Don’t Drink The Wizard’s Elixir There Is A Cure For What Ails Us
Feb 3, 2011
It’s time for the United States to bring sanity back to the discussion of healthcare. It’s time for us to do what we do best; use our brains and technology to solve one our most vexing problems.
Let’s not drink the Wizards Elixir. It won’t work to cut loose millions of American employees from employer sponsored self-funded benefit programs and pay the “fine/tax”. If so, then employers will be turning over a critical function to government-subsidized healthcare. This is a function that employers have worked diligently to control, is already far more cost effective than using a “fully insured” carrier and can be vastly improved with simple plan design and point-of-service payment technology.
The health and well being of human capital is what enables productivity. Productivity is what distinguishes us from the rest of the world. So, herein is a dose of sanity that will help for what ails us.
The Milken Institute's 2007 study, "An Unhealthy America," notes that 70% of health costs (more than $2 trillion a year) are related to lifestyle. Prevention therefore becomes the “silver bullet.” We know the causes. We know the treatment. Yet, we keep getting sicker. Why? We blame the Wizard and lack of personal responsibility!
Americans have become “Healthcare Zombies.” We have been lead to believe that the healthcare system is some kind of magic potion. Eat all you want - forget about personal health responsibility, then just go to the doctor and get “cured” and/or fixed. Well it just ain’t so America.
Let’s all take stock in the fact that in 1890 the average lifespan of an American was in the mid 40’s. Why did it jump to 68-70 suddenly after the turn of the century? It is widely accepted that adding chlorine to the drinking water and providing good clean sources as well as sanitation infrastructure greatly increased life span by eradicating water bourn disease. Chlorine and infrastructure helped us all live longer not healthcare. Over the last several decades we have seen the average lifespan climb even higher to the mid 70’s but not so much as a result of healthcare. This jump has been largely related to a safer food supply.
This is where a prudent man starts asking the trillion-dollar question. “If we keep getting more unhealthy as Mr. Milken points out, then what has healthcare done for us.” That answer is simple; it’s hurt our ability to compete in the world. Yes, we are the most productive workforces; however the margin we need on products is sapped by paying outrageous amounts for healthcare. It’s destroying our competitiveness, giving us false hope and now rapidly killing our businesses. If we spent just half of what we do on healthcare every year on developing new energy sources, new infrastructure and technology we would have already solved the energy problem and perhaps many other pressing issues like educating the masses about the simple ways to stay healthy.
Is it any wonder that over the last 30 years any employer that could become self-funded did so? Maybe that’s because they all found out that it actually cost far less than being “fully insured” with a carrier. At present, 45% of the 308 million persons that live in the U.S. receive their healthcare through an ERISA employer sponsored self-funded program. Why? It’s affordable. It bests a fully insured carrier by almost 50%. If you exclude the carriers’ stop loss positions on self-funded plans, less than 17% of Americans are truly covered under the fully insured carriers costing us about $890 billion a year. Just about 25% are covered under Medicaid and Medicare and about 13% are uninsured.
Since the passage of healthcare reform there has been a lot of discussion by employers about dropping healthcare benefits in favor of paying the “fine/tax.” In the February 2010 issue of CFO magazine employers were asked to respond to the question of how healthcare reform legislation would most likely affect their company health care plan. The results of the survey revealed that of those polled 54% were considering curtailing health benefits or dropping them completely.
So why do it! Why even think about paying a “fine/tax” of $2,000 per employee and getting nothing for it except jeopardizing the productivity of your human capital and even worse lowering their effective wages. Don’t listen to the other Wizard in Washington. He won’t help you either. Don’t kid yourself. Your abandoned human capital will either not get insurance or be a sitting duck and have to pay 50% more to get it from the fully insured carrier market, effectively lowering their wages. Don’t get us wrong… perhaps some of the healthiest individuals in this country are those without insurance since they cannot afford to get sick by over indulgence. Having insurance “coverage” doesn’t make you healthy. Personal choice, lifestyle and behaviors make you healthy or unhealthy. Excluding environmental and genetic diseases, 50% of all our unhealthiness is caused by poor lifestyle and behavior choices. So, let’s do something to impact behavior. Let’s stop doing the same thing over and over and expecting different results. For gosh sake, traditional plans with a $20 co-payment are no incentive to change anyone’s lifestyle.
