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11/23/2009
The STATE OF WI the problem – and maybe the solution - to health care costs

If you might have been looking for it, the week’s news included nudges toward solutions to begin to address 1) health care access and 2) health care costs.

First, the annual Mercer National Survey of Employer-Sponsored Health Plans told us employers saw costs of health care coverage for employees in 2009 rise at its lowest annual increase in a decade – an average 5.5% throughout the country. Small business and larger corporations achieved those relative “controls” differently - small businesses moved employees into lower-cost consumer-driven health programs, larger businesses did more health risk assessment and wellness-related activities to control costs.

The Mercer study also demonstrated that Wisconsin employers paid nearly 22% more for health insurance than the national average. Why?

Among reasons the state stands out, according to Dustin Conrad, a Milwaukee-based principal with Mercer's health and group benefits business, are the generous deductibles people here enjoy.

In Wisconsin, an individual enrolled in a preferred provider organization - the most common arrangement for delivering health care - pays an average deductible of $654 for services within the network. Nationally, the average is $1,096.

And the employee contribution toward premiums in Wisconsin is lower: $106 monthly for individual coverage through a PPO, compared with $120 nationwide.

(Emphases are mine.) The more that’s given away, the less responsibility the consumer feels to control costs. Period. I would wager very costly, very low-deductible public employee policies in Wisconsin, with very minimal premium participation per employee are key factors impacting higher health care costs here.

Best of all last week, the state of Wisconsin got into the act of looking for less costly options for health care and health insurance coverage. Imagine that.

Following the suspension of the BadgerCare Plus Core Plan a month ago, committees from both chambers of the Legislature began brainstorming ways Tuesday to solve the health care needs of Wisconsin’s low-income residents.

…. “The question we face as a state is how do we address people on this waiting list? Do we leave them out in the cold or do we provide them some care?” [Rep. Jon Richards, D-Milwaukee, chair of the Assembly Committee on Health and Healthcare Reform]

…. Jason Helgerson, Medicaid director at DHS, said the agency is collaborating with other groups and thinking creatively for ways to address the growing need for the affordable health care offered by BadgerCare Plus.

Helgerson said some of the cost solutions for the program include more selective treatment coverage, limited hospital stays and outpatient visits, and no hospital visits until a certain deductible is met. These options, he said, limit the cost per member to approximately $100 per month.

(Emphasis is mine.) Imagine that. When put in a bind, the state is actually finding ways to balance the need to increase access with the need to control costs. Could they actually be working on an insurance product that might remove costly state mandates? Wow.

Jo Egelhoff, FoxPolititics.net

COMMENTS

Jo,
I agree with the items highlighted here since i believe there needs to be personal responsibility. However what you cite here doesn't predict what the overall health costs are. Simply telling people that they need to pay more of their health care costs doesn't reduce the overall costs. It simply shifts costs from deductible employer coverage to non-deductible employee payments. This may reduce excess consumption. But maybe not in the long run. I would like to know what the cost per service is in Wisconsin compared to other states. I believe it is higher. In other words, we have built in higher costs than other states and as a country, built in higher costs than other countries. Shifting the burden may help a bit in the short run especially if costs per procedure are available to consumers (which they are not) so consumers can shop for best value. However the biggest cost drivers in our country and Wisconsin are the system and not the individual.

dave allen (Mon Nov 23 07:18:32 2009)

Employer coverage should be ended. It is outmoded as people frequently change jobs, are between jobs or may be self-employed. People also live much longer than 75 yrs ago, when employers first began providing coverage.

Health insurance should be attached to the individual, not to employment, and tax laws should be re-written to reflect this change.

There are several measures that would reduce costs. One would be to reduce unnecessary government mandates and regulations.

