinking about, ‘I have to write a check for this. I’m going to go get this service.’ Less benefits are going to lead to less cost and less premiums.
Pearson: The costs are so expensive, though, and bankruptcies, the majority of them are because of health care costs. So the catastrophic sounds nice in my mind, but if you have a $12,000 out-of-pocket (cost), how many consumers can actually afford that? That’s another thing too.
Schmidt: I think it’s about having options. You have to have broad networks. You need to have narrow networks. You need to have coverage that’s meeting people where they’re at. We don’t have a lot of flexibility in plan design in the individual market. We want to personalize it as a consumer. So take it as an employer, and they’re trying to personalize it for probably 80 percent of their members, which is like trying to please all my kids at the same time. It’s not going to happen, but you do have to also say, ‘What is it that you’re trying to accomplish?’ I still think that there have to be options that are out there, but it’s not about sheltering people from cost. Give me the information to be an engaged consumer. I won’t be so scared of the unknown, and I can better understand a plan that’s going fit my needs.
Hughes: Tell me one consumer service or product where the consumer’s not paying for it and using it where the cost has not come down and the quality has not been improved. In Lasik surgery, let’s look at that for the last 10 or 15 years with what that used to cost and look at it now. Is that covered by insurance? No. Look at cosmetic surgery. … That stuff has come down in cost because it’s not covered by insurance. If you unleash the consumer on this stuff, I guarantee — I know — providers would adjust. The cost would come down on the competition we’ve just created.
Pallone: Health insurance should be what the consumer wants it to be. I think we need to have the flexibility, as the providers and payers, to create products the consumers want to buy. If you want to buy a high-deductible plan, a couple different HSAs, you should be able to do that. If you want to buy something that’s got the full suite of services, you should be able to do that too.
Now, you’re going to have to shop. You’re going to have to understand the value of the service you’re getting, but I think that a lot of that flexibility was sort of taken away from the plans with the ACA and our hope is as we progress, some of that flexibility will come back.
Root: I definitely feel that the consumer needs to be involved in that and I would lean personally more toward the catastrophic … being able to choose, and then having the understanding of this is how much risk my family is willing to tolerate, and then being able to purchase from there.