Preparing for a Changing Healthcare Marketplace Lessons from the Field (1993) / Chapter Skim
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Private Health Insurance: Adapting to Changing Times
Private Health Insurance: Adapting to Changing Times
Pages 6-39
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From page 6... ...
I learne(1 a long time ago not to tell the person next to me on an airplane that I am involved in private health insurance because everyone is angry about health insurance coverage. Patients feel it is too costly, it does not pay for the services they need, and it involves too much red tape.
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From page 7... ...
The following is a sample benefit package (it is drawn from the Health Maintenance Organization Act, so it is a particularly liberal benefit package, giving particularly liberal coverage) : · Physician services, including consultant and referral services by a physician; · Preventive services, including regular checkups, pediatric examinations, immunizations, well-child care, family planning, anti infertility treatments; - Inpatient anti outpatient hospital services; Emergency health services; Diagnostic laboratory and therapeutic radiologic services; · Home health services; · Facilities for intermediate and Tong-term care; · Vision care; · Dental services; Mental health services; Treatment for alcohol or drug abuse; · Physical medicine and rehabilitative services; and · Prescription drugs.
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From page 8... ...
An insurance expert once defined health insurance for me by saying, "health insurance pays for what doctors do or order to have done." We have not traveled very far from that over the past fifty years. There are some areas here and there that are changing, but by and large health insurance payment decisions are based on what doctors clot Coverage is further defined based on where, or in what specific settings, such as hospitals, emergency rooms, and outpatient offices services occur.
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From page 9... ...
What defines coverage in most of our minds is what insurance pays for and that always deviates from whatever we have to have done to us to stay well or get well. In this case, neither doctor nor patient will know what is covered until the final bills are received.
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From page 10... ...
If their bias was heavily against what one might call preventive services, then those were exclude~i. If their bias was against mental health services- and it frequently was-then the employer felt it did not need to offer them.
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From page 11... ...
A number of problematic insurance coverage and rating activities result from these employer and employee trade-offs and cost pressures. One such problem is experience rating, in which the employer is charged a premium based on the likely future health costs of only their own employees, based on those employees' past health costs.
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From page 12... ...
They must be able to count the providers or service sites and describe discrete service units. These factors are all interrelated.
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From page 13... ...
Another of the structural limits of the insurance industry is the "moral hazard problem." There is some moral hazard for everybody involved in the insurance process. For the insurance buyer, there is the temptation not to insure until you get sick.
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From page 14... ...
When these consulting companies are asker! to show data to prove that their measures save money, it is incredible how thin their data are.
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From page 15... ...
If your intention is to improve coverage, what kind of government improvements might help, and what kind of government changes? First, you have to decide whether it is better to reform, to rebuild, or to replace the employer as the payer for, and purchaser of, coverage.
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From page 16... ...
Those who are rebuilders and who think we can and should move into vertically integrated plans face a truly huge change, a rebuilding of the entire insurance industry. I think it is a greater change than General Motors changing its auto lines, much greater.
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From page 17... ...
One is to rebuild insurers and to restructure employment-based coverage so as to move our system to vertically integrated health plans; the other is to regulate providers directly and directly set rates. At present, we are in the midst of the debate between these approaches.
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From page 18... ...
I would also like to discuss other factors apart from the health insurance benefit package, although this is a key factor as it determines the utility of insurance coverage. I have participated in quite a few meetings on this general topic recently and I see this issue routinely discussed from a perspective of very narrow interests and viewpoints, on the part of employers, the government, anti various provider groups.
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From page 19... ...
Most of these workers move from farm sites every three to four months and have children exposed to chemicals, poor nutrition, and dangerous environments. In March 1993, I had the opportunity to spend a week traveling across the country attending seminars sponsored by the Robert Wood Johnson Foundation and the Henry I
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From page 20... ...
This gender imbalance created access and barrier issues in most communities, particularly in cultures where orthodox, traditional and conservative belief systems exist. A number of the immigrant groups who participated expressed concern that the personal information required to access health care could be passed on to government or law enforcement agencies.
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From page 21... ...
What shall we do about the current complex enrollment, eligibility and claims processes under various forms of insurance? These have worked very well to discourage people from getting public and private insurance.
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From page 22... ...
The last factor that I wish to discuss is one that is not only important in terms of the kind of benefits we have, but also in resolving the access problem. I believe that the availability of more primary care and the management of patients on a consistent and regular basis will determine the ultimate financial success or failure of health care reform.
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From page 23... ...
