Ask About Your 2012 Health Benefits

Many U.S. employers will drop a bunch of health-care options in their workers' laps in the next few weeks, if they haven't already. If you're one of those workers, unless you change jobs or lose your job, the choices you make will stick with you and possibly your family for all of 2012, so it's important to scrutinize and compare health-plan options.

You may be tempted to automatically re-enroll in the same plan you have now, but that could cost you. Many plans are shifting costs and benefits around and some employers have introduced new ways for workers to save money, experts say.

"If an employee blows off open-enrollment communications, the employee could pay more because they're missing incentives to pay less that are tied to participation in wellness activities," said Eric Parmenter, vice president of consulting for High Roads, a benefit consulting firm in Nashville, Tenn.

For next year, employers generally aren't as interested as they've been in recent years in raising workers' premium contributions, but they're finding other ways to pass on higher health-care costs, said Michael Thompson, principle in human-resource services at PricewaterhouseCoopers in New York.

"There's not as much focus on increasing premiums for workers as much as there is on increasing the amount of cost-sharing workers have at the point of service," he said.

People who use their health plan might feel more of a squeeze than those who don't, said John Asencio, senior vice president of Sibson Consulting, a human-resource consulting firm in New York.

"If you had a $15 copay, you'll probably see those go up to $20, $25 for physician office visits," he said.

The good news is underlying benefit-cost increases are expected to be moderate, compared with earlier in the 2000s when double-digit premium spikes whipsawed employers and employees alike.

Though they still far outpace general inflation and workers' wage gains, health-benefit costs are on track to rise 5.4% on average next year, the lowest rate of increase in 15 years, according to preliminary survey data from Mercer, a consulting firm in New York. If employers did nothing to manage the cost increase through plan-design changes, the increase would be 7.1%. The overall trend of the past five years has been about 9%, according to Mercer's findings.

Use of health-care services declined last year as people were left with less disposable income in a struggling economy and more workers faced higher out-of-pocket medical costs, said Beth Umland, director of research for health and benefits for Mercer in New York.

"If money is tight and you've got a $1,000 deductible, you might think twice about going to the doctor if you also think you could put it off," she said, noting the average deductible has doubled in the past five years.

Here are five bottom-line questions to consider as you compare your 2012 options:

1. What's new this year? As part of the health-reform law that kicks in more comprehensively in 2014, most employers already extend coverage to workers' adult children up to age 26 even if they're married or in school. And they have to offer free preventive care for a number of services such as colonoscopies and mammograms. For 2012, many employers are offering what are called consumer-driven health plans, which have high deductibles and often attached savings accounts. They're trying to control costs before 2014, when they have to extend coverage to part-time workers putting in at least 30 hours a week, among other anticipated costs, Umland said.

For 2012, the minimum annual deductible required for high-deductible health plans to be coupled with health savings accounts (HSAs) is unchanged at $1,200 for self-only coverage and $2,400 for family coverage. But the annual maximum for workers' out-of-pocket expenses is going up $100 to $6,050 for single coverage and rising $200 to $12,100 for family coverage next year, according to the Internal Revenue Service. Out-of-pocket expenses include deductibles and copays but exclude premiums.

Workers with HSAs for themselves only can contribute up to $3,100 to their accounts in 2012 compared with up to $6,250 for workers with family coverage in a high-deductible health plan. Those limits are slightly higher than for 2011.

2. What would the plan cost me? If your plan is shifting to coinsurance, where you pay a percentage of the total instead of a flat fee, you may have to think differently. "If you had a $10 or $20 copay, it was easy to understand what it was going to cost you when you went to the doctor," Thompson said. "If the plan now has coinsurance and a deductible, that visit may cost over $100 if you haven't met your deductible."

In making a total estimate of what a plan might cost you, first take stock of the premiums, the amount you contribute each month out of your paycheck, which will likely be higher for more a comprehensive benefit plan than for a bare-bones one. The second part relates to your out of pocket costs. For this, consider your recent history of health services. If you see a doctor or need blood work drawn frequently, for example, your copay or coinsurance amounts could make a big difference in your overall spending projections.