There are some good provisions in the Affordable Care Act (ACA). However, by focusing on the overall goal of the ACA to get “affordable coverage” for as many people as possible our leaders have missed the boat. It’s not coverage that will solve our problem. In fact, it’s coverage by a third party that created our problem. The government talks about controlling the overall cost of healthcare but more “coverage” will in fact increase the overall spend rate without gaining any useful benefit. Meanwhile people will continue to over-eat, smoke and engage in lifestyles that lead to poor health conditions ending in more visits to the doctor and more cost - a disconnect between personal responsibility and accountability. In the end the ACA will be like pouring gasoline on a fire. Somehow we have overlooked what all good firemen know. We have to prevent the fire in the first place. Why do we spend so much time on building inspectors and building codes… to prevent fires! Yet we have no codes for people at all when it comes to getting “affordable coverage.” The Wizard’s biggest deception is in fact “affordable coverage.” Until we get the fire prevented there will NEVER be “affordable coverage.”
Good healthcare can add to our quality of life. It hasn’t contributed much to our longevity. Clean water, a healthful diet and some very simple everyday precautions contribute to longevity and quality of life. According to the 2007 Pfizer release, The Health Status of the United States Workforce: 29% of employees are affected by Dyslipidemia (high cholesterol), 20% have hypertension (poor blood pressure control), 65% are overweight or obese and 23% are smokers. These four health factors make up the 70% of preventable chronic disease. So what can you do? The first three health factors are directly related to diet - not only what you eat but also how much you eat. As for smoking…you may as well build your home over Love Canal. While the overall rate of smoking has decreased from 27% to 23%, it is still the number one cause of cancer and cancer related deaths, yet Americans continue to smoke. Where are we headed? Consider the recent CNN report that in the United States 61% of all adults and 31% of children are obese. By simply addressing these issues, you address an enormous amount of needless, wasteful spending on the Wizard’s Elixir. You can convert a “Healthcare Zombie” to a rational, thinking living creature. How? It’s time for all of us to have substantial “skin in the game.” That translates to “Healthcare Accountability.”
Healthcare Accountability should be an easy and achievable goal; after all, good health is its own reward. Unfortunately, today’s “Healthcare Zombie” requires additional incentives to promote personal health responsibility and accountability. To activate employees to be accountable, many companies have implemented wellness programs in addition to their healthcare/benefit offerings. We know that “Wellness” has the ability to save companies millions of dollars in healthcare costs. The concept is simple, healthy employees cost less. In fact, over the last 10 years in America many corporations have invested millions of dollars on wellness programs to save millions of dollars. In a recent article published by the Harvard Business Review (2010), Johnson and Johnson reported that they spent about 93 million over six years to save $250 million. That return on investment would appear lucrative, except that our suspicion is that Johnson and Johnson spent far more than that on “health insurance” costs in addition to their wellness programs. So, it’s a beginning but why have to spend “extra” money to save any money?
Recent data has definitely demonstrated that wellness programs can achieve a return if you are willing to wait 3-6 years for the results, if you are able to achieve significant participation levels and you happen to have “extra money” to fund the add on programs. In fact, we are now seeing that employers are beefing up financial incentive budgets for wellness programs to encourage higher levels of participation because the traditional approach is failing and unsustainable. Thirty-seven percent of today’s employers are now linking large financial incentives to the participation and completion of a wellness program. Will this approach really yield a healthy return? Not likely, because your money will never be equivalent to the employees’ own “skin in the game.”
The inclusion of consumerism is really the “silver bullet” that will provide optimal activation of employee behavior change. Consumerism by design is wellness because it fosters personal healthcare accountability and responsibility. According to a McKinsey study, a consumer driven healthcare model immediately changes behavior (by having “skin in the game”) in a way that improves the personal health as well as financial health of both the employee and employer. Towers Watson recently reported that employers are increasingly making changes in their benefit designs to offset the rising healthcare costs. More and more companies are moving to a CDHP model and this adoption rate is expected to rise another 7% in 2011. It’s time to consider the data and make a change, a change that will work to lower the spending on “healthcare” and improve the overall personal health and financial well-being of your human capital while at the same time allowing your company to become more successful and competitive in the marketplace.
Wellness programs are designed to address and change individual behavior. In order to achieve a sustainable wellness program, an appropriate benefit design that supports actual long term change is necessary. Wellness experts agree that monetary incentives motivate and activate sustained behavior change. So why are companies (in a stressed economy) continuing to increase their wellness incentive budgets and pay more for limited results, when healthcare accountability and a healthy workforce can be achieved through consumerism alone. A CDHP fosters the highest level of healthcare affordability because the value is seen by the individual in their own dollars and cents. Healthcare entitlement is diminished as individuals become knowledgeable about the cost of healthcare and learn to spend their money wisely and appropriately. They re-examine how they perceive personal health and come to understand and embrace that good health is a reward in hard dollars as seen in their Health Savings Account.
Companies who place their efforts and commitments toward a healthy workforce should continue to do so, but in a more efficient and effective way that will not only maximize their healthcare dollar but achieve the same or better health and productivity outcomes.
