Wednesday, June 29, 2011

Employees and Employers: Hostages Of Healthcare

I was reading an article today about internet start ups in Israel and how this portion of their GDP was almost as much as health care was; then I noted that health care was something like 6.8% of their GDP.

In the United States health care represents 17.3% of our GDP.  Now, the government, through Medicare and Medicaid, accounts for half of this amount, but the reality is that this is a huge number! 

Oh, and Israel has universal health care coverage that is mandatory.  In 2009, 61% of non elderly Americans had health insurance through their employers; which was down from 69% in 2000.

Now, I am not going to get into the politics of the Affordable Care Act or "Obama Care" as it is commonly known, but I believe that Winston Churchill pretty much said it all when he stated, "You can always count on Americans to do the right thing - after they've tried everything else." 

For clarification, I believe that we would have been better served if we had implemented the Swiss Health-Care Model; it basically takes the employer out of the health care system. Over the course of the last 20 years I know the importance fringe benefits play in attracting and retaining employees; the reality is if we had not been self funded, or our own health care insurer in 1994, we would have fell victim to NAFTA, but we benefited by being our own health insurer and having a reputation of having great insurance.

Employers, especially small employers, find themselves held hostage by health insurers.  They have to offer health insurance, which requires a decision that most small employers are ill equipped to make.  Then they have to administer the insurance, and the performance of the insurer reflects on the employer.  At renewal, employers always find themselves facing a rate increase and left with the options of reducing coverage or switching insurers; kind of like trying to carve a stick of wood with an axe rather than a pocket knife.

I found this article about the demise of Google Health, which was a platform that Google attempted to launch to provide individuals with a vehicle to centrally store and manage their health care information online.

The reality is in the American health care system there is no consumer. 
"The theoretical appeal of such a service (Google Health) is that people can make better decisions about health care when they have all of their health information readily available. 
After a very successful pilot test with 1,600 patients of the Cleveland Clinic, Google Health launched a little over three years ago. It joined similar consumer-driven offerings from Microsoft, Dossia and Indivo. While none of these other services have outright failed, they cannot be considered home-run successes. 

Why not? Why hasn’t the Internet empowered consumers to manage their personal health information the same way it has better informed them about medical conditions?

The answer is the same as why Health Savings Accounts (HSA) have never achieved the interest that they should have:  Individuals are not the consumers of health care. 

The rates charged are established by the insurance carrier; providers when asked what a procedure costs have to know who your insurance carrier is first.  In turn, doctors are directed by ones health insurance on how to treat a patient; under one health insurance contract the carrier may have agreed to 'bundling' of certain services by CPT code and another might not have.

In more and more cases, particularly with BC/BS - Anthem, more and more medical providers are finding that Medicare actually pays more for some services than insurance companies do, and the federal government is mandated by law to pay all undisputed claims in 30 days; there is no such mandate with health insurance companies.

For employers, I do have the following recommendations, until sanity returns to our dysfunctional health care system:
  • If you have over 150 employees look into self funding
  • Bring employees into the decision making process; get their input
  • Demand experience data, note where your health care dollars are going.
  • Find ways to educate your employees and get them thinking about changing bad lifestyles habits
Think of health care as an employee/employer partnership.  You will find that besides the long term cost savings you will enjoy you will also notice improvements in employee morale and employee retention. 


Dave said...

The Swiss are highly selective in determining who gets to move to and live in Switzerland. Such selectivity/exclusivity is necessary if you are going to offer generous health and welfare programs, otherwise poor immigrants who consume more in services than they pay in taxes will swamp the system.

Carl said...


The Swiss do enjoy a more homogeneous population but the reality is in the US we already subsidize immigrant healthcare via Medicaid and the inability of our healthcare providers to deny emergency service.

If we dealt with our illegal immigrant problem with an amensty program then we would dry up the market for jobs that pay cash.

By opting for the Swiss system you would dismantle Medicaid and Medicare as healthcare would be provided to everyone via private health insurers to individuals rather than through employers. That in turn would create a net tax savings via the loss of the bureaucracy of medicare and medicaid.

Carl said...

Canada is looking into transforming their healthcare system through "Consumer Engagement"