HD39 - Report on the High-Deductible Health Insurance Plans and Quality and Educational Initiatives


Executive Summary:
Health Savings Accounts (HSAs) were created by the federal government to address rising health care costs by encouraging consumers to be more financially responsible for their health care decisions.

Health Care Costs are Rising

Health care spending is rising at an alarming rate resulting in increasing health benefit costs for employers and employees and a precipitous decrease in the number of employers offering health care benefits. Health insurance premiums have grown 6% to 11% faster than inflation nationwide from 2001 through 2005. The percentage of employers offering health insurance benefits dropped from 69% to 60% from 2000 to 2005. (Mercer/Kaiser Family Foundation)

Health care cost increases are driven by a number of factors combined including a demographic shift of baby boomers seeking more care, increased use of pharmaceuticals, new medical procedures, improvements in medical technology, increased rates of chronic disease, defensive medicine and provider costs. Medicare and Medicaid have not been spared by growing costs. Medicare’s Part B premiums rose 13.2% for 2006 and Medicaid costs in Virginia are projected to increase at an 8% rate through 2015. (American Health Line, Senate Finance Report on Medicaid)

Policymakers Want HSAs/HDHPs to Transform Consumers

Policymakers are hopeful that HSAs combined with high deductible health plans of typically $1,500 deductible (HDHPs) will transform the behavior of consumers with an incentive to use health care more efficiently. Desired outcomes include: encouraging employers to provide health insurance coverage, reducing health insurance premium costs, reducing the number of uninsured, a reduction in the use of unnecessary health care, as well as increased consumer interest in health care quality and cost information.

Study Focused on Likely Challenges of Increased Use of HSAs/HDHP

There is some early evidence from surveys that interest and enrollment in HSAs is growing in Virginia. (Health Affairs and ehealthinsurance.com) As the number of Virginians enrolled in HDHPs and HSAs grows there will be impacts on consumers and every part of the health care industry. The parties to HJ 818 met five times and focused on three key areas: provider payment, quality information and cost information.

Provider payment: It is clear that the growth of HSAs and HDHPs mean that consumers will be paying more out of pocket for health care services. This is a substantial change for insurers, hospitals and physicians that results in consumer needing more information. Consumers will be paying out of pocket for services up to their deductible and for co-insurance amounts after the deductible. Key findings include:

• Consumers will want to know that they are paying the appropriate amount for the services provided under their policy.

• Insurers will need to be able to provide consumers and providers information on the status of their deductible and the applicable co-insurance amounts for health care services.

• Health care providers will need to collect a “promise of payment” at the time of service to ensure the collection of payments from consumers for their HDHP deductible and co-insurance amounts.

Quality Information: HDHPs are designed to promote consumer-directed care by increasing the role of patients in taking more responsibility for their care. With this newfound responsibility comes exercising personal judgment in the decisions to: seek care, choose a provider and facility, pay in the manner deemed appropriate and choose how to address the cost decisions. Key findings include:

Basic information on the general certifications, credentialing and accreditations of hospitals, physicians and health plans are readily available on public websites from Virginia Health Information, Virginia Department of Health and the Virginia Board of Medicine and other sources.

• Basic quality information on general areas of measurement are available to the public in regard to hospitals and health plans on the Virginia Health Information website and on various national websites. VHI will soon have quality information available regarding physicians who have submitted data to the outpatient surgical database.

• Health care information is not consumer friendly in terms of assisting them in making specific decisions on the basis of a health care provider or institution’s performance in addressing a particular disease or procedure.

• There is a lack of standardization of reporting criteria for physicians, hospitals and health plans. Currently, there are many national and statewide efforts to develop uniform standards for measuring health care quality. It is expected that eventually national measurement standards will yield to enhanced pay for performance programs.

Price Information: A Virginia consumer cannot simply go to a website and find out how much a procedure or visit to the doctor’s office may cost. Key findings include:

• Health plans, hospitals and physicians conduct business on a competitive and contractual basis. All parties are protective of the negotiated discounts contained in their contracts. An inherent conflict exists between a consumer’s interest in price information and health care competitors’ business interests.

• A marketplace for providing price information is beginning to develop among health plans. Some examples in Virginia exist, but they are not accessible by the typical consumer. For example, health plans offered by Anthem, Lumenos, Definity, Aetna and Cigna all provide various levels of price information to their members on their website.

• There will be a continuing effort by health care competitors to determine what price information is desired by consumers and how to provide it.

Conclusion

The architects of health savings accounts are hopeful that consumer financial responsibility will create transformational change in the health care marketplace. While the jury will be out on the practical effect of HSAs/HDHPs in Virginia for some time, all parties to House Joint Resolution 818 are in agreement that a marketplace move towards HDHPs creates a wave of discomfort, concern and apprehension.

To fully understand the implications of these plans, the existing task force members should consider continuing to meet to discuss possible opportunities to address consumer concerns, improve data collection, cost information, and to alleviate provider concerns over payment. We are hopeful that continued collaborative efforts will assist in resolving issues stemming from an enrollment increase in HDHPs and HSAs.