Perhaps one of the rays of hope in cost reform is the proposed treatment evaluation to be undertaken by conducting ‘comparative effectiveness research’. The April 5, 2010 Business Week describes this effort. If successful it will result in a sober study of costly and new treatments alongside the tried, true and often generic options when it comes to drugs. Hopefully it will look at other costly treatment interventions vs. more conservative measures. In a system where the patient has no economic incentive to get the best result for the dollar, such research is necessary and the results should be tied to what is paid for by those who are tasked with writing the checks – be they carriers or the government
Our Company’s Experience with Health Insurance Premiums
As we launch MCNtalk, we are focusing on posting articles by others on health and medicine related topics. It is not our general intention to focus on MCN in these postings. This article is about all companies providing health coverage and all employees receiving these benefits.
The other day we received our initial rate quote for our health insurance for our new plan year starting in July 2010. By way of background, MCN has over 100 covered lives in a number of states, so we rely upon national carriers to quote and provide coverage options for our staff.
Our annual increases for equivalent coverage to the prior year have been consistently in excess of 10% for as long as I can remember. We have coped with this by reducing coverage through increased copays and deductible and passing on a portion of benefits costs to employees to the degree they exceed the level the company will cover.
I personally remain baffled at the resistance to addressing this significant problem and wonder what drives certain individuals to fight for a status quo that is an illusion given the history that every employer faces, not just MCN. No rational employer will passively accept these increases and the assumptions that underlie employer based health care is fragile and approaching a breaking point. This is not a theoretical issue but one that impacts every person. It is naive to count on continued employer coverage, as it is naive to assume that an individual will continue with a given employer. How would we respond to any other vendor or supplier who increased their rates at a consistent rate in excess of 10%?
The email below was written to the company. It has been edited slightly. I welcome your comments
Brian Grant, MD
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To: MCN Employees
Re: MCN Health Insurance 2010
March 25, 2010
These messages are predictable and not fun to write. And they underscore the need for major systemic reform, which the recent national health bills don’t in my mind more than hit the surface of.
We received our initial fee proposal from our current carrier. As you may recall, our increase proposal last year from our prior carrier last year, was 54%. We moved our coverage and the final outcome was in increase of about 15%.
The current proposal is 17%. About 14% of this is so-called community related increases – basically the overall cost of all in the plan. About 3% is MCN related, such as a chronic condition, some expensive births, and some other expensive claims. But to my knowledge there is really nothing over the top in our group or something unusual in a group of over 100. I should note for anyone nervous at this observation, that we at the company do not have access to individual claims information nor would we want access. But we were told in general terms about some of our unique experiences as a company.
We are not done yet and there will likely be some but not a whole lot of improvement in the above number. MCN has agreed to l pay a small portion of the coverage increases for employees. The rest will fall upon the employee in the form of higher out of paycheck costs, and/or decreased benefits via higher co-pay, greater deductible, or your decision to go to the lower cost policy with less benefits, such as the health savings account option. MCN can’t justify absorbing the major blow of an out of control system and the collective decisions of all of us to consume too much health care, pay too much for it, allow healthy folks to opt out and otherwise place companies in the role of the provider of health care to begin with. I believe that a willingness to foot any increase beyond inflation, which is less than 3%, is generous. In any event, MCN is not alone in passing on increased costs to staff. This has become the norm in most businesses.
Now to be fair, there is not a whole lot that you can do as individuals to impact this, but collectively there is and I want to speak to that. We have a situation that in the world of economic theory is called the tragedy of the commons. This refers to the old English commons that belonged to all, so folks would graze their sheep till there was no grass left and it was worthless for all. There was no incentive for an individual to not graze, since others would and the self-sacrifice of the non-grazer would only benefit others. Similarly in the oceans, absent fishing regulations and treaties, there is no incentive or reason for a fisherman to not fish a species to extinction, since others will do it if he declines to fish and he only forgoes his portion of what is left. Similarly in health care we have a situation where the health care consumption by one of us, is charged off to the rest of us, to the degree that we don’t write our own checks. But it goes up for all and by and large in the current system an individual decision to not consume has little personal economic benefit.
I am personally irritated by the notion that we are impacted by claims experience in the company. This action creates an incentive for a company to engage in illegal discrimination, such as not hiring individuals with chronic conditions, not hiring young women likely who use pregnancy benefits and the like. MCN won’t discriminate based upon illegal criteria such as this. It would be wrong and illegal, but such discrimination likely does take place in many a business and is very difficult to prove – when an individual presents with visible evidence of a higher demographic likelihood to be a high medical user. All a hiring manager need do is select another candidate for other reasons, not stating the health cost concern that could be driving the decision. I also find myself wondering if any dependent coverage purchase decisions have been made by staff who have a dependent who needs costly care and is going to use more benefits while at the same time others are choosing to not cover dependents who do not have any obvious health risks and are less likely to use benefits? In our US system where coverage is optional, such decisions are rational and make a lot of economic sense, but the rest of us pay for these decisions. I don’t fault anyone for making smart and logical decisions on this or any other personal issue like health coverage when there are choices to be made.
