Health
insurance is perhaps tied with retirement for first place in the
benefit sweepstakes as the benefit most valued by staff members.
However, the health insurance programs offered by local governments
are often themselves sick and in need of treatment.
Health
insurance seems to frustrate everyone. Employees and their
dependents are often confused and annoyed by their close
encounters with questions of costs, provider access, whether a
particular treatment or prescription drug is covered, etc. An
employee or dependent feeling ill and wanting to see a doctor faces
questions such as: Do I need a referral? Is the doctor a preferred
provider? How long will it take to get an appointment in a limited
network? What is the deductible? These questions only add to their
feelings of illness.
Even if the
person is not really sick, or only suffering from a minor ailment,
the employee may often feel drained or depressed by the time they
have sought care and fought the health insurance battles.
Health care
providers, including doctors and hospitals, whine incessantly about
low reimbursement rates, payment delays, mountains of paperwork,
managed care restrictions, etc.
What about
employers, such as local governments? Serious symptoms of hardening
of the insurance system arteries are easily observed, but too easily
ignored. The symptoms include annual demands by providers for rate
increases, accompanied by explanations and justifications shrouded
in the mystic language of actuaries.
If the rates
arent going up, then access to the network is reduced or there are
increases in copays or deductibles, pharmacy restrictions on what
drugs are covered and increased paperwork for the organization as
well as employees.
Providers have
also adopted a tactic of delaying as long as possible the dreaded
announcements to organization leaders (often the agencies Human
Resources leaders) about how much of a rate increase they demand.
Word comes so late that the cumbersome agency procurement processes
make it impossible to launch a new search for alternative providers
in time for the start of the next benefit year.
For example, if
the benefit year is Jan. 1 in your agency (as it typically is), the
enrollment period for benefits will likely have to take place in
October or November to ensure that all the enrollment decisions and
payroll adjustments are prepared for the Jan. 1 start.
In order to do
an effective open enrollment, there has to be employee
communications, printing of material, perhaps the particular joys of
collective bargaining with multiple unions, and more.
This means the
decisions about providers and benefit levels have to be made in
August, if not July. In turn, this means that the formality of life
in a bureaucracy, such as preparing contract documents and
soliciting signatures by the providers, as well as reviews by
purchasing, attorneys, county administrators, etc., must all be
accomplished before the deal is done.
That means
tentative selection of providers takes place in May or June in order
to shepherd the decision through the complex processes of
organizations which may not be designed to make rapid or flexible
decisions.
Finally, in
order to be in a position to make a provider selection decision in
May or June, a procurement process may have to begin in January or
February.
In other words,
the process is so bizarre that it overtakes itself. There may be a
brief window, perhaps lasting as long as 15 minutes, when there
actually is one contract in place and a process for the next renewal
has not yet began. This would be the perfect time for a brief staff
celebration to recognize how hard people have been working on a
tread mill, which may not allow them to feel as though they have
actually gotten anywhere.
The HR Doctor
recalls being on a NACo program with a colleague who headed
purchasing in a large county in Maryland. He introduced himself by
saying, My job is to pour epoxy into the wheels of government to
keep them turning. Often the procurement process for health
insurance reflects exactly what the speaker meant.
The process is
complicated, the costs are high, and they are growing. The paperwork
and complexity of medicine itself is increasing. The beautiful HR
daughter, Rachel, is a third year medical student. I never mean to
scare my daughters, so I am not going to let her know that by the
time she is ready to retire as a physician, the entire body of
medical knowledge she is now learning would have changed at least
100 percent.
So what is an
employer and especially a public employer, supposed to do in the
face of the importance of health insurance as a benefit and its
incredible cost and complexity? The first and obvious answer for us
as individuals is dont get sick. However, even elected officials
are not able to pass an ordinance banning personal illness.
Self-funding is
not necessarily a better answer than being fully insured by some
for-profit company. Such a company only yesterday was probably
merged with another larger company, which, in turn, will be merged
again with an even larger company. Self-funding does have one
particularly powerful attraction. It allows an elected or appointed
official to appear to be a short-term hero when the process
initially begins. This is because the premiums that come into the
system, from employees and from the agencys own contributions,
begin mounting up immediately.
However, in the
first several months of the program, bills have not yet come in nor
have they been validated or paid. The result is that most
self-funded programs will amass positive cash flow initially.
Fast-forward a
couple of years, however, and the picture changes. Utilization is
uncontrolled, costs go up at a double digit pace, and the
organization is reluctant to appear to complicate employee relations
with ongoing rate increases or benefit reductions to keep pace. The
results can be a disaster and the hero turns to a villain if one
critical component is absent in the self-insurance plan. That
component is vigilance.
Dont even
think about self-funding, is the HR Doctors best advice, unless it
is clearly understood and strongly supported by the governing body
and the employees and their many unions that the programs success
demands monitoring of trends, restrictions on unnecessary or
excessive utilization, and the ability to make rapid adjustments
when negative trends first appear, rather than waiting a year or
more.
In any
engagement with health insurance, whether self-funded or fully
insured, the employer has an obligation to monitor and take prompt
and effective action at the first sign of trouble or risks.
By the way, the
concept of prompt and effective action is the same concept that
the U.S. Supreme Court has told us in a landmark sexual harassment
case what we should be doing to prevent liability in this important
area as well. Monitoring and vigilance begin and end with data
analysis. It is simply a matter of knowing how your money is being
spent. Demand a list of all the providers receiving payment under
the plan. You may be surprised to find that there is a significant
cluster of payments going to only a few providers. Or, you may find
that a very significant amount of money is going to providers in
certain specialties.
The HR Doctor
knows of one agency where the number one benefit cost in a
self-funded health insurance program is for chiropractors and
physical therapists. Such information should be seized upon as a
basis to innovate and perhaps negotiate substantial discounts with
the top providers in trade for restrictions of access to other
providers.
Besides the
lack of vigilance and rapid response, the other area of concern for
the viability of insurance programs is the lack of attention paid to
prevention and excessive utilization.
Dont even
think of self-funding without ongoing employee education. Make
prostrate screening and mobile mammography tests so readily
available right at the front door of the office building that
you take excuses away from employees who might not go for a cancer
screening. Disease management of chronic problems such as asthma and
diabetes is well worth the money spent in implementing the program.
Neighborhood
hospitals may already have disease management programs that can be
used in the agency. The more attention and affirmative action, if
you pardon the expression, that is demonstrated concerning the need
to be responsible consumers, the more responsible most peoples
health care behavior will become.
Unfortunately,
there will always be some employees dumb enough to continue smoking
incessantly, not wear their seat belts, or not exercise. The effects
of such preventable unhealthy behavior on programs, especially small
agency self-funded programs, is negative and hurts the programs
viability for everyone.
What about the
long term future? There must emerge some fundamental national
reforms, in the HR Doctors opinion.
The cost of
health care is only going to continue increasing, at an even greater
pace than in the past. In the long run, the effective management of
such cost increases, balanced with positive employee relations, will
be beyond the scope of most employers in the United States acting
alone.
Partnerships
with providers, innovative education and health improvement
programs, the willingness of unions to accept a responsible role in
attacking a mutual problem, as well as state and federal courage to
face a growing national crisis, are all requirements for an emerging
solution. For the purpose of this short article, the HR Doctors
best advice is to keep good watch on how money is spent and to take
good care of yourself.
I have already
made an appointment to see future Dr. Rachel. Unfortunately, I will
be sitting in her waiting room for about two years until she
graduates and is ready to see me. I wonder if I will need a referral
from mom.
The HR Doctor
wishes you and your family good health and good health
insurance!