Jan T (Mon Nov 23 09:02:36 2009)

Jan,
I'm with you on the first two points you make. However, your third point about government regulation is backwards. It is the lack of regulation and mandates that prevent our system from having true competition. When every health policy can have so much variance from the other it encourages the waste that we have. More regulation of benefits and eligibility and total disclosure of pricing will go a long way to drive cost down. Despite the fact that health care is so important, anyone can find out more about their car than they can about their health care. It was government regulation that eventually standardized the safety and control features on automobiles. The sad part it it was after the Japanese already figured it all out. If I could buy Japanese health care I would, just like their cars.

dave allen (Mon Nov 23 09:58:34 2009)

Dave,
Higher deductibles will lead to lower health care costs. It's not meant to be a shell game, shifting the burden. Yes, costs are shifted to consumers. Shifting the burden forces consumers to be as aware of health care costs and choices as we are of auto prices and grocery prices. As a result, consumers must and will take more responsibility for health care spending.

Health care costs are higher in Wisconsin where there is less competition - and often an overabundance of health care providers. This (lack of) competitive situation is perpetuated because of over-utilization by those with low deductible, low participation plans. It's the old adage - when it's free is when it's really going to cost you. And "almost free" health care to millions in Wisconsin is indeed costing us. What is so wrong with all of us paying for our own health care, insured of course, for high-cost, unanticipated losses.

Jan, I'm with you on employer-provided health care. If health care is provided by the employer (as they can be free to do), it's cost must be taxable income to the worker. As Dave says, we need regulations to a certain extent. We don't however Dave, need extensive mandated coverages.

Jo (Mon Nov 23 10:10:15)

Jo,
I have had direct experience with shopping for health care costs. I can tell you that it is absolutely impossible (not difficult, IMPOSSIBLE) for a health care consumer today to find what anything other than the prescription drug costs and office visits. The throw it on the consumer attitude is cost shifting unless a consumer can find out what things cost which they cannot. Consumers will get what they think they need then be unable to pay the cost because the cost is NEVER known up front. Then the consumer will hold back on getting more services because of the fear of bankrupting costs, not because of a rational decision making process. I challenge you to find out the lowest cost colonoscopy fully loaded within 150 miles from here with the covered by your insurer and cash pay price. Go ahead try to do this with less than 10 hours of work.

dave allen (Mon Nov 23 10:51:34 2009)

Dave, we've had this discussion before. Yes, transparency is critical - and we don't have it now. Critical. Let's go after getting transparency in lieu of a 2084 pp. bill.

Jo (Mon Nov 23 11:36:15 2009)

Jo, What's a 2084 pp?

dave allen (Mon Nov 23 18:39:30 2009)

Reid's bill that's 2,084 pages long. Well, probably more by now.

Jo (Mon Nov 23 19:20:20 2009)

Dave, I have Japanese friends. They are not happy with their health care.

Medicare, Medicaid, veteran and Native American care are highly regulated by government. The results, however, are not exemplary by any measure.

Why is health insurance much cheaper in Idaho than it is in New York? Fewer mandates and less regulation by the state government.

The more roles granted to government, the more temptations for corruption are presented to bureaucrats and elected officials. Power granted to the government will be abused and distorted by vote-farming politicians. Healthcare in government hands means unstoppable nannying.

Overregulation and prior attempts at limited socialization of health care are what have led to cost growth, by inflicting compliance costs on doctors and hospitals and coverage mandates on insurers, and by incentivizing the squandering of healthcare resources through shifting expenses to employers and government.

Jan T (Mon Nov 23 19:25:34 2009)

Jan,
The problem with "regulation" in the US currently is that it attempts to plug holes all over the place. We have an incredibly complex byzantine "system" that no rational person would ever deliberately create. My idea is that we regulate the fundamentals broadly and strongly. We tear down those institutions that provide no value. Then, market forces will work effectively when the rules are enforceable and effective. As an analogy, we have an excellent road system in this country but the rules are by and large the same. Private contractors build them and maintain them. My remark that I'd like Japanese health care is irrespective of individual or collective dissatisfaction the Japanese have with their system. We spend the most, get the least results for our money and have the highest dissatisfaction among all countries surveyed. For now I'll take their system at least it can be built upon. Ours cannot be.

dave allen (Tue Nov 24 06:36:42 2009)

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