Setting this issue aside, let’s reflect on what we can control and which also may be impacting our costs and experience at some small level, but which if other policy holders would be mindful of, would have a real impact.
We have no impact in our use on fees charged and paid for care. The carriers make that decision and shopping for price is likely not a viable option for us in America. But we can and should make utilization decisions – whether to receive care or not, the extent of such care, and the type of such care.
Much of health care is discretionary and palliative. Some care is worthless or harmful. Estimates suggest that as much as a quarter to a third of health care has no significant impact on one’s health. As individuals we make many choices. I want to suggest to us that we pretend for a moment that a health care decision was at our own cost and that we had the money available if we wanted it, but if we chose to, we could keep the funds and use them in other ways, or save it. If that were the case, rather than ‘insurance paying’ how would we behave differently?
Hopefully we would still pay for necessary preventive care, vaccinate our kids and get flu shots. But certainly some would choose to not pay for what is clearly necessary. And many other complex medical decisions may be beyond the scope of some to judge, but with expert guidelines, the Internet and the ability to ask good questions, I believe that many of us can and should make decisions on our care and not rely only upon the advice of caregivers.
Let me suggest some areas of potential savings. Far from complete but worth thinking about and expanding upon with your own examples:
– How many sessions of physical therapy, chiropractic care, or regular office visits are adding value and are worth the added cost, if at all?
– How many visits to the primary care doctor are for self-limiting matters such as viruses and could be avoided with good self-care, hydration and over the counter medications?
– How many brand name drugs could easily and appropriately be replaced with generics and have minimal if any additional benefit?
– How many unfinished prescriptions are in your medicine chest and prescriptions not complied with but paid for?
– How many ER visits could be avoided by not waiting till the evening or weekend when one was feeling ill? How many of these visits could have been to a much less costly urgent care center?
– How many of us have declined a recommended test that might be interesting but not critical. For example an MRI to confirm what is clinically obvious and which does not alter the treatment course? How many of us have asked if a test is necessary and why, or if it is optional. What if we asked the doctor if he or she would order it if we had to pay out-of-pocket with our own money? Would we be so uncritically accepting if we had to write our own check for a thousand dollars or more?
– How many surgeries could be deferred, and C-sections be avoided? Studies have addressed the fact that many procedures could be avoided with a different clinical approach.
Our health care system is broken. So called reform has passed and days later we are given a predictable double-digit increase in our premiums. MCN ought not be in the business of providing health care to employees anymore than we are in the business of providing rent, children’s education or food for our staff. A company has no moral, legal or ethical obligation to provide health benefits. It only has an economic imperative and the reality that benefits are expected at certain levels of employment and that its ability to hire and retain quality staff is impacted by benefits and pay. But be assured that it is the rare company that is not shifting more and more of the cost burden of healthcare to staff directly as we are, or indirectly by salary reductions and lower increases.
I am baffled by the loud protests by people like us, who rely upon fragile employee benefits for health care, have significant and increasing out-of-pocket costs, and are faced with impossibly high premiums for non-group policies, especially if they have pre-existing conditions – yet who somehow have constructed a fear of a government mandated alternative. As I have long said, doing nothing is not an option, since our carrier by imposing such increases, is doing something – and we in turn will not be passive by not responding to it. It impacts each one of us and most other working individuals, if we are lucky enough to have a job and an employer who provides some level of decent health benefits – which many of our neighbors do not enjoy.
There is more to come and we will keep you updated as we work through this process. Thank you for your understanding and support as we engage in this annual challenge.
Brian
More Doctors Giving Up Private Practices
Traditionally physicians were small business people, working alone or in small groups. Increasingly physicians are becoming employees or partners of larger organizations. The barriers to entry as a solo practitioner are increasingly steep and risky – while groups afford power to negotiate fees, invest in practice infrastructure such as record systems and equipment, and allow young and often debt-burdened new physicians the ability to enter a practice as an employee without personal investment. Furthermore, the increasing complexity of contracting and payment with multiple payers leads many physicians to seek to avoid the business end of medicine and leave it to others while they treat patients. This New York Times article describes the trend.
A City United by Tragedy, Divided by Its Kindness
When individuals are the victims of a mass killing, such as those killed in 9-11, Columbine, the Ft. Hood shootings and other events, there is often an outpouring of support including financial assets made available for survivors and family members. Whether such support is appropriate and the inherent challenge in allocating such resources in an effort to compensate is fraught with conflict and ethical challenges. This article in the Wall Street Journal describes the challenge and the methods employed in one such event in New York.
