Consumerism and wellness: rising tide, falling cost

Annual employer-sponsored health plan cost increases have been slowing incrementally due to slowing health care utilization--a phenomenon very likely tied to the proliferation of health management activities, wellness programs and other consumerism strategies. This article describes the sharp rise in recent years of consumer-directed health plans (CDHPs) and explains what developments must happen for genuine consumer-directed health care to realize its full potential. These developments include gathering transparent health care information, increasing consumer demand for that information and creating truly intuitive data solutions that allow consumers to easily access information in order to make better health care decisions.     

Defined contribution health plan to consumer driven health benefits: evolution and experience

Today, the idea of placing more choice on employees "consuming" health care and giving them more responsibility and incentive to control health care costs and utilization is alive and thriving in the form of consumer-driven health care. This article examines the evolution of consumer-driven health benefits--including the experience of the first generation of "defined contribution" health care participants (i.e., retirees) and the results of different approaches employers have taken to early consumer-driven plan designs. The author then describes what's needed to answer the question: "Can consumer-driven health care control health cost?"     

Study results: employer-based coverage of genetic counseling services

Because advances in genetic medicine are likely to affect the cost and delivery of employer-sponsored health care, plan managers require a basic understanding of related services. By describing and analyzing a survey of health plan managers, the author shows where they may need more information about genetic services in order to negotiate coverage and make informed purchasing decisions. Given these current information gaps, genetic counselors may be helpful to health plan managers by providing information and quality assurance about genetic medicine as it continues to integrate itself into medical practice and as plan managers seek cost-containment approaches in the face of rising health care costs.     

Asymmetric information in health insurance: evidence from the National Medical Expenditure Survey.

Adverse selection is perceived to be a major source of market failure in insurance markets. There is little empirical evidence on the extent of the problem. We estimate a structural model of health insurance and health care choices using data on single individuals from the NMES. A robust prediction of adverse-selection models is that riskier types buy more coverage and, on average, end up using more care. We test for unobservables linking health insurance status and health care consumption. We find no evidence of informational asymmetries.     

Converting retirement benefit into a life care annuity with graded benefits*

This paper deals with life care annuities, i.e. bundled products comprising a life annuity and long-term care insurance. It aims to assess the cost of converting retirement benefit into a life care annuity with graded benefits using a pre-existing public pay-as-you-go pension scheme. With this objective in mind, we present an actuarial method based on array calculus for valuing this type of life care annuity. The health dynamics of the annuitant rely on a reversible illness-death multistate framework. The paper contains a numerical example in which mortality and disability assumptions are based on data from the USA and Australia, although this should be viewed simply as an illustration. In addition, in order to check the coherence of these data, we compute life expectancy for both healthy and dependent persons, and then for dependent persons in each of the states of dependence. The effect of ruling out the recovery assumption on the annuity’s cost is also assessed. The analysis provides valuable insights into how much it would cost to introduce these annuities and enables us to make some policy recommendations to help ensure that this combined pension scheme has a good actuarial design.     

The next big thing in health benefits: consumer choice

Consumers are the only ones who can affect all decision points that drive health care cost and quality. As a result, consumers' health and financial security depend on their taking more responsibility for their health care decisions and having the tools and information needed to do so successfully. This article explains the five key decision points that drive health care cost and quality, how technology aids marketplace innovations, and how employers can help advance consumer choice in order to push the health care system to deliver better care and keep inflation in check.     

A Comparison of HMO Efficiencies as a Function of Provider Autonomy

Current debates in the insurance and public policy literatures over health care financing and cost control measures continue to focus on managed care and HMOs. The lower utilization rates found in HMOs (compared to traditional fee‐for‐service indemnity plans) have generally been attributed to the organization's incentive to eliminate all unnecessary medical services. As a consequence HMOs are often considered to be a more efficient arrangement for delivering health care. However, it is important to make a distinction between utilization and efficiency (the ratio of outcomes to resources). Few studies have investigated the effect that HMO arrangements would have on the actual efficiency of health care delivery. Because greater control over provider autonomy appears to be a recurrent theme in the literature on reform, it is important to investigate the effects these restrictions have already had within the HMO market. In this article, the efficiencies of two major classes of HMO arrangements are compared using “game‐theoretic” data envelopment analysis (DEA) models. While other studies confirm that absolute costs to insurance firms and sponsoring companies are lowered using HMOs, our empirical findings suggest that, within this framework, efficiency generally becomes worse when provider autonomy is restricted. This should give new fuel to the insurance companies providing fee‐for‐service (FFS) indemnification plans in their marketplace contentions.     

Population health improvement--the next era of the health care management evolution

The trend of increasing health care costs over the past several years shows no signs of slowing down. While employers have attempted to address the issue with various cost-shifting and cost-sharing initiatives to relieve the burden, those attempts have often fallen short. In today's fiscally scrutinized benefits environment, the emphasis needs to be more strategic. The management of employee health and productivity needs to move to a more encompassing organizational view that addresses the most expensive drivers of these costs head-on, with prevention, education and employee responsibility as key tenets. Organizations that make the move--by implementing programs to maintain, improve and manage their population's health--will enjoy substantial cost savings and enhanced employee productivity.     

Here it comes: defined contribution health care

The Patient Protection and Affordable Care Act includes provisions to make the individual health insurance marketplace one where all Americans, including those with preexisting health conditions, can obtain affordable coverage. At the same time, the act has failed to address, in any significant way, many of the underlying flaws in the current U.S. health care system that have caused costs to spiral out of control. The combination of persistent U.S. health care cost increases and a viable individual health insurance marketplace will cause a sea change in employer-sponsored health care offerings that is similar to that seen among employer-sponsored retirement benefit plans: movement away from defined benefit approaches and toward defined contribution designs. Although the authors show parallels between the evolution of employers' health care and retirement offerings, they explain why certain key developments will need to occur before defined contribution approaches become as prevalent in employer-sponsored health care plans as they are in today's employer-sponsored retirement plans.     

