Some insurance policies remind me of pay-day lending. People are strapped for cash and prescriptions are expensive. So, we buy insurance policies with “baked-in” prescription co-pay plans. Is it efficient? NO. Is it expensive? YES!
It is like pay day lending. You can’t afford the short-term cash flow challenge (the copay solves that) so you end up buying a much more expensive policy than what you really need.
Employers often do the same thing because they don’t want to impose on their workforce the worry or challenge of paying the full cost for their prescriptions at the point of sale.
This is a real problem. So we developed a solution.
Several years ago we partnered with our clients and a group of pharmacies. This partnership allows employees to pay ONLY their share of the costs at the time of purchase. The employer pays the balance using a program we developed called SharedFunding. SharedFunding has worked great for our clients. Why?
- The employer saves a substantial amount of money by purchasing a high deductible plan where even prescriptions are subject to the high deductible. They then promise to cover a set portion of the prescription for the employee (a copay, for example).
- The employee has the option to fill a prescription at one of our partner pharmacies and only pay their share when they pick up their script.
I was naive at the beginning, but then I learned:
- People tend to be terrified when the hear they have to pay up front for prescriptions…. even if they are going to get reimbursed.
- Some people are in a tight financial situation and cannot deal with any float — it is embarrassing to them and many end up NOT getting the prescriptions they need.
- Employers want to save money and offer smart strategies, but they don’t want to inject anxiety into their workforce.
- The total financial equation saves everyone a lot of money and no one gets hurt.
We can’t help you much with payday lending, but we CAN help you with the equivalent scenario baked into some health plans.
In the coming days, HHS will announce another change in the health care roll out. This time, they are going to allow carriers to keep and issue policies that do not meet ACA guidelines. This adds to the recent pushback on the employer mandate to 50-100 employee companies AND the lessening of enrollment requirements on larger employers.
Groups and individuals that embraced the “early renewals” last December will now have the choice to keep those plans for another year. This will make the late summer and early fall less noisy as many will likely sign back on for another year.
Will new products emerge? If carriers are allowed to issue policies that do not conform with ACA, will some move to issue less expensive policies or even offer lower rates to underwritten non-ACA plans? Employers and Individuals may buy these plans if they are less costly, even if they may be available only for a year.
Will this push back the “individual mandate?” Since the mandate requires one to have a “compliant plan,” how will the IRS enforce this when HHS allows non-compliant plans to be offered?
ACA’s goal, in large part, is to regulate the market. While this and other adjustments to ACA may make the short term more quiet, it raises questions about how they will enforce the law down the road. At some point HHS is going to have to decide what they are going to stand behind (and enforce) and what they are going to abandon.
As the law gets tweeked, it increases the chances that companies will do whatever makes sense to them and stop focusing on what they need to do in order to follow the law. If employers conclude that the law is a moving target, they may just create their own strategy, their own certainty.
PwC announced during a webinar earlier this month what they believe to be the top 10 healthcare issues of 2014:
1. Companies rethink their roles in the new health economy
2. Corporate funds invade healthcare venture capital space
3. Employers explore private exchanges
4. Industry picks up the pace of price transparency
5. Social, mobile, analytics and cloud come together
6. Technology is the new workforce multiplier
7. Twenty-first century tools refresh clinical trials
8. Fail fast, frequently and frugally for true innovation
9. States pursue Medicaid managed long-term care
10. New rules combat counterfeit drugs
PwC compiled this list based on polling data they collected in Fall 2013 from 1,000 consumers and interviews with top healthcare industry executives. For more information and comments from some of the webinar attendees, read Top 10 Healthcare Issues for 2014 as it appeared in Healthcare Finance News.
Quite often in the course of working with our clients on practical and innovative approaches to lower their healthcare costs or mitigate pending increases, we are asked two questions:
“Why is healthcare so expensive?” And “where is the money going?”
The first question is so hugely complicated there may not be enough bandwidth on the internet to analyze it and address it in writing. The second question was addressed in a recent study published by the Agency for Healthcare Research and Quality and related in easier to read fashion in a joint Kaiser Health News/Washington Post article.
While this is really big picture stuff, in answering the question on where the money is being spent, they present some interesting (perhaps only to analytical geeks like me) and startling facts worth taking a moment to contemplate:
- In 2010, Americans spent @ $1.3 TRILLION on healthcare (This addresses direct payments for care provided during the year. It jumps to $2.8 TRILLION when you include health care goods and services, public health activities, government administration, the net cost of health insurance, and investment related to health care).
- 1% of the population accounted for 21% of the $1.3 TRILLION spent.
- 5% accounted for 50% of all healthcare expenditures. And, 10% are credited with 66% of the healthcare spend.
- Contrast that with the 50% of the folks in the U.S. that accounted for less than 3% of the costs.
Our BBG world is micro and hyper-intensively focused on helping mid-size and small employers control costs and improve outcomes one employer at a time. We can’t even begin to suggest we know where the big picture solution lies. That’s for folks a lot smarter and better equipped. It does appear clear however, even to this lay person, that to put a dent in this ever growing cost curve, the lion’s share of the resources and efforts must laser focus on solving the 5% accounting for 50% cost equation…
For more on the study or the article, go here:
And, here: www.kaiserhealthnews.org/stories/2013/october/08/one-percent-of-costliest-patients.aspx