Health Insurance Changes Would Shake Up Market

President Bush wants to rejigger tax deductions for health insurance, Ted Kennedy wants to expand Medicare to everyone, and Hillary Clinton wants another crack at reforming health care. Read More ...

—Source: The Denver Post, Published Jan. 29, 2007

NBC11 News Reports on Vimo!

When many people shop for a car, they do their homework and compare prices, but a Bay Area company is offering comparison shopping for something closer to the heart -- surgery. Vimo, a company based in Mountain View, offers comparison shopping. Watch video...

—Source: NBC 11 News, Published Jan. 24, 2007

Vimo Study Spotlights Low Corporate Contributions to HSAs

Vimo received national attention in January after the release of a report that assesses the health of the nation’s Health Savings Accounts (HSAs). The report reveals a significant gap between the number of people enrolled in high deductible health plans and the number of people that hold a Health Savings Account. The report also shows that funds on deposit in the average HSA are roughly half of what is required to cover the typical health plan deductible for these consumers. Both findings hint at disturbing trends that may jeopardize the “Consumer-Driven Health” movement.

This newest report from the Vimo Research Group is free, and available for immediate download here.

“HSA market penetration and funding levels are considered by many to be key indicators of the progress of the consumer directed health care movement,” says Tom Cochrane, CFA and Vimo’s Vice President of Partner Relations. “Unfortunately, the Vimo report shows that fewer than one out of every three consumers eligible to open an HSA has done so – a shocking statistic because the accounts are such clear winners for consumers and financial planning experts agree that those eligible to open HSAs should do so immediately. HSAs are triple tax-advantaged, and funds in HSAs can even be used to save for retirement.”

The Vimo Report also states that while normal spending on medical expenses can explain away some of the low HSA balances observed, the low average balance nationwide would seem to point towards a general trend of low (or no) HSA contributions from employers – behavior which could stunt the nascent CDH movement.

“The Consumer Driven Health Care movement represents a golden opportunity for consumers to assert substantially increased levels of control over their health care,” says Cochrane. “But as employers switch over to high-deductible health plans and the health savings accounts that accompany them, consumers should be especially aware of any resulting changes to their total compensation. If a company makes the switch, but doesn’t fund or under funds an employee’s HSA, this can represent a windfall for the company – but also a dramatic reduction in total compensation for the employee.”

Vimo’s research team gathered data from published materials, phone interviews and the Internet. While the Vimo Web site presents a broad range of comparative information on HSA companies and products, this new report focuses on enrollment in and funding of the accounts themselves.

— Source: Vimo.com

Top 7 Health Trends of '07

The year ahead will be a watershed for the health industries, according to PricewaterhouseCoopers LLP, as health savings accounts reach a tipping point, states act where the federal government hasn’t and pressure on pricing amid demand for transparency forces pharmaceutical companies, hospitals and health plans to rethink their strategies. These are among the top issues identified by PricewaterhouseCoopers’ Health Research Institute, which released its report, “The Top Seven Health Industry Trends of ‘07.”

The report also includes findings of a nationwide survey of 1,000 Americans about their perceptions of the U.S. healthcare system. The survey identified significant differences between what consumers and industry believe to be key issues. The survey found that only one in six (17 percent) agrees that a very important way to reduce the cost of healthcare in the United States is for consumers to share more of the cost, which is the strategy behind high-deductible health plans with Health Savings Accounts. More than half of those surveyed (51 percent) believe that better, more advanced medical technology and diagnostics provide the answer.

