Time to Bend the Health Insurance Cost Curve

There was an interesting health insurance discussion on the social networking site LinkedIn recently.  Participants were talking about the 2011 United Benefits Advisors Health Plan Study.  The study noted that Consumer Directed Health Insurance Plans, at 22.9% of employer-provided health plans, surpassed HMOs, which now represent only 17.8% of employer health plans.  Both still lag far behind PPO plans (48.4%), according to the study.  It went on to cite its finding that the rates of cost increase for CDHPs was not much below the rate increases associated with other plans.

Bill Stafford, UBA Vice President, Member Services commented about Consumer Driven Health Plans (CDHPs), “As these health insurance plans become more prevalent, the percentage of savings has continually declined.”  I disagree with the notion that costs are rising because the less healthy among us discovered CDHPs. Bearing in mind that the most Americans are still covered by employer-sponsored health insurance, it is employers who are increasingly adopting CDHPs to manage their benefit spend. While the population covered by CDHPs may increasingly reflect the population at large, it’s not the more significant driver.

At the end of the day, this one is a comparison of apples and elephants. HMOs and PPOs were arrangements intended to manage care and its related costs. Initially, HMOs used with lower deductibles because capitation and the gatekeeper would keep the larger costs under control. History’s scorecard records that one as a swing and a miss. PPOs largely replaced indemnity plans as insurers negotiated rates with networks of providers. A CDHP with a network use requirement is not sufficiently different, with the exception that the out-of-pocket limit is more heavily shifted up front.  The idea is that consumerism incents people to either shop (which they largely still don’t understand they can do) or rely more on wellness than disease management. Regardless of the approach, the industry has largely been shifting costs around to the extent it’s largely an effort in moving deck chairs on the Titanic to hear the band play.

To make a change, one cannot simply shift costs. They must be changed.  Stafford stated, “We anticipate that in spite of passage of health care reform efforts, health care costs will continue to increase. We still need concerted efforts to change or alter the underlying health care issues that control costs.”  At Soter Healthcare, we agree.

Both directly and with our partners, we are working every day to bend the health care cost curve back in our clients’ favor.  We’ve launched an innovative health benefit plan with our partners that reduces unnecessary costs, takes advantages of early intervention, offers significant cost reductions and greater access to premier surgical and hospital care, and, for most of our clients, important reductions in health insurance rates that put money back into the company.  Importantly, the Soter approach is not just for large employers.  Our innovative approach works for employer groups as small as two people.

The cost curve can be bent downward, and we’re doing it for our clients every day.  Be sure to ask how it can work for your company.

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