Sunday, October 24, 2004

Tailored plans a high-fee stopgap


Insurers tout new deductibles, 'stripped' coverage

By John Eckberg
Enquirer staff writer

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Pam Day, a 36-year-old Anderson Township resident, realized last year that she needed to act to cope with the increase in her family's health-insurance premiums.

"I know insurance has been increasing over the years, but until I had to pick and choose, I had no idea how much," Day said.

She charted a path in January when she set aside three nights after her children were in bed to figure out which company's package best suited her needs.

Day, a registered sales assistant at securities brokerage Hilliard Lyons, made some concessions in coverage after her research and ended up saving $26 a month.

But her new plan does not pay for her husband's Allegra-D - which means he no longer takes that allergy medication - and she's somewhat bitter.

"I think the insurance companies are to blame," Day said. "Insurance companies have been allowed to get away with a lot."

Health-insurance executives respond that the cost of health care continues to rise - and will for years to come - despite their best efforts to slow it down.

The trend of ever-more-costly hospital visits, medicine and physician care means national expenditures on health care is expected to almost double in every category from through 2013.

"We're trying to make sure we have low-cost options like higher deductibles and stripped-down plans," said Chuck Slater, senior vice president/general manager of Anthem Blue Cross and Blue Shield in Cincinnati.

Lower-cost approaches

Among the approaches insurance companies are taking that lower premium costs:

• Consumer-directed health care. This puts more control on costs in the consumer's hands, but means more money must first come from the consumer's pocket.

For instance, a plan may offer consumers the first $500 of medical expenses and cover anything over $2,000. Employees then choose from an array of coverage for the $1,500 in expenses they have to cover in between.

"I believe that in the consumer-choice model, you inform the consumer about quality and cost and their behavior can begin to change the (cost) curve," Larry Savage, chief executive of Humana, said.

• Patient education and wellness programs. Such programs can identify unhealthy choices such as smoking and obesity, which drive up long-term costs.

The sticking point: Though many consumers will modify behavior based on information they glean from wellness programs, many won't. Industry experts say that means unhealthy people who continue to make questionable choices tend to drive up insurance for everybody else.

• Customized plans. Insurers provide an array of choices and analyze costs of providers and common medical procedures. This can help the consumer make decisions for the future based on good analysis of past medical expenses.

Anthem, for instance, has an online option that allows healthy people to obtain a high-deductible ($1,500) policy and buy insurance against catastrophic illness.

• Health savings accounts. This new federal tax reduction, similar to a Roth IRA, allows individuals and employers to contribute pretax dollars that can be used toward medical expenses. This is combined with a high-deductible plan that has low premiums.

• Anthem also offers an advanced care-management plan that assigns staff to advise and review plans, like, for instance, the duration of hospital stays.

"Until we re-engage the consumer to have an economic stake, be intellectually engaged and to be armed with actionable information, I don't see any change in the trending," Humana's Savage said.

E-mail jeckberg@enquirer.com




SPECIAL REPORT: HEALTH INSURANCE
Tailored plans a high-fee stopgap
Workers bracing for insurance shock
Exec's tough call: Covering his family
Doing what's right loses out to costs
Rising fees eclipse prescription needs
Family does without, praying they'll get by
Subsidized coverage key, Springer says

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