With Cancer, Let’s Face It: Words Are Inadequate
This column from the New York Times, March 21, 2010, challenges us to find new vocabulary around the experience of cancer. The writer dislikes terms like bravery, victim and hero – and a general surplus of clichés around the disease. Some other recent articles written by women have had similar criticism about the commoditization and ‘pinking’ of breast cancer.
Managed Care: Get Used to It
From the New York Times on Sunday March 14, this article states the obvious; that avoiding change in the health care system is not an option and that payers will exercise some decision-making and control over what is paid for and permitted. An inherent challenge in any system where the payers are not the consumers is that usual marketplace controls are not present. When we pay ourselves, we generally exercise restraint. In health care it is the rare service that is paid for by the patient. The patient has no particular motivation to not consume, or to shop for price, and the providers have motivation to treat and sell services to the degree that they can be medically justified. An interesting thought experiment would be to imagine a patient seeking or being advised to obtain a given treatment, and then instead of being given the treatment, they are given the money that the treatment would cost at the place they were considering, and told that they have a choice of getting the treatment, keeping the money and foregoing the treatment, shopping for the treatment at a lower cost and keeping the difference, or changing the type and extent of the treatment (for example switching from a brand name to generic drug). Obviously the complex nature of diagnosis and treatment would make decision-making a challenge for many. Furthermore, irresponsible behavior combined with the perverse incentive of keeping the cash would mean that many would take the money and not vaccinate their kids, and generally be more resistant to preventive care where they are not currently suffering or in pain. Health reform proposals as best we can tell, are not meaningfully addressing the excess utilization trends that occur regularly.
Several days on the blog – progress report and request
556 hits since starting, and a relatively small number of subscribers. Have realized that many filters block blogs at work, so for those who can’t access it at work or don’t have the time, they might want to subscribe or access the blog from their personal email.
Two requests – please consider subscribing, which will mean getting notice of new messages, which one can schedule daily, weekly or whenever there is a post.
And please consider commenting on something posted that you have reaction to. Don’t be shy. Get the conversation going.
Caution: Stats May Be Slippery
Why claims of an almost miraculous decrease in U.S. worker injuries don’t stand up to scrutiny is the subhead of this article from business-friendly “Business Week” in the March 11, 2010 issue.
Since the original publication, the company described in the article AK Steel, sent in their own reply, which presents their view of the controversy.
The Nothing Cure
By Matthew Herper and Robert Langreth, From Forbes Magazine, Issue Date March 29, 2010
Instead of ignoring the placebo effect, doctors should try to enhance it, says a Harvard Medical School professor.
This interesting discussion on the placebo effect is worth a read. The presence of the placebo effect is well-known and generally accepted in medicine, though it may be frequently argued as to when it is taking place or not – especially when one’s own treatment is being questioned.
From a policy standpoint, a legitimate question is whether those treatments that have a significant placebo component are ethical to the degree there may be conscious deception on the part of the practitioner – on behalf of helping their patient. In addition, should third parties such as insurance or government be asked and expected to pay for placebo interventions?
Welcome to MCNtalk – a discussion group for you
MCNtalk, which has existed for many years as an email broadcast, is being converted into a blog. Advantages include the ability for prior articles to be stored, indexed and accessed by readers, as well as a robust ability to include many features and full user control of how or if they receive notifications of new postings or comments.
In addition, this blog will be readily available on the web for subscribers and non-subscribers alike.
It is a work in progress and we hope to add many enhancements over time.
The address is http://www.mcntalk.com
Your comments and ideas are welcome as well as requests to add a particular site or blog to the featured list. We also welcome links to articles of interest, or even your own idea pieces.
Our goal is to present articles of interest and potential relevance to those who deal with medical issues in claims management, disability, injury and related legal and administrative issues, as well as those who have a general interest in health-care issues. I am linking to blogs that focus on health care politics but we will do our best to steer clear of partisan and acutely political matters. We recognize that our readership is diverse and that there is no shortage of good sources for thoughtful comments, reflections and positions on current political issues.
This does not mean that the occasional article will not be controversial, and we welcome divergent comments. Inclusion of a particular article does not necessarily imply agreement with the stated position by MCN or it’s staff.
The original MCNTalk email list will be used for periodic reminders about the blog and recent articles. But we encourage direct subscription via the button on the upper left, which will provide immediate notice of new postings. You may change your subscription preferences or unsubscribe at any time.
We welcome comments but they should be signed, courteous and relevant to the posting. We will tread gently into the world of comments and initially screen them before posting, perhaps opening them up to non-screened postings for repeat commentators or all.
If you have ideas or thoughts about making MCNTalk more effective and relevant – send them to us at MCNTalk@mcn.com.
Thank you.
Brian L. Grant, MD
Chairman and Medical Director