Category: Health plans

Mini-meds mandated in Massachusetts?

published date
May 29th, 2007 by

Massachusetts’ Commonwealth Health Insurance Connector is doing its best to ensure the availability of affordable, high-quality health plans. For young adults, they’ve opted for an enhanced version of the existing student health plans, which have been mandated for almost 20 years. The plans are cheap: as low as $119 per month without drug coverage.

There’s a catch, though. The plans have annual coverage caps of $50,000 or $100,000. That’s higher than the $25,000 to $50,000 caps of the student plans, but it won’t take a seriously ill young adult (or their premature baby) to run up a bigger bill than that in Beantown.

Patricia Walrath, co-chair of the Legislature’s Health Care Financing Committee told the Boston Globe:

We thought this was one place where we could be a little experimental, because they are a very low-risk population.

But the Access Project thinks differently and issued a report critical of the plans. Plan co-author Stephen D’Amato says:

[T]he main purpose of insurance is to protect people in those rare instances when you have huge costs. Allowing these caps is duplicating a mistake that was made nearly 20 years ago. It’s going to destroy some lives

In a perfect world –or actually in any other OECD country– $119 per month would be enough to pay for comprehensive coverage for a young adult. Here, though, it isn’t. As a result, there’s a tradeoff between an affordable premium, coverage for routine services, and coverage for catastrophic costs.

I’ve written before about Mini-Meds –policies that offer limited coveraged, with caps much like these new Massachusetts plans. In some ways they are odious –almost the opposite of insurance– but they do provide access to the health care system and take away the worry of being saddled with $10,000 or $20,000 in medical debts. A debt like that can seem almost as catastrophic as a $1 million debt to people of limited income.

I don’t object to the capped plans for young adults. First, keeping the premiums somewhat reasonable will increase compliance with the mandate and increase the attractiveness of living in this state. Second, if debts get too high there’s always bankruptcy protection. Young adults have time to start over and since the hospitals will have such a high percentage of insured patients they should be able to suck up some of the losses without whining too much.

When a $0 copay is too high

published date
May 9th, 2007 by

The Wall Street Journal reports (New Tack on Copays: Cutting Them) that employers and insurers are cutting some drug co-pays to a few dollars or even zero. The emphasis is on getting patients with chronic conditions to adhere to drug regimens that promote good health and reduce other medical expenses. The programs typically target asthma, heart failure and diabetes –illnesses where the employer or health plan can realize a return on their investment within the short time a typical employee or member is with them.

The new initiatives are notable for going beyond low co-pays for generics to include low co-pays for branded products that are cost effective.

Behind the about-face is mounting evidence that higher copayments may not make long-term economic sense. While they’ve curbed drug spending in the short run, studies show they’ve also discouraged some people from taking essential medicines. A 2004 Rand Corp. study of more than 80 corporate and commercial health plans, for instance, showed that chronically ill people used to taking regular drugs cut their medications by between 8% and 23% when their copays were doubled.

I’ve written about low co-pays before, and pointed out that generic drugs shouldn’t need insurance coverage at all.

But why stop at $0 copays? Employers are already shelling out thousands of dollars for employees’ health benefits, so why shouldn’t they pay their employees specifically for adherence? In addition to zero dollar co-pays, why not pay employees cash bonuses –or top up their HRAs or HSAs (assuming they can find a way to do so legally)– for staying on worthwhile drugs over extended periods of time?

And there is an opportunity to align the interests of employers, patients and pharmaceutical companies by allowing the pharmaceutical companies to fund these bonuses and contribute ideas and programs that enable adherence. In the absence of new drugs or pricing power the main growth opportunity for the pharmaceutical industry is increasing adherence.

As long as the programs are directed toward reducing overall medical costs then I’m not concerned about abusive promotional practices. And this is where employers can play a big role. Time and again it’s been demonstrated that pharmaceutical benefit managers and physicians are unduly influenced by financial incentives to push particular drugs. (Look no further than today’s lead story in the New York Times (Doctors Reap Millions for Anemia Drugs) to see what I mean.) Let’s see if employers can do a better job of looking out for their employees’ best interests. I think they might be up to the task.
An intriguing aspect of such a plan would be the chance for branded pharmaceutical companies to compete against generics. If the branded company can do a better job of promoting adherence, an employer might find it better to pay the extra cost of the branded product.

A conversation with Intuit’s Dan Levin

published date
April 24th, 2007 by

From my post on the World Health Care Blog
Had a chat this afternoon with Dan Levin, VP and General Manager of Intuit’s Quicken Health Group. Intuit may be on the cusp of doing for the health care consumer what it’s done for the financial consumer, and that would be no bad thing.

Health care is a costly, complex mess and the status quo is untenable. From Dan’s perspective, there are two things that may happen:

  1. The entire system will be revamped
  2. Consumers will take on a more active role as customers

Intuit’s betting on #2 and putting some Quicken-like tools in place to help consumers manage the financial aspects of their health care.

Dan seemed pleased that some big technology companies (think Google and Microsoft although he was too polite to mention them explicitly) are trying to disintermediate established players, especially health plans. That’s had the effect of focusing the minds of health plan executives who don’t want to see their businesses undermined; it’s opened the plans up to the virtues of working with a white knight like Intuit. The Quicken brand is a powerful one for health plans to be associated with because it connotes confidence, trustworthiness and ease –three things plans desperately want to project with consumers.

