Biggest Shift in Employer-Based Healthcare in a Decade

The Wall Street Journal reports the biggest shift in employer-based
healthcare in a decade is being planned.  Major disruptions and
significant health risks to workers are predicted.

Health insurance premiums increased an average of 14.7% nationwide in
2003, raising the average cost to employers to $6,227 for each
employee they cover, according to a study released Monday by Hewitt
Associates, the Denver Rocky Mountain News reports (Brand, Denver
Rocky Mountain News, 10/14)

Some U.S. companies this year are making what might be the "biggest
shift in employer-provided health care in a decade ... (to) help them
"become shrewder consumers" rather than simply pass on a greater share
of health costs, the Wall Street Journal reports.

However, as employers switch provider plans to cut increasing medical
expenses, employees are faced with "major hassles" and health risks.
When a consumer changes health plans, they often have to find a new
doctor; substitute different medications because of different
reimbursement policies; postpone preventive tests and routine
check-ups; and deal with delays in getting referrals, appointments and
record transfers. About 62% of employers shopped for a new plan in the
past year, and 33% of those changed insurance carriers or health
plans, according to a survey from the Kaiser Family Foundation.

We now have the freedom to choose the very best health care we can
afford.

These disruptions and health risks for workers with essential jobs in
major US companies are no different from what New York City Medicaid
recipients are suffering.  Today's New York Times reports that as the
City's Medicaid recipients constantly lose and regain eligibility,
they are randomly re-assigned to new HMOs. See
http://www.nytimes.com/2003/10/14/nyregion/14MEDI.html

What is happening in healthcare is part of the destruction of the
so-called "middle class." The expression "middle-class" is largely a
fiction, implying that large fraction of the population has interests
opposed to those of the working class.  However, the expression
"middle-class" is valid in the sense that workers' struggles over the
last century won a relatively stable life for many families' health,
housing, education, and employment.  This is what business and
government intend to destroy.


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Wall Street Journal, October 15, 2003

Your Health Plan's New Math

Many People Must Rethink Benefit Choices This Year As Firms Revamp
Options

By RUTH SIMON  Staff Reporter of THE WALL STREET JOURNAL
http://online.wsj.com/article/0,,SB106616919273701000,00.html


For many workers, the benefit enrollment package that arrives this
fall could be the most unpleasant piece of mail they get all year.

Stung by what is expected to be the fifth consecutive year of
double-digit increases in health-care costs, many employers are
aggressively revamping their offerings -- dropping old options, adding
new ones and making subtle but important changes. Many workers will
see their health-insurance premiums rise again. Some will also be hit
up for a greater portion of the bill each time they fill a
prescription or see a doctor.

But companies aren't stopping there. Many are undertaking what could
amount to the biggest shift in employer-provided health care in a
decade. The trend is away from health maintenance organizations, whose
costs have been rising at a faster clip than medical prices overall,
and toward greater choice -- but at a price.

Some companies, like International Paper Co. and Lockheed Martin
Corp., are experimenting with new "consumer driven" approaches that
give employees an annual cash allowance to spend on medical care.
Others, like Sears, Roebuck & Co., are moving away from fixed-dollar
copayments to arrangements that force workers to pay a percentage of
each medical bill. And many companies are making it far more expensive
to use brand-name drugs rather than generics.

The goal is not just to get employees to pay a bigger portion of the
costs but to make them more sensitive to medical prices and become
shrewder consumers. "We're working to change the way people think and
behave," says Liz Rossman, vice president of benefits at Sears.

The upshot is that many people will find that automatically
re-enrolling in the plan they had last year may not be the best move.
In some cases, it may not be an option at all.

International Paper, for instance, is replacing two of its plans with
two new consumer-driven options. Under one, a family of four would get
a personal care account with $1,000 that can be used to partially
offset a steep $4,000 deductible. Employees can go to any doctor they
choose, but will pay 35% instead of 20% of the cost if they stray
outside the plan network.

Lockheed Martin is introducing a plan that, for a single employee,
includes a $1,000 deductible and a $500 health care fund that can be
spent on doctors' visits and hospital services. It also includes new
coinsurance charges for drugs, with the highest levies on brandname
medications that aren't on the company's "preferred" list. "We're
making people make some real hard economic decisions," says John Rust,
Lockheed's director of group insurance-supplier management.

Deciding what plan makes sense is getting tougher because there are
more variables than ever to consider. For many workers the
most-noticeable hit will be in their paychecks. Employees are expected
to pay, on average, $196 a month for family coverage, or 15% more than
this year, according to Towers Perrin, a benefits consulting firm.

But it may not be wise to simply pick the plan that takes the smallest
bite out of your wallet or the one that offers the richest suite of
benefits. It's better to focus on total cost -- deductibles and
co-payments or co-insurance as well as premiums. That means adding up
both the amount you'll pay each month as a premium and what you are
likely to shell out over the coming year for doctors' visits,
prescription drugs and other medical services.