Next, if you're considering a health plan with a savings account such as an HSA, factor in what, if anything, your employer contributes to that account that may offset your costs. Your monthly premiums will likely be lower, but don't forget unpredictable and intangible costs. "How much am I saving for sure vs. how much might I lose if I actually use the plan?," Umland suggested asking. Plus, are you OK with managing another financial account? Try to find out how many extra administrative tasks you may need to do to use the HSA funds. Some offer debit cards you can swipe, but others may force you to submit and track claims for reimbursement.

3. What happens if I get really sick or injured? Try to run a worst-case health scenario under each of the plan options to see how financially exposed you would be among them should you or one of your covered dependents have a grave accident or illness. Know what expenses are counted in the out of pocket maximums. "How much would I be out of pocket in this option vs. this option if I suddenly need $50,000 worth of care?" Asencio said.

4. Are my meds covered? If you're on maintenance medication for a chronic illness, check to see if any plans will waive your copay or coinsurance on certain prescription drugs, making them effectively free to encourage you to keep taking them, Thompson said. You may have to talk to a health coach or participate in a disease-management program to get the free meds, but more employers are trying this option to get a handle on their long-term health costs. Some plans also offer a separate out of pocket maximum for prescription drugs, he said.

5. Am I leaving money on the table by failing to participate in wellness programs aimed at making or keeping me healthy? Whether it's a game-oriented workplace exercise competition, private dietary counseling, talking to a health coach or taking classes to help you quit smoking, you may not be able to afford to ignore your employer's 2012 wellness offerings. "While these programs have been around for a while, employers are really taking them seriously now as a way to manage costs," Umland said.

You may not have to do much work to score a break on your health-care costs. In fact, some employees may end up paying $25 to $50 more in premiums per month or hundreds of dollars more in deductibles if they don't complete a health risk assessment or other activities meant to gauge their general health status, Asencio said. "Companies are getting more aggressive around these issues."

11:34 AM | 0 comments | Read More

Cut Back on Visits to Doctor

Insured Americans are using fewer medical services, raising questions about whether patients are consuming less health care as they pick up a greater share of the costs.

The drop in usage is showing up as health-care companies report financial results. Insurers, lab-testing companies, hospitals, and doctor-billing concerns say that patient visits, drug prescriptions, and procedures were down in the second quarter from year-ago levels.

"People just aren't using health care like they have," said Wayne DeVeydt, WellPoint Inc.'s chief financial officer, in an interview Wednesday. "Utilization is lower than we expected, and it's unusual."

Others say that consumers are beginning to forgo elective procedures like knee replacements. "We have a very weak economy and it's just a different environment for the elective parts of health care," said Paul Ginsburg, a health economist who runs the Center for Studying Health System Change and has been analyzing health-company earnings. But "this could go beyond the recession. Being a less aggressive consumer of health care is here to stay."

Continued weak demand could eventually put downward pressure on spiralling health-care costs, a long-sought goal of policy makers. It could also force insurers to lower premiums.

The new trend comes amid a broader drop in health-care use as more Americans lose their jobs and their health insurance. Such cutbacks have happened before in recessions, but the drop seems to be more pronounced this time, industry analysts say.

More Americans also are buying high-deductible health plans that force them to bear more of the upfront costs for health services. Some 18 million Americans bought high-deductible plans this year, compared with 13 million last year, according to Paul Mango, a director at consulting firm McKinsey & Co.

At the beginning of the year, Dan and Natalie Johnson, of Gig Harbor, Wash., used the website eHealthInsurance.com to buy a new plan with a high deductible, now set at $5,500 for their family. Their previous coverage had no deductible.

Now, the couple says they are thinking twice before scheduling doctor visits. Recently, when their 16-year-old daughter's allergy prescription ran out, Ms. Johnson called the allergist's office to ask for a renewal, without coming in for an appointment, as she would have done under their previous insurance.