Meanwhile, Intuit has learned from its experience with its initial foray into health care, Medical Expense Manager that consumers aren’t going to key in their own information. Fortunately, health plans have a lot of the data already.

Dan was pleased to tell me that United and Cigna have recently announced plans to make Quicken Health available to their members while the technology companies’ products and services are still on the drawing boards. He’d like to see every health plan offer Quicken Health –the way Intuit has managed to sign up close to 5000 banks for data downloads into Quicken.

Intuit is big on primary research to understand consumer needs. They asked health plans what percent of their members had filed a complaint in the past year and got back estimates of around 6%. Meanwhile about half of consumers answer yes to the same question. According to Dan, “that’s the classic definition of a quality problem.” I’m guessing that’s why Medical Expense Manager placed such a heavy emphasis on tools to help patients dispute bills with their health plans.

I asked Dan whether Intuit was switching sides by selling to plans. He said no. The same sort of bill dispute tools will be available in Quicken Health but their inclusion will actually benefit the plans, Dan said. The reason: Quicken Health will help members “clearly and cogently present their argument to the health plan,” which will make dispute resolution simpler and cheaper.

So where will Intuit go from here to expand its product range? Nothing’s announced but it’s clear that Intuit has learned plenty from its other products. Over 100,000 doctors use QuickBooks today, so although Dan didn’t say so I wouldn’t be surprised to see Intuit move into the space between physicians and health plans. In the process, Intuit might find itself in the role of doing some disintermediating of its own!

Understanding the appeal of Mini-Meds

published date
April 18th, 2007 by

I’m not enthusiastic about Mini-Med plans –the policies that offer limited coverage, often capped at $25,000 to $50,000 per year. In some ways they are the opposite of insurance because they pay for routine expenses but don’t cover catastrophic ones. In fact, I’ve come out repeatedly in favor of scrapping insurance for routine costs, like prescriptions.

I have to admit there’s another side to the story, and admit that my personal perspective on this has been colored by the fact that I can afford traditional coverage.
The Wall Street Journal ran a very informative piece on page 1, today (Covering the Uninsured, But Only up to $25,000). It focuses on Tennessee’s state-sanctioned mini-med coverage, CoverTN, and repeats some of the common criticisms:

Alan Sager, a professor of health policy at Boston University, calls the Tennessee plan “flimsy insurance” that will merely “provide cover for employers to save money.” Adds University of Tennessee medical-school professor David Mirvis, “It may be better than nothing, but it’s not real insurance.”

These experts are right.

On the other hand:

…Gov. Bredesen says he listened to focus groups and queried blue-collar folks, such as a waitress at a waffle restaurant, to devise his plan. “They weren’t interested in buying insurance for catastrophic events. They wanted access to the emergency room next month, access to the pharmacy next month,” he says. “Let’s give people what they want instead of what some advocate says they want.”

What Bredesen understands, but Sager and Mirvis downplay, is that a $10,000 or $25,000 or $50,000 debt falls into the “catastrophic” category for a lot of people. It can mean filing for bankruptcy or taking many years to dig out of debt. There’s not such a big difference between owing $50,000 and owing $1 million. Both amounts are in the category of not being repayable. Many people who run up debts of either amount are going to be eligible for Medicaid in any case.
On the other hand, if a person of modest means buys a comprehensive policy, it’s likely to be expensive and have high deductibles and co-pays. In addition to having to scrape together the money to pay the premium every month, a moderately expensive episode of care could still end up causing financial hardship or ruin.

For example:

Sherry Slatton, 46, a nine-year veteran in the Pepper Patch kitchen, dropped her comprehensive health insurance through her husband’s employer. The couple enrolled in the CoverTN plan, and their monthly cost will drop to about $175 from $350. Ms. Slatton wasn’t happy with the old coverage, which she says stuck her with $4,000 in charges when she underwent surgery to remove a benign cyst.

There’s also a stigma associated with being uninsured, and Mini-Meds address that, at least to some degree:

Ms. Robinson, the 23-year-old kitchen worker, figures it can’t get any worse than being uninsured. A nonprofit clinic recently told her she couldn’t get an appointment for a sinus problem for three weeks. Last summer, she went to a hospital emergency room for an infection. She says she was treated rudely, never saw a doctor and couldn’t get a prescription for an antibiotic from a nurse. Now, she’s paying $47 a month to the hospital to pay off her $3,000 debt. Her CoverTN premium is $41 a month.

“You walk in the hospital without insurance, it’s like you don’t even matter,” says Ms. Robinson.

I still dislike Mini-Meds –especially those sold by companies that engage in deceptive marketing practices– but we should acknowledge that not everyone who buys them is irrational or uninformed.

More on MA’s Rx coverage requirement

published date
April 16th, 2007 by

I’m not that happy about the requirement that buyers of health insurance in MA will have to get Rx coverage. Seems like that lines me up pretty squarely in the corner of the health plans. As Massachusetts Association of Health Plans’ Marylou Buyse says:

It is going to take away choice from people. On the other hand, it’s going to force everyone to have what most people consider to be a very desirable benefit, at an increased cost, of course.

Well that about sums it up.