1. States Take the Initiative: In the presence of federal gridlock, states are taking the lead on divisive issues such as stem cell research, health insurance coverage for the uninsured and oversight of advertising and promotion by pharmaceutical companies. Responding to local social and fiscal concerns, states are developing innovative insurance programs, forming public-private partnerships to spur innovation and passing legislation to drive greater accountability and transparency from hospitals, physicians and pharmaceutical manufacturers. According to PwC, such state-led initiatives will likely expand in 2007, but the risk is a patchwork quilt of local programs and regulations.
2. Transparency Could be Revealing: The demand for transparency around pricing, quality measures, safety standards and community benefit is being driven by and is supportive of consumer-directed healthcare and pay-for-performance. In 2007, the health industries will focus on becoming more transparent, but government, insurers and employers need to educate consumers about the availability and use of such information. Providers will need to dedicate more resources to reporting, a strategic issue that can no longer be delegated down in the organization.
3. Time to Walk the Talk on Technology: Developing a digital backbone to support electronic health records, interoperability and transparency is a national priority, but the public mandate is unclear and the industry is struggling with the cost and return on the investment. According to PwC’s research, nearly one-quarter (24 percent) of Americans don’t yet believe that having an electronic health record will improve the quality of healthcare, and four in ten consumers (42 percent) are unsure. Progress will take an investment of resources from the government and/or the private sector.
4. Consumers Take the Wheel: The shift toward consumer-driven healthcare as a way to control costs will continue, but the year ahead will be the tipping point for HDHPs and HSAs. Insurers, employers, and to some extent the government have been proceeding in favor of consumer- directed health plans in the absence of strong support from the consumers themselves and from strong data on the results of such changes in benefits. PwC’s consumer research found that only one in seven Americans (17 percent) surveyed by PwC thinks that increased cost-sharing is a “very important” way to reduce healthcare costs. With a critical mass of people now enrolled in these plans, 2007 will be the year to see whether they really have results to offer, and for consumers to weigh in on what they think of them.
5. Price Check for Pharmaceuticals: Forty-two blockbuster drugs will lose their patents in 2007, opening the door to generic equivalents and potentially creating an enormous loss of revenue for brand name pharmaceutical manufacturers. PwC’s consumer survey indicates that the public is quite aware of and sensitive to drug prices, perhaps due to relatively high cost sharing and price transparency of pharmaceuticals, relative to other health services. Nearly three quarters (72 percent) of consumers surveyed said they would be willing to take a generic versus brand—name prescription drug. According to PwC, drug pricing will come under continued pressure from generics, and pharmaceutical companies will have to develop innovative pricing strategies to compete.
6. Obesity is the New Smoking: First smoking, now weight. There is a culture shift around healthy eating sweeping the United States, as evidenced by the number of fast food chains cutting out transfats and U.S. companies introducing health and wellness programs. Two-thirds of U.S. adults are overweight, and obesity’s impact on chronic health problems is stirring healthcare organizations and employers to aggressively promote weight loss. Public attitudes have yet to catch up: While three in five Americans (61 percent) believe health insurance should cost more for smokers, only 40 percent believe it should cost more for those who are overweight because of poor lifestyle habits. In 2007, expect public health campaigns to push the envelope on obesity through wellness programs and financial incentives to lead healthier lifestyles.
7. Small is Big: The competitive landscape will change as healthcare gets smaller, more focused and patient friendly under consumer-directed healthcare. Physicians and hospitals are now competing with retailers, several of whom have announced plans to open mini-health clinics within their walls. Consumers like the idea: Four in ten people surveyed by PwC (42 percent) said they would seek non-emergency care from a retail health clinic. In addition, large general hospitals are seeing competition from increasing numbers of smaller, specialty hospitals, surgery centers and outpatient clinics, the result of regulatory action overturning the specialty hospital ban. There already are 130 specialty hospitals in operation and more under construction, predominantly in the South and West.

-Source: PriceWaterhouseCoopers

Underestimating Health Costs

More than 70 percent of U.S. consumers say they know little or nothing about how much their doctors charge compared to other doctors, according to a survey sponsored by HealthMarkets, a leading provider of affordable health and life insurance to individuals, the self-employed and small businesses.

When it comes to Americans estimating the cost of health care, usually, the price is wrong – because the estimate is too low. Most adults (65 percent) think that, in general, a high-priced doctor in the U.S. charges two or three times as much for the same procedure as a low-priced doctor. In fact, a review of HealthMarkets data for several selected procedures shows that some doctors charge nearly 10 times what others charge for the same procedure. The survey found few people have a sense of how much health care can cost, or how much costs can vary from one doctor to another. For example:

Told that the lowest price charged nationwide for a CT scan of the abdomen was $298, most people (73 percent) said the highest price other doctors charge for the same procedure would be no more than $2,000. (The low price was based on actual 2005 HealthMarkets claims data.) In fact, the actual charge for the same CT scan varied from $298 to $2,858 - or almost 10 times as much as the low price - according to HealthMarkets 2005 claims data.

Told that the lowest price charged for a knee replacement was $22,000, 83 percent said the highest price was no more than $66,000. In fact, the actual price charged for a knee replacement varied from $22,000 to $77,239, or more than three times as much as the low price.

A quarter of Americans (24 percent) said during the past two years they have skipped a visit to the doctor for a check up or medical problem because the amount they would have to pay is too high.

Among those who are self-employed or work in small business, nearly a third (31 percent) said they have delayed a doctor visit because out-of-pocket costs would be too high.

—Source: www.healthmarkets.com