Removing the complexities of traditional plans, multiple platforms and programs in favor of CDHP will improve the way individuals engage in and understand the healthcare system. It creates a workforce that adopts and embraces healthy behaviors and promotes financial wellness. If we use a conservative figure for direct savings on medical and pharmacy care of $1,000 per employee per year, then there is a savings of $55 billion dollars a year by moving employees to a CDHP. If the 55 million employees covered under self-funded plans put just $2,000 away each year in their HSA that would be an additional tax savings each year of $46 billion dollars for employees and $8 billion saved in employer payroll taxes. That would represent a total overall reduction of nearly 28% of the total cost of healthcare for this group and for 80% of the 55 million the tax savings alone are more than enough to pay the total amount of their care plus save an average of $1,200 a year.
Here is the Solution:
Responsibility + Accountability + Transparency = Healthcare Affordability
Employers should embrace the responsibility of creating a savvy healthcare consumer and destroy the “Healthcare Zombie” by fostering consumerism through plan design administered on an efficient, paperless Internet based point-of-service payment system that enables transparency and eliminates hundreds of billions more dollars in needless cost associated with member bills, collection efforts, paper shuffling, debit card charges and fraud. The government should do the same for Medicaid and provide a means for individual self employed persons to band together to gain access to their own self-funded health plan.
We have the data, technology and the CDHP/HSA legislation in place. Do we as American businessmen have the will to change? Or shall we keep on doing the same thing and expect different results. As the Wizard proclaimed, “Pay No Attention To The Man Behind The Curtain!”
About Simplicity Health Plans
Cleveland, Ohio - Simplicity Health Plans is the best implementation of a CDHP/HSA. It aligns the interests of the Employer, Employee and the Provider to provide a turn-key, fully integrated Consumer Directed Health Plan. It also delivers a low cost, scalable solution to control claim costs. The Plan fuses unparalleled technology, point of service adjudication, real-time data, and first of its kind anti-fraud controls. Services include an ERISA compliant health plan, HSA administration and banking, medical claims administration, TPA functions, pharmacy, dental & vision, COBRA, stop loss reinsurance, real-time Utilization Review and Case Management, Health Coaching, Comparison Shopper, Health & Wellness programs, and a host of on-line tools for Providers, Employers and Members.
About the Authors
Lisa M. Holland, RN, MBA has been in the healthcare care industry for over 18 years and held senior level positions within the largest healthcare organization in the US. Lisa is an accomplished business development professional with a superior healthcare skill set that includes benefit plan design, sales, marketing, technology development, data analytics and project management. Lisa's passion, strength and knowledge are in primary prevention as well as Health and Productivity Management. Lisa’s professional objective is to use her knowledge and expertise to encourage and promote the appropriate utilization of healthcare services and solutions that empower healthcare consumerism and impact national healthcare affordability.
Gregory J. Hummer, M.D., has spent the last 18 years developing and perfecting Simplicity Health Plans to solve the vexing complexities, out-of-control costs, burdens and inefficiencies that are associated with healthcare coverage in America today. Dr. Hummer is chairman and CEO of Simplicity Health Plans. He concluded his training at the Cleveland Clinic Hospital. His career includes 16 years as a Cleveland trauma surgeon, founder of a national group of emergency care centers called MED Center, and a three-year stint at NASA Lewis Research Center as director of medical screening. Dr. Hummer’s healthcare solution incorporates technology that provides efficient paperless claims processing and point-of-service payment with a CDHP + HSA package. Simplicity Health Plans is the first and only plan that provides instant and completely paperless claims processing and point-of-service payment transparency.
Daryl Chapman has over 20 years experience in the Insurance Industry. He is an Executive Vice President with American Wholesale Insurance (AmWINs). He is currently acting as the Practice Leader for new initiatives and has operational responsibility for the AmWINs product created in response to health care reform. He joined AmWINs after the merger of his health care consulting company with (AmWINs). Daryl was a Senior Vice President at Marsh and McLennan Corporation. He had profit and loss responsibility for a 500 person, $50 million, four-site administrative unit that provided health care administration for almost a million members. He was the architect of a 60,000 person retiree health care practice and has managed the benefits for associations as large as 3,000,000 members. He is a noted consultant, author and sought after speaker on retiree health care issues. Prior to his entry into the insurance industry, Daryl spent 13 years as a Naval Intelligence officer. He served as the Aide to the Director of Naval Intelligence, the Assistant Chief of Staff (intelligence) for the Commander Seventh Fleet and as the Senior Analyst for the General Defense Intelligence Program
To learn more about Simplicity Health Plans, contact Lisa Holland at 401.487.1450