We must Took at the entire range of issues and try to pull things together, because I think we are on the brink of a great opportunity. Health insurance benefits are certainly one of the areas in which we can make a lot of improvement.
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From page 24... ...
, or a managed care organization, or (one of the new terms) an accountable health plan, or, as we are soon to be called in Washington State, a certified health plan.
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From page 25... ...
health insurance, the largest, whether it be liability insurance, health services contractors, or HMOs; (b) the public health sector, which includes those public health services such as water purification and air quality; data collection and dissemination; public information; disaster responses; some social services; and research and monitoring through the National Institutes of Health, the Centers for Disease Control and Prevention, the Food and Drug Administration, and a variety of other organizations; (c)
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From page 26... ...
benefit controls, either by cost-sharing, which lowers premiums but may not lower costs, or by rationing coverage as the Oregon Health Decisions approach has proposed; and (c) health services guidelines ("If we just had better technology assessment and practice guidelines, we would be able to control all the costs in health care!
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From page 27... ...
" That is the way the issue should be approached. In order to do so, we must involve all the players: the health insurance industry, the public and occupational health sectors, the pharmaceutical an(l medical equipment industries, and consumers.
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From page 28... ...
FINANCIAL RESPONSIBILITY Involuntary Tax-Based Public Health Semi-voluntary Health Insurance Voluntary Charity Occupational | _ Overhead Workman's Compensation Risk-Based Ventures/ Research 13 Elective Procedures/ Cosmetic Surgery Increase Function Decrease Mo rbidity Delay Mortality Prevention/ Health Promotion Basic Research Clinical Research Housing/Food/ Clothing Voluntary Behaviors Addictions ·Preference. Seivices FIGURE 2 Funding Streams II.
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From page 29... ...
The third general category is individual financial responsibility for health care costs that are "personal." The breadth of benefits therefore must be decided in a context that is far broader than just health insurance. We must look at all funding sources for health services and define explicit financial responsibility.
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From page 30... ...
Hospital per diem cost-sharing will be predominantly, if not exclusively, a cost-shift to the individual. The conclusions on the depth of coverage issues are as follows: in an employed population, modest copayments do not a(lversely affect health status, modest copayments have some impact in decreasing utilization and therefore decreasing total cost, and modest cost-shar~ng predominantly causes a cost-shift to the individual.
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From page 31... ...
· Health insurance benefits must not discriminate based on age, gender, ethnic background, illness, or method of diagnosis or treatment. It is extremely difficult to separate bad luck from bad genes from bad behaviors.
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From page 32... ...
QUESTION: How reasonable is it to expect that traditional insurance companies can be successful in the world of integrated health plans? STANLEY ~JONES: The difficulties that an insurer faces in moving from a traditional insurance arrangement to a vertically integrated health plan are practical, but profound nevertheless.
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From page 33... ...
KENNETH SHINE: I would like for you to discuss the issue of guaranteeing a basic benefit package, but with an option that if people wanted to buy more benefits, they could do so. Critics of such a strategy contend that if that happens one might very well go back to a multi-tiered system in which there was the basic benefit at a relatively low level, and the population who could afford to do so would buy a higher level of benefits.
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From page 34... ...
We asked our members what should be in the basic benefit package, and they say "everything but infertility treatments ant! cosmetic surgery." Some people want a service covered because they need it, or they think they might need it, or someone in their family needs it.
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From page 35... ...
Sometimes people talk about including things like vision care or dental care, and I would argue that all of these may be good things to include in a "basic benefit package." However, you may want to make them separable in terms of the delivery systems. In other words, some people may use primarily vision or yenta care because they are really healthy and they may not want to go into an integrated system that limits their choice of providers if they have to give up their ongoing relationship with their dentist or eye doctor.
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From page 36... ...
I do not know the answer to that. QUESTION: I am an obstetrician/gynecologist and I would have to say something about not considering basic coverage for reproductive care.
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From page 37... ...
I haven't even gotten to the question of what's a benefit yet. That logic leads me to say that I would rather see some sort of accountable health plan that includes both clinicians and people who can worry about setting prices and defining risk, and who can worry about managing resources, but who are held accountable to high standards of quality and who compete on that basis.
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From page 38... ...
But even that is a risk. The other side of the risk though is that frequently people talk about the problem of unnecessary care in the fee-for-service system and unnecessary illness that comes out of it.
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From page 39... ...
Well there are some real incompatibilities. We decide we are going to set rates and try to control volume, and then we tell an accountable health plan that the way they can really save money is to channel their patients to certain hospitals and certain physicians, but incidentally the rates for that hospital have been determined based on their getting so many patients next year.
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