More on Health Care Reform

Most of the information we have posted on our new blog concerning health care reform has been credited to other authors who have weighed in on this legislation.  It’s time for us to step up to the plate.

We believe health care access is a worthy goal.  Certainly, this access issue has had considerable attention in the reform package.  What we continue to call for is better focus on medical service cost containment efforts.  Health care is expensive.  We need more effort getting costs under control before we try to dump our citizenry into a system that is unaffordable.  It’s really easy to say this, but we are going to have to get serious about putting some muscle behind this initiative if we ever hope to be successful.

What can be done to help make the system more affordable?  What we are really talking about is medical insurance premiums, since we must pay those costs before accessing medical care.  Our firm works with employer groups in the design and management of their employee benefit plans.  The area that gets most of the focus is the group medical plan.  Since we get to tell our clients the good news and the bad news (about their medical plan renewal), it is imperative that we provide guidance on how best to control the factors that effect premiums.

What factors?  For one, the medical loss ratio (MLR).  The MLR is a simple calculation of premium taken in by the carrier vs the paid claims.  In the case of a group plan paying $100,ooo in premiums and having $80,000 in paid claims, the MLR is 80%.  The insurance carrier uses the MLR to establish required premiums at the renewal.  Why is this important?  The lower the loss ratio, the better the renewal.  The better the renewal, the less money the employer spends and, at least eventually, the less the employee pays through payroll deduction.

How can we control and improve the MLR?  We argue the first step must be the education and engagement of the employee.  The employee must be equipped with the proper support tools to make good decisions about where and whom they will get to provide their medical services.  Employees need to have easy access to research to help them make these decisions.  There are many medical providers, physicians and facilities, and asking the employee to do research on all of them in their community is unreasonable.  If we ask them to check medical prices before they select a surgeon and a hospital, they might check a couple of options, but they won’t check all available options.  They need someone to hold their hand, get them the research (medical outcomes and pricing), in order to make an informed decision.

By helping the employee gain access to the medical providers that produce the best medical outcomes, we improve their chances of success, get them back to work more quickly, and reduce the likihood of “medical re-work” which involves having to repeat the procedure (which increases the cost).

If we then take it one step further and help the employee get to the best providers AT THE LOWEST PRICE, then we really start to make an impact.  The employee gains the advantages listed above, plus the employer and employee reduce costs by making wise, informed decisions.  If we can get the patient to lower cost providers with great outcomes, everyone wins.

How can this be done?  There is a start-up cottage industry being developed to provide this badly needed support.  Some companies have been at this for a while and have developed meaningful research to assist in this effort.  We REQUIRE out clients to carefully consider engaging this resource before any further talk of cost containment is discussed.  If fact, we feel so strongly about it that, in most cases, we engage these resources at no cost to our clients.  Nothing like putting your money where your mouth is.

Let’s talk about money for a second.  Follow the money, as they say.  If we reduce medical claims cost by steering people to the best providers at the most reasonable costs, what effect will that have on the MLR?  It has no choice.  It must go south.  This is really not that complicated, but few people take the time to understand that the choices people make about how they consume medical services plays a huge part in whether affordable medical coverage can be sustainable.

The next part is the challenge.  How do we engage people in the process?  How do we get them to pick up the phone and ask for help?  This is the deal.  If we can’t get people engaged, then this process will never have a chance to work.  But make no mistake.  Employers are figuring out how to get this done.  Momentum is building with each passing day.  We counsel with our clients concerning the communication strategies they can use to get their employees engaged.  Think about how your employees consume information.  How do they like to learn?  Do they like print, podcasts How about a survey to learn this information?