It also means reading the fine print of individual provisions to catch
significant changes. Washington Mutual Inc. has doubled its co-payment
for visits to specialists in its HMOs, and is increasing the
out-of-pocket maximum on another one of its plans to $2,250 from
$1,500 for in-network services and to $4,500 from $3,000 for those who
go out-of-network. At AMR Corp., parent of American Airlines, nonunion
employees who sign up for one plan will pay 40% of the cost when they
go outside the plan's network, twice as much as in the past.

Workers "have more skin in the game" this year, says Tom Beauregard, a
national practice leader with Hewitt Associates. "Employees need to
slow down and make careful decisions." Here are some guidelines that
can help in the benefits enrollment process:

Estimate how much you'll spend on medical care. Whether a plan is a
good buy or a bad one will depend, in part, on your health-care needs.
So your first step should be to estimate how often you and your family
will visit the doctor, how many prescriptions you expect to fill, and
other medical services you may need next year. You can often come up
with a reasonable prediction by looking at how much you spent this
year on medical services.

Check for differences in preventive care. At International Paper, for
instance, employees can get up to $500 of preventive care at no cost
under some plans, but will have to pay up to $20 per check-up in
others.

If you use a lot of brand-name drugs or expect to go outside your
plan's network, find out what it will cost you, and if you can do
anything to cut those expenses. Mail-order programs can produce big
savings on prescriptions you take regularly.

Rethink HMOs. Many people joined HMOs because they were cheaper or
avoided them because of rules that limited access to specialists. But
HMO costs have been climbing at a faster clip than medical care
overall, while some of those knotty restrictions have been eased. So
while HMOs aren't necessarily the deal they once were, they may allow
more freedom of choice than in the past.

"It used to be that for the employee, the HMO had the best benefit for
the lowest contribution," says Richard Ostuw, a principal with Towers
Perrin. Now, he says, "it may or may not have the lowest contribution"
but still can be a good value, especially for people who see doctors
frequently.

Sears will offer just 35 HMOs nationwide next year, down from 53 in
2003 and about 220 five years ago. The company says that many HMOs no
longer meet its standards for cost and quality but it thinks highly of
those it still offers.

The bottom line: People need to examine the detail of each individual
HMO for cost as well as quality.

Consider your risk tolerance. The collapse of the stock-market bubble
made many investors think twice about how much risk they could
comfortably accept. Now that same notion is rearing its head in health
care.

Many companies now offer a range of options, from low-cost, bare-bones
plans to ones that are more costly but offer richer benefits. At
Verizon Communications Inc., for instance, nonunion employees can
choose between plans with $200, $400 and $1,000 deductibles.

Take advantage of company-provided calculators. Some of the newest
tools go well beyond simple number crunching. International Paper's
calculator automatically plugs in estimates of the cost of preventive
care when an employee enters his or her name, gender and geographic
location. AMR is working on a calculator that will allow workers to
model the costs of different plans based on the health claims they
filed the previous year.

Many employers are also providing workers with information that can
help them find the best care. Verizon is rolling out new online
quality rankings of more than 620,000 doctors and 4,700 hospitals
nationwide plus information about how to treat diabetes and other
chronic illnesses. Washington Mutual is adding new online resources
that employees can use if they or someone in their family has been
diagnosed with a particular illness, including questions to ask
doctors and the pros and cons of different protocols.

Consider whether it pays to split up. As costs climb, some big
employers are sharply raising the premium for family members or are
adopting financial incentives designed to nudge working spouses to
other health plans. That means you need to look at both your own
health plan and your spouse's plan before deciding whether you should
keep the family together or split up when it comes to health coverage.
At AMR, a worker who might pay roughly $25 for single coverage would
pay about $49 to cover two people and about $74 to cover the whole
family. At General Electric Co., an employee earning $100,000 will pay
roughly $8 more a week to cover three people instead of two.

Enroll in a FSA. Flexible Spending Accounts allow workers to use
pretax dollars to pay for many medical expenses their health plans
don't cover. But the vast majority of workers don't use them because
of rules that require employees to forfeit any contributions not used
by year end. At GE, for instance, just 15% of eligible employees
enroll in health-care FSAs.

But with out-of-pocket costs climbing, there's more reason today for
workers to enroll in FSAs. The plans are also more attractive now,
too, because of a recent decision by the U.S. Treasury Department that
allows workers to use pretax dollars to pay for nonprescription drugs.
That means you can generally tap your FSA to buy anything from aspirin
to cough drops, provided you have an itemized receipt to prove you
made the purchase.

Keep an eye out for special deals. Some companies are offering the
carrot as well as the stick to keep costs from soaring further. If one
of these rewards makes sense for you, grab it. Verizon workers pay $60
a year less in health-care premiums, for example, if they indicate
that no one in their family uses tobacco products. Lockheed Martin
will put an extra $100 in the health-care fund of workers who fill out
an online health-risk assessment. The information is then funneled to
"health advocates" who provide workers at risk of running up big
medical bills with information about disease management programs and
healthy lifestyles. Sears, meanwhile, has hired an outside company to
scour medical claims information to identify gaps in workers' care and
offer guidance.