And this spring, their son, 14, got his athletic physical at a local urgent-care clinic that charged just $40, instead of a doctor's office, which would have cost about $90. "We don't want to go through our savings going to the doctor," says Ms. Johnson, a photographer.

All this raises the question of whether, after a year of national attention on out-of-control health costs before the federal health overhaul passed in March, the trend portends a lasting change in the way Americans use the medical system.

Just a year ago, insurers reported surging health-care usage. Back then, more consumers were signing up for Cobra, the federal program that allows people who have lost their jobs to keep their insurance. The government had extended a subsidy to cover 65% of the cost of the coverage, which can be prohibitively expensive.

However, the Cobra subsidies only covered the unemployed for 15 months, and many people have hit the limit and dropped coverage. What's more, people who have lost their jobs since the end of May don't qualify for the Cobra subsidies.

To be sure, the change in behavior could be short-lived. On an earnings call last week in which it reported a decline in hospital usage, UnitedHealth Group Inc. (NYSE: UNH - News) said it thought utilization would rise again in the second part of the year, as Americans exhaust their deductibles and insurers start paying for services. Both Aetna Inc. (NYSE: AET - News) and WellPoint (NYSE: WLP - News) said the utilization fall-off was new as of this year, and they had not seen the trend previously even as the economy has deteriorated. Some insurers also cited an unusually mild flu season this year as a temporary factor.

What's more, the federal health overhaul could cause usage to surge again. The new law will hand insurance cards to many Americans in 2014, which could unleash pent-up demand.

Utilization has ticked down in previous recessions, and tends to take a year or two to change because of how far in advance employers and insurers design their health plans, said Carl McDonald, an analyst at Citigroup Investment Research. He said the last time he saw utilization fall off was in 2003, adding that usage also dipped in the early 1990s. But he added the drop is bigger this time than in previous recessions.

The declines in utilization has boosted profits for insurers, who set their prices to cover anticipated medical costs. Insurance industry prices and profits have been under fire by Democrats and regulators this year. Insurers have justified high premiums by pointing to out-of-control medical costs. But the recent drop in usage could make it difficult for insurers to argue that continued price increases are necessary.

On Wednesday, Aetna said usage of health-care fell in the second quarter, feeding a 42% increase in profits. WellPoint reported a 4% earnings bump, saying that hospital admissions and usage of prescription drugs had dropped compared with a year earlier.

After the earnings releases, Rep. Pete Stark (D., Calif.) called on the companies to reduce their premiums since they are paying out less in medical care. In an interview, Aetna's chief financial officer Joseph Zubretsky said companies might eventually have to do just that. "If utilization stays down, it will have a favorable impact on rates," he said.

One company reporting evidence of lower utilization is CVS Caremark Corp. (NYSE: CVS - News), the drugstore giant. In its earnings announcement Wednesday, it said it is seeing a drop-off in new prescriptions for maintenance drugs tied to a decline in physician visits.

People are "visiting fewer primary care doctors and specialists," said Chief Executive Tom Ryan, in a conference call with analysts.

Last week, Quest Diagnostics Inc. (NYSE: DGX - News), a laboratory-testing company, told investors that its volume fell 2.6% in the first quarter and 1.3% in the second partly because of decreasing physician visits. In addition, AmSurg Corp. (NASDAQ: AMSG - News), an outpatient-surgery company, reported that same-store procedures declined by 2.6% compared to a year earlier.

Another sign that people are forgoing doctor visits or getting less care came from athenahealth Inc. (NASDAQ: ATHN - News), which provides billing services and electronic health records for more than 1,700 medical groups. It said last week that the number of claims filed per physician, as well as the average value of the billing for each visit, had dropped from a year earlier.

Physician visits and hospital admissions are dropping this year, according to Thomson Reuters' healthcare business, which surveys doctors and hospitals. Doctor visits have declined each month this year, including a 7.6% drop in May 2010 from May 2009. Likewise, hospital admissions dropped in three of the first four months of this year compared to those months last year, including being down 2.3% in April 2010 from April 2009.

10:29 AM | 0 comments | Read More