June 11, 2002
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ASHINGTON, D.C.—Consumers can count on paying more for health care next year as employers continue to shift costs to workers through higher deductibles and copayments, according to a panel of Wall Street and health policy analysts at a roundtable held today by the Center for Studying Health System Change (HSC).
Despite forecasts of another round of double-digit premium increases next year, most large employers are unlikely to embrace radical overhauls of their health benefits next year, but companies will take steps to make workers more aware of the costs of care, said Roberta Walter Goodman, a first vice president of Merrill Lynch.
Insurers are developing new products, including so-called consumer-driven health plans that typically include a spending account controlled by the worker and a high-deductible insurance policy. If people dont use all the money in their account, they can roll the money over from year to year. Other insurers are experimenting with tiered hospital and physician networks, which require patients to pay more out-of-pocket if they use more expensive providers. Neither approach appears to be catching on, panelists agreed.
"We will see much more tweaking of existing benefit plan structures than we will moving to things that are new and different and dramatic," Goodman said. "I dont think were going to see the world turn dramatically on its axis next year."
In recent years, insured consumers have been shielded from rapidly rising health care costs, according to panelists at HSCs seventh annual Wall Street Comes to Washington roundtable. A webcast of the conference is available on kaisernetwork.org, a free service of the Kaiser Family Foundation, and can be accessed at www.kaisernetwork.org/healthcast/hsc/11jun02
With a weaker economy and looser job market, employers will move to increase workers awareness of health care costs by raising deductibles and copayments and perhaps greater use of coinsurance, where patients pay a percentage of the cost of their care rather than a fixed dollar amount, panelists agreed.
"Right now what were doing is raising copayments across the board, and were affecting people who need the most services as opposed to trying to influence peoples shopping behavior," said William Scanlon, Ph.D., director of health care issues at the U.S. General Accounting Office.
Just as there was a consumer backlash against restrictive managed care practices, a similar backlash could develop against increased consumer cost sharing, said Robert Reischauer, Ph.D., president of the Urban Institute.
"As the movement toward increasing the burden on those utilizing the health care system increases through higher deductibles, coinsurance, copays, whatever, that will in fact become a political issue and there will be a backlash," Reischauer said.
HSC President Paul Ginsburg, Ph.D., who moderated the panel, questioned whether employers might move back toward more tightly managed care plans to help keep costs down.
"I tend to think were not going back to the days of intensive gatekeepers and intensive utilization management practices," Goodman said, adding that its more likely that plans and purchasers will pay far more attention to the 3 percent of patients who account for 40 percent of health care costs through such approaches as disease management.
Using disease management techniques and evidence-based medicine to manage the care of the sickest patients can help keep costs down, Goodman said, but most health plans are only "scratching the surface" of what can be done to improve care for these patients.
Reischauer, however, said disease management efforts "will save some money, but the idea that this is the silver bullet, and its going to substantially lower the trend of cost growth is largely wishful thinking."
Panelists also were pessimistic about the outlook for Medicare+Choice, Medicares struggling managed care program. Even if Congress poured new money into the program, Medicare+Choice plans are facing demands for steep payment increases from providers, and government payments cant keep up, Goodman said.
Joe France, director of equity research at Credit Suisse First Boston, predicted more health plans will withdraw from Medicare+Choice, adding that plans have increased premiums and reduced benefits to such a degree that beneficiaries are unwilling to put up with all of the "constraints" of managed care.
The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nations changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded by The Robert Wood Johnson Foundation and affiliated with Mathematica Policy Research, Inc.