Sunday, April 30, 2006

Consumer Driven Health Plan Movement

In its recent call letters, OPM has placed the FEHB Program squarely in the forefront of the consumer driven health plan movement. OPM was the first large employer to promote health savings accounts in December 2003, and the current call letter requires plans to empower consumers through, for example, price and quality transparency.

Last week, the consulting firm Watson Wyatt Worldwide released a report with these interesting -- but not very surprising -- findings:

"[A]ccording to the analysis of health benefit plan expenditures, the 4 percent of participants with serious health conditions account for nearly half of health benefit spending in any given year. This group is unlikely to be won over by financial incentives or plan design features, such as high-deductible health plans paired with health savings accounts, which allow employees to save for health care expenses on a tax-advantaged basis. Such plans are likely to be attractive only to healthier employees.

"Those who are not as sick — the roughly 25 percent of participants in the early stages of chronic conditions or with acute health episodes — account for 40 percent of spending. In contrast, those who are healthiest — 72 percent of participants — account for just 11 percent of health care spending." (I wonder if those percentages would vary materially in the FEHB Program because it tends to be a demographically older group.)

Watson Wyatt draws the conclusion that high deductible health plans alone will not control health care spending. According to the company's analysis, “It’s up to employers to understand the varying needs of employees and to respond with targeted consumerism — an approach that uses different strategies to engage different segments of the population covered by health benefit plans.” For example, promote continuing good health for the 72% who do not use much health benefits and direct plan members who are high utilizers to obtain the best care for their chronic conditions, even if those providers are higher priced than others.

Albert B. Crenshaw writing in today's Washington Post analyzes the Watson Wyatt report. He encourages workers to take advantage of preventive care and disease management programs offered by their health plans. Of course, OPM has been pushing the same message through, for example, its healthierfeds campaign.

The Crenshaw article includes a Watson Wyatt suggestion that employers examine the relationship between absenteeism and health care. I recall attending an OPM carrier conference in the late 1990s where a health care provider encourged OPM to adopt mental health parity because it would reduce employee absenteeism. Of course, OPM did mandate mental health parity (subject to managed care requirements) in 1999 (effective with the 2001 contract year). In March 2006, a study of the FEHBP mental health parity initiative was published in the New England Journal of Medicine. The study focused on whether managed mental health parity materially increased FEHB Program costs (it didn't). The study did not consider whether managed mental health parity improved worker attendance at federal agencies. The study promotes the interests of the mental health community that wants expanded mental health parity, but it does not really help the federal government as an employer, in my view.

1 comment:

Lisa M said...

Dave,

In retrospect, I'm surprised it took so long for you to get to a blog. Welcome to the 'sphere.