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7/26/2007
When Torinus says ALL IN, he means ALL IN
Several folks responded to my saying we must get health care costs under control before (or at least at the same time as) we commit to government financing health care coverage for all. Icited John Torinus' hard work at Serigraph, resulting in average "all-in" health care costs per person of $7,400.
This from John Foust:
Torinus says nothing about the level of deductibles for employees. Isn't the true cost of my health care the sum of the employer's portion plus what I pay directly? See In Effect's analysis of Torinus's message. Of course a CEO will think it's "well-regarded" by employees. You think Torinus has the same health care outlay as his employees? You think by merely "insisting" on lower health care costs, it'll happen? Says who?
John’s right. Legislators and voters “insisting” on lower health care costs doesn’t make it happen. It’s a matter of all of us instituting and institutionalizing wise health care practices. I know, much more easily said than done.
But In Effect blogger Seth Zlotocha is a bit wet in his whining about John Torinus. Seth says Serigraph’s publicized average health benefit cost per employee of $7,400 couldn’t possibly include employee costs. Well, following my inquiry, Torinus sets the record straight on his costs. When he says “all in” he means it. The Serigraph average all-in health benefit cost:
"includes every drop of health cost, employee and employer, dental, mental, drugs, HRA, prevention, wellness, disease management, on-site nurses, administration -- everything.”
Now, compare that with the cost of the program for state employees. An average premium cost alone of $11,880 annually. So that’s the employer’s (i.e., the state’s) cost. Then add in the average premium a state employee pays is $708 per year. (If you are an employee covered by your employer with a health insurance plan of some kind, how much premium is taken out of your paycheck in a year?)
Seth and John both have good additional questions about comparing the Serigraph and state situations, and we’re not quite to the point of comparing apples to apples. (One of us will let you know when/if we get there.)
But here’s the point for now – and I make it again. Controlling health care costs absolutely must be goal number one. The business community is working hard at it – because they’ve got bottom lines to protect – and because they’ve got to be competitive with Mexico and China and Bangladesh. It’s time now, for us taxpayers to insist on a wiser use of the health benefit dollars used for public sector employees. When we can do that, as Serigraph has, the state budget becomes a snap.
COMMENTS
Insist that state employees give up a $750 annual premium? (I'll bet Seth is a state EE?)
Life is difficult, don't you think? JE
Michael Bina (Thu Jul 26 08:53:36 2007)
Bottom line:
If the Democrats' budget goes through with the $15 billion dollar health care cost, many employers won't be working to lower health care costs. The big employers will toss their hats in the air with joy while the small employers make a dash for the border.
Good points. And everyone and his brother wanting health care will make a dash into the state. As I understand it, WI would even be covering employees living in Wisconsin but working in Minnesota - and their employers wouldn't be paying into the system. Wow. Something's wrong there.... JE
C.R. Stevenson (Thu Jul 26 09:33:05 2007)
Jo: This problem is really a two edge sword as far as it pertains to public employees. The one edge is the annual double digit increases in health care costs that governments have been seeing for the last 5-7 years.
The other edge is the fact that public employees only pay about 10% of the cost of health care and usually have several choices of health care benefits that most private sector individuals do not. So when you are looking at a double digit increase in health care every year, guess who takes the brunt of that? The government and ulitimately the taxpayer.
Both edges of the sword are equally lethal, but our legislators and adiministrators seem to ignore the employee edge. It is politically easier to blame the health care system, but both edges can hurt you. As I have said before, we need representatives that will address both. We should be thinking about that in the upcoming elections.
Good points. The numbers indicate that the "average" premium contribution for state employees is 5.6%. Good deal if you can get it. JE
Mike Thomas (Thu Jul 26 09:51:51 2007)
As I watch and participate in this health care reform debate there is a glaring division.
There are two distinct viewpoints.
1.The typical private sector company point of view.
2. The public sector worker, including many, but not all, politicians' point of view.
One group, the private sector, knows they MUST control costs or they will eventually go bankrupt.
The other group produces plans like Healthy Wisconsin which is openly hostile to market incentives that control costs. Control costs? What's that? Just raise taxes to pay the increases.
When is this Wisconsin public sector mindset insanity going to end?
The role of government is not to run health care. The role of government is to act as a facilitator. Health care requires tranparency on cost and quality to allow market forces work. Government must require transparency.
Ironically two US Senators, one Democrat and one Republican are proposing consumer driven health care reform. It's called the HAA "Healthy Americans Act". It's time for the Democratic members of the legislature to get off their government run plan, work with Republicans, and propose a plan like HAA.
Yes, it's the costs, and the structure of the current system that drives dependency on anything but oneself. Drives me nuts. JE
Russ (Thu Jul 26 11:17:12 2007)
I don't mind discussing ideas, Jo and Michael, but why do I need to defend myself personally? Since you've always appeared to be a serious and smart blogger, Jo, I'm a little surprised you'd reinforce that type of attack.
Since you brought it up, though, I'm a UW employee who pays $816 per month for a generous health plan that adequately covers my entire family. I don't have any deductible, and my co-pays are about $15 per office visit and $5-30 per prescription. Pretty sweet, huh?