Write to Ruth Simon at ruth.simon@wsj.com5

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Wall Street Journal, October 15, 2003

The Perils of Switching

Changing Health Plans to Save Money Could End Up Posing Risks to
Health

By VANESSA FUHRMANS  Staff Reporter of THE WALL STREET JOURNAL
http://online.wsj.com/article/0,,SB106616922966749700,00.html?mod=arti
cle-outset-box


Many people have found that switching health plans to save money
introduces major hassles into their lives. What they may not know is
that, if not managed correctly, it can pose risks to their health as
well.

Joining a new health plan often means having to find new doctors or
substituting medications because of a different reimbursement policy.
Faced with navigating new rules and networks, some patients put off
routine checkups and other preventive tests. Others have to contend
with delays in getting appointments, referrals and transferring their
records.

Such disruptions in health care are becoming routine for many
Americans as both employers and workers shop for the best deals to
curb rapidly rising medical expenses. In a survey of employers
released last month by the Kaiser Family Foundation, 33% said they had
changed health plans or insurance carriers in the past year. More
volatility is expected for 2004. "Employers are saying, 'I need to
consider other vendors, even if it means a disruption for employees,'
" says Edward Kaplan, senior vice president of the Segal Co., a
benefits consultancy. In a typical year, 5% to 10% of Segal's clients
may shop for a new insurer. This year, he says, it's closer to 20%.

Between new jobs and graduate school, 30-year-old Laura McLellan has
had to change health plans at least five times since college. Last
year, after switching to the plan she's on now, she skipped getting
her annual Pap smear test because she hadn't yet found a gynecologist
in the new network. And as a first-time patient, she couldn't get an
immediate appointment with a doctor in the network when she became
sick from paint fumes in a new apartment. Instead, she had to go to a
walk-in clinic and then a hospital emergency room.

"I don't feel like I've had a stable relationship with a doctor since
my pediatrician," says Ms. McLellan, who works as an editorial
assistant in Cleveland.

Playing 'Catch Up'

A study published recently in the Annals of Family Medicine suggests
her experience isn't unusual. Researchers at the University of
California, Davis, who looked at insurance claims data of 336,000
patients, found that women older than 40 who were in the first year of
a health plan were 13% less likely to have a mammogram than those in
the fourth year of a plan. The research also concluded that new
members ran an 89% higher -- though still small -- chance of an
avoidable hospitalization, usually resulting from a chronic condition,
such as diabetes, that is kept under control with regular care.

When patients find a new doctor, they usually have to play a game of
catch-up. "On the first visit with a new patient, preventive care
isn't on the top of the list," says Michael Potter, a family physician
in San Francisco, who has found that more than half of his new
patients have come to him through health-plan switches. "I may be just
sorting out a patient's medical history or dealing with what's
bothering them at the moment."

Sometimes, before he can prescribe the best treatment, he says, he has
to wait for a patient's immunization records, blood work or other old
laboratory tests to arrive, which can take weeks, even months.

If the problem is urgent, or the patient can't recall what tests he or
she has had, Dr. Potter says he'll go ahead and run a duplicate test
himself -- which could mean an unnecessary cost for both the patient
and the health plan. Recently, he says he had to order an expensive
echocardiogram, an ultrasound of the heart, for a new patient who had
recently switched plans and had been taking several heart medications.
"If I'd seen his previous test was normal, I wouldn't have had to," he
says.

Wastefulness

After Eva Kahana's doctor of 10 years no longer was in her health
plan, she found a new one, but then had to repeat a complete physical
and many lab tests she'd already had done. She has since had to switch
doctors two more times. "I've been lucky in that I've had excellent
doctors," said Ms. Kahana, a medical sociologist at Case Western
Reserve University in Cleveland. "But there was a certain wastefulness
in the system."

Just because your employer switches plans, it doesn't mean you'll
necessarily have to hunt for a new doctor. Many companies, especially
larger ones, first conduct a "disruption analysis" looking at how much
doctor-switching a new plan would require. "Most companies will take
major pains to avoid making employees change providers," says Tom
Billet, senior consultant with employee benefits firm Watson Wyatt
Worldwide.

Switching Medications

Still, a new plan may mean paying extra for certain medicines or
getting new authorization from an insurer to continue a treatment
you've already been taking. Among the most common types of drugs a
patient might be required to change on a new plan: birth-control
pills, hypertension treatments and antidepressants. Arlis Adolf, a
family physician in Denver, says she has seen many patients react to
side effects when switching antidepressants. "It can take a while for
them to restabilize," she says.

If you have to switch plans, avoiding such problems often means
spending more money. In the past four years, Jeff Walton's employer, a
mortgage bank in Phoenix, has changed plans three times. But because
Mr. Walton's two daughters saw mental-health therapists and had
developed a rapport with them, he and his wife, Sherri, didn't want to
find new doctors. They've also kept the same family physician and
other specialists. But they estimate they spend between $5,000 and
$7,000 more a year for certain drugs and to see doctors outside their
plan's network.

"We know employers are trying to save costs and get the best deal,"
says Mrs. Walton. "But to give up those doctors would be devastating
to us."

Write to Vanessa Fuhrmans at vanessa.fuhrmans@wsj.com