What do friends and the media tell us? How different information channels affect women’s risk perceptions of age‐related female infertility

This paper investigates through which channels women receive information about the general risk levels of age‐related female infertility and how the different channels affect women’s perceptions of the risk. We find that the media reaches women of all ages, while only about one woman in four has received information from the health care system. We also find that friends and relatives are an important source of information that affects women’s risk perceptions. However, the information from friends and relatives seems to generally make female recipients more likely to overestimate the risks. We conclude that the information sources have different, sometimes even opposite, impacts on the risk perceptions, possibly making it harder for a woman to be aware of the true general risks of age‐related infertility.     

Testing Alternative Regression Frameworks for Predictive Modeling of Health Care Costs

Predictive models of health care costs have become mainstream in much health care actuarial work. The Affordable Care Act requires the use of predictive modeling-based risk-adjuster models to transfer revenue between different health exchange participants. Although the predictive accuracy of these models has been investigated in a number of studies, the accuracy and use of models for applications other than risk adjustment have not been the subject of much investigation. We investigate predictive modeling of future health care costs using several statistical techniques. Our analysis was performed based on a dataset of 30,000 insureds containing claims information from two contiguous years. The dataset contains more than 100 covariates for each insured, including detailed breakdown of past costs and causes encoded via coexisting condition flags. We discuss statistical models for the relationship between next-year costs and medical and cost information to predict the mean and quantiles of future cost, ranking risks and identifying most predictive covariates. A comparison of multiple models is presented, including (in addition to the traditional linear regression model underlying risk adjusters) Lasso GLM, multivariate adaptive regression splines, random forests, decision trees, and boosted trees. A detailed performance analysis shows that the traditional regression approach does not perform well and that more accurate models are possible.     

The Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191)

The purpose of this article is to provide a general overview and reference source for the Health Insurance Portability and Accountability Act, which was signed into law by President Clinton last August. The focus of the article is on Title I--Improved Availability and Portability of Health Insurance Coverage, and on Title III--Tax-Related Health Provisions. The author points out that due to the trend towards an incremental approach to health care legislation, this act must be viewed as one of a series of initiatives being taken by the federal government intended to impact the cost of the U.S. health care delivery system.     

The new millennium--what will health benefits be for the small employer?

With the impending approach of the year 2000, the author considers the evolution of health benefits over the last few decades and the forces that are bound to affect health benefits for the small employer in the next millennium. This article suggests that it will be necessary to spread the cost of health care as well as other reform initiatives in order to make it possible for small businesses to have a greater voice as well as an equal share in health benefits, particularly considering that the majority of Americans work for small employers.     

Engaging employees in health care can contain costs and improve quality

Employers need to do much more to change some of the deep-seated employee attitudes and behaviors that are driving health care costs. This article debunks common employer misconceptions about employees' attitudes and behaviors with regard to health care. It then discusses the results employers can obtain by taking specific initiatives that provide employees with the motivation and resources they need to effectively manage health risks and make informed health care decisions.     

Hospital Costing: Experience from the VHA

The government administered Veterans Health Administration (VHA) is the largest integrated health care system in the USA. As health care dollars are becoming tighter nationwide, VHA faces the dual challenge of achieving cost reductions and improving quality, while operating in an increasingly competitive marketplace. This places new demands on cost accountability within the agency. This paper identifies the cost accounting procedures currently used by VHA as it responds to internal budgetary curtailment and to external competitive pressures. Understanding the different costing approaches taken by the organization along with their associated problems offers lessons of interest to financial managers within and outside VHA.     

Health care consumerism: engaging the real buyers--employees

Many employers have begun moving toward health care consumerism strategies designed to encourage employees to take more responsibility for their health care and the cost of that care. Recent surveys suggest ways employers can ensure their consumerism strategies succeed in engaging employees and, ultimately, encourage employees to change their behavior. This article describes what those surveys reveal about employer and employee perspectives on consumerism and suggests steps employers can take to align their interests with those of their employees in order to manage the demand for and use of health care.     

Disability, absence and the health reform era

The total cost of employee absence for many employers is high, and the correlation between employee health and disability is clear. This article reviews several challenges employers face in managing employee health and absence in a well-integrated manner. Although such an undertaking is not easy, the additional cost national health care reform may bring makes the interrelationship between employer profitability and employee absence, health and disability more crucial than ever for employers to recognize and manage.     

Researching accounting in health care: considering the nature of academic contribution

As academics we naturally seek to address interesting and important questions. Our concerns for rigour drive us to work from generally accessible preoccupations towards more narrowly and precisely defined questions however. Such specialisation is properly understood as a source of strength in our knowledge. The growing impact of governance mechanisms surrounding journal rankings threatens this strength by attacking our abilities to produce, but also to integrate, the specialised contributions that we make however. This article will expand upon this basic argument and further elaborate it through a discussion of the academic literature around costing in health care.     

How companies tackle health care costs: Part II.

In this continuing examination of responses to the growing costs of health care, based on a survey of more than 200 large companies, the author discusses the results of employers' efforts to trim these expenses. Most companies have chosen to meet the cost-cutting challenge by changing demand--that is, by redesigning their health insurance policies--and by changing the suppliers of health care services. After a critical analysis of these mechanisms, the author concludes that most of these strategies do little more than shift the costs from one payer to the next. To affect the total cost of the system, she maintains the business sector must use its power to bring about changes in the reimbursement of providers and in the underlying structure of the health care system.