Under Healthy WI, I'd pay $1520 per year toward premiums plus the $2200 that my wife would pay through her employer (she works in the private sector, so she does a little better than me on salary). Add to that a $600 annual deductible and about the same in co-pays as I have now.
Yeah, you two are right, I'm totally pushing Healthy WI for personal reasons. I really should just keep my mouth shut, don't you think?
The bottom line on Torinus is that I think he's playing with his numbers. Is it so difficult for him to disclose the total cost of a family plan at Serigraph and KI, including the employer-paid premium and deductible along with the employee-paid premium and deductible? When he does that, we can start having an honest debate. Until then, the reality is just hiding behind convenient "per employee" numbers that don't consider employees who opt out of coverage and can't differentiate between employees who opt for a single vs. family plan.
I didn't think I was criticizing you personally Seth, and apologize that it wasn't more clear than that. Lots of work to do to try to compare apples to apples. I hope we can get to a good comparison. JE
Seth Zlotocha (Thu Jul 26 11:57:14 2007)
I appreciate that, Jo. I also want to clarify that I currently pay $816 per year in premiums as a UW employee, not $816 per month as I wrote above.
Seth Zlotocha (Thu Jul 26 13:11:42 2007)
Seth,
You've implied that John Torinus is intentionally playing with the numbers.
Why would he do that? This is a man of high integrity. I suggest you correspond with him directly if you question his figures.
Serigraph, like most private employers, absolutley MUST find ways to reduce their yearly health cost cost increases. The alternative is dump its American workers and move offshore. There are two ways to control health care cost increases.
One is to empower consumers by giving them the tools and financial incentives to "shop" for common health care services. That can be accomplished if providers are required to disclose their fees and their quality history.
The other is a government agency imposing price controls to balance the service demands with the funds available from the health care tax. The other method is rationing which is the method used in Canada and UK.
Sadly Healthy Wisconsin does not put market forces to work. It's just another "socialized medicine" plan. Other plans such as the proposed Healthy Americans Act provides the tools to put the consumer back in charge of his health care.
Russ (Thu Jul 26 17:39:00 2007)
Totally agree that the real culprit here is escalating costs. We've got to get costs under control and this means coming up with SOME way to ration health care.
As a conservative, I think we've got to implement a rationing system that rewards the productive members of our society. Why should I pay unlimited costs of some welfare case family with no jobs? Unlike the current system, or the proposed Healthy Wisconsin plan, what we NEED in this state is ZERO coverage for those who choose not to work and GOOD coverage for those who do.
I wouldn't go that far. But rationing is another story, though the word is scary. Oregon's been working with a prioritizing of procedures for decades. It's a matter of us, as a society, making decisions about priorities. Now, that doesn't mean taking away health care from anybody. It may mean, however, palliative care in the last days of life as opposed to high-risk, low results procedures. That kind of thing. JE
PonderThis (Fri Jul 27 06:25:00 2007)
I don't imply that Torinus is playing with the numbers, Russ, I actually come out and say it.
I'm sure Torinus is a stand-up guy. And, really, his high integrity is why I've felt the need to directly respond to both of his columns, among others I've analyzed in the past. He's a well-regarded voice, which is why his opinion matters, which is why I take it seriously enough to critically analyze it. In the end, being a person of high integrity gives people a reason to put your views under a microscope, it doesn't (or, at least, it shouldn't) preclude you from questioning.
That said, I actually did send Mr. Torinus an email on Wednesday asking him to clarify his figures. As of this morning, I still haven't heard back.
And your point that there are two ways to control health care costs -- market forces and rationing -- is wrong. Health care costs involve a wide array of facets that span well beyond the actual interaction between a doctor and a patient. Administrative costs (both provider and payer) and cost-shifting also play a big part in what makes health care cost so much. Addressing those areas in addition to combatting overutilization through market forces -- while at the same time putting protections in place to avoid costly underutilization -- is the best way to address the cost issue. And while Healthy WI could arguably do more to address overutilization, it does do something through the use of a $300-$600 deductible. I'd prefer the WHP route that involves a $1200 deductible and a partially state-funded HSA, and that's something that could get added to Healthy WI as the discussions about it continue.
Also, Jo, here's my post from today which continues the discussion about what "all in" costs really means.
Great Seth. I'm running to get started on a cycle trip to Lac du Flambeau - for my birthday! - so will take time to read your piece later this weekend. Thanks for your continued work in this area. JE
Seth Zlotocha (Fri Jul 27 08:43:53 2007)
Seth, Come on over and audit our numbers. We at Serigraph manage the costs for both employer and employee. We are in this together. Therefore, we manage total costs. We are self-insured, so we have the actual discounted charges from our providers. That's the number we use -- before deductibles, co-insurance and the off-setting health savings account kick in. Your incredulity over our numbers stems not so much from ours being so low (they are still a big number), but because the bloated, under-managed public plans are so high. Some local school districts are well over $20,000 per employee, nearly three times what we are paying. Other innovative private companies have matched Serigraph's numbers. QuadGraphics is one. KI in Green Bay is another. So it is not a fluke. As I said, come on over a take a close look. My new book on the subject, "The Company That Solved Health Care" -- a bit of a strong title -- describes our journey.
John Torinus (Sun Oct 31 10:54:31 2010)
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