Businesses prepare for health insurance shift
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On the same day that a new Institute of Medicine report said Americans waste $750 billion on health care each year, health exchange specialist Don Garlitz told local business leaders how they might cut some of that waste as well as slow their ever-growing employee health plan costs.
Health insurance exchanges, which operate as health plan marketplaces for people who otherwise cannot afford to purchase insurance, will help shape the future of American health care when major components of the Patient Protection and Affordable Care Act go online in 2014.
But because most people still get their health insurance through their work, employers play a key role, too.
"Employers will make decisions on what products to put before employees," said Mr. Garlitz, executive director of bswift Exchange Solutions, a Chicago-based benefits administrator that helped Utah set up its first statewide health exchange in 2009, a year before the Affordable Care Act became law. He spoke Thursday at the Pittsburgh Business Group on Health's 13th annual symposium at the Pittsburgh Marriott City Center.
For the Pittsburgh region, long-accustomed to insurance that grants members access to nearly all hospitals and specialists, the exchanges represent a different dynamic: A choice among multiple health plans but likely with access restricted to a narrower network of providers, Mr. Garlitz said. "Employees buy from the carrier they want and buy the coverage they want."
The shift has already begun in Pennsylvania: Last week, United Healthcare announced it is now offering small business owners options from 30 different medical plan designs that have different levels of coverage and a range of deductibles and premiums.
In a release, the insurer said with the new plan, "Employers define their level of financial contribution and offer employees the individual choice to pick the plan that best meets their unique needs."
That's a big upside for employers -- an ability to control, or at least predict, the year-to-year costs of having an employee health plan. Instead of cringing at the prospect of another rate increase each year, they can tell employees, "Here's what we've budgeted for our health plan. This is what you have to work with."
While that shifts responsibility for managing health costs to employees, "maybe that's what needs to happen in the market," said Mr. Garlitz.
Clearly something needs to happen, according to the report released Thursday by the Institute of Medicine, an independent organization that is part of the National Academy of Sciences. The 450-page report estimates the nation wastes 30 cents of every dollar spent on health care because of unneeded care, excessive paperwork, fraud and other types of waste.
"Our health care system lags in its ability to adapt, affordably meet patients' needs, and consistently achieve better outcomes," said the institute's committee chairman Mark D. Smith, president and CEO of the California HealthCare Foundation. "But we have the know-how and technology to make substantial improvement on costs and quality. Our report offers the vision and road map to create a learning health care system that will provide higher quality and greater value."
While there's no guarantee health insurance exchanges will ultimately reduce an employer's health plan costs, Mr. Garlitz said they will give employees a bigger personal stake in making that happen.
"What you're after is a deeper consumer involvement," he said.
First Published September 7, 2012 12:42 am