When Betty Noel was diagnosed with endometrial cancer last year, her husband, Larry, figured most of the costs would be paid by health care coverage from his job managing the garden shop at a Kmart in Lynchburg, Va. But when he got a $13,270 bill for the first month of Betty's radiation therapy, he found out differently. K Care Value Plan, his health insurer, informed him that the maximum coverage for outpatient services was $1,200 a year. Larry and Betty would be responsible for coming up with the rest. "We were shocked," says Larry, 59, who was paying about $300 a month for coverage. "I pay more than that just in premiums every year."
The Noels' experience is hardly unique. As health care costs have continued to climb -- premiums rose 7.7 percent this year -- employers have been shifting more of them onto workers' shoulders. The $5 copay has gone the way of the nickel candy bar. These days, you can expect to pay $20 or more every time you visit the doctor and to pay 20 to 30 percent coinsurance for some drugs and services. Annual deductibles of $1,000 or more are becoming more common.
At the same time, benefits are shrinking. "Definitely, we are seeing a trend toward lower benefits across the board," says Beth Darnley, chief program officer for the Patient Advocate Foundation, a nonprofit based in Newport News, Va., that helps people resolve health coverage problems. In the Noels' case, the foundation contacted Kmart. Within a few months, the company revised its insurance to cover up to $500,000 annually for inpatient and outpatient care combined. (Kmart declined to comment.)
Out of PocketThat was good news, but it didn't solve all of the Noels' problems. Larry still had to withdraw $5,000 from his 401(k) retirement plan and take $4,000 out of their savings to cover the 20 percent coinsurance they owed for Betty's cancer care. He says, "Sometimes I wonder -- what if I get to the point where I can't afford this anymore?"It's a question many people are asking themselves. Health care ranked as the No. 1 concern, outpolling war and terrorism, among those responding to the annual health confidence survey released recently by the Employee Benefit Research Institute. Six in 10 respondents rated the American health system "fair" or "poor," and more than half said they are not satisfied with the cost of health care. In studies, people consistently give the health care system high marks for quality, and the rankings assembled here and on the Web by U.S. News in partnership with the National Committee for Quality Assurance, managed care's primary accrediting body, showcase the top performers in this important area. But people are worried about expenses, and as health care costs continue to shift to individuals, anxiety and dissatisfaction mount.The buzzword for this cost-shifting is "consumerism." The latest hot concept to capture the imagination of health plans, employers, politicians and policy wonks, consumerism hands the health care reins to individuals, giving them more responsibility for making decisions about their medical care -- and a bigger financial stake in paying for it.
The most high-profile way that consumerism has entered the mainstream is through health savings accounts (HSAs) -- tax-advantaged financial accounts, attached to high-deductible health plans, that people can use to cover their medical bills and save for future medical costs. In addition, health plans are offering members a growing array of "consumer-driven" tools that aim to help those in any kind of health plan evaluate health care prices, pick doctors and hospitals that are both cost effective and high in quality, get appropriate screenings and tests, and otherwise manage their health. Employers, meanwhile, are steering workers toward cheaper drugs, medical services, and providers by offering lower copayments and other incentives for certain choices.Having consumers make choices is a smart idea that gives them a stake in spending health care dollars wisely--or is it a thinly disguised ploy to offload these costs onto individuals, many of whom, as demonstrated by the 46.6 million (and counting) uninsured, can ill afford to pay them.Some experts suggest that the new focus on consumers is unsurprising. Health plans, employers and providers have all tried--and largely failed--to control costs. "The last constituent standing in this mix is the consumer," says Mark Bertolini, executive vice president and head of regional businesses for the insurer Aetna.
It's too soon to know whether consumerism will actually help reduce overall health care costs, but chances are, you're going to be hearing about it when you shop for health insurance. Here's what to look for:Health care consumerism is thick with acronyms, nowhere more than around pairings of high-deductible health plans (HDHPs), also called consumer-driven health plans (CDHPs), with HSAs or a similar financial account called a health reimbursement arrangement (HRA). President Bush has made HSAs a key element of his health care policy, and Forrester Research predicts that nearly one in four consumers will be in some kind of consumer-driven plan by 2010.Federal law requires a qualified HSA plan to have a deductible of at least $1,050 for individuals and $2,100 for families in 2006. The amounts are indexed to rise every year. Participants are responsible for virtually all medical costs up to that amount. Individuals can set aside money tax-free in an interest-earning HSA linked to the plan to cover their medical bills until they reach the deductible. Employers can contribute money to the account as well, and about two-thirds that offer HSAs do.Once the deductible is met, a health plan with catastrophic coverage kicks in. This is often a preferred-provider organization (PPO) plan with copayments or coinsurance for doctor visits, drugs, and the like.
Ho-HumBut consumer-driven plans have been slow to catch on. Only about 4 percent of covered workers are enrolled in a high-deductible plan with a linked savings account, according to the Kaiser Family Foundation's annual employer health benefits survey released in September.Employers aren't especially enthusiastic -- about 8 percent of companies that offer other insurance say they're very likely to include a consumer-driven plan next year. One reason, says Gary Claxton, vice president of the Kaiser Family Foundation and the study's co-author, is that once company contributions to HSAs are factored in, "it's not clear how much employers actually save with these plans."Nor have employees been particularly gung-ho. Fewer than a third of those enrolled in HSA-compatible plans said they understood and were satisfied with them, according to a survey of more than 18,000 employees released in September by human resources consultant Hewitt Associates. Nearly half said they wouldn't pick the plan again if they had a choice. People selected this option primarily for its lower premium, the study found, instead of seeing it as a vehicle to save for health care costs in retirement -- which was cited by advocates as one of the major reasons for establishing HSA plans. As of July, the average balance in these accounts, including employer contributions, was just $1,260, according to Inside Consumer-Driven Care, a Washington, D.C.-based newsletter.
Lower premiums were a big draw for Al Meginniss. When his employer, Lutheran Social Services, Elgin, Ill., switched from a standard PPO to a high-deductible HSA-compatible plan through United Healthcare 18 months ago, the premium deducted from Meginniss's paycheck every two weeks for family coverage immediately dropped from $294 to $174. The nonprofit covers half of his $2,200 deductible, leaving him with $1,100 to handle on his own -- only $100 more than before. Between Meginniss, who has diabetes, gastroesophageal reflux disease and arthritis, and his son, an athlete with frequent chiropractor bills, their HSA has been getting a workout. Meginniss has been able to accumulate just $500 in his account. But he figures he's doing OK. The key, he says, is Lutheran Social Services' contribution of half of his deductible.Next: Health care plan scores >
Source: Health & Wellness
CONTRIBUTE TO THIS STORY
