Tracking Trends in Plan Design: A Conversation With Blaine J. Bos
Tracking Trends in Plan Design: A Conversation With Blaine J. Bos
MANAGED CARE August 2008. ©MediMedia USA
Right now large employers are obsessed with improving health and, not incidentally, productivity, says the chief analyst of a respected survey
Mercer has been tracking the insurance offerings of businesses through its National Survey of Employer-Sponsored Health Plans for more than 20 years. The annual study plots the rising cost of health care premiums, predicts the following year’s increases, and quantifies which plan types are gaining popularity and which are losing. The reports also demonstrate that trends started by the largest employers work their way down to smaller employers, and that much of health care is cyclical: Issues that are at the top of agendas today are likely to disappear during the next decade. “It’s been quite instructive,” says Blaine J. Bos, Mercer’s chief strategist for U.S. health reform and the survey’s chief analyst and national spokesman for the past 10 years. A consultant since the late 1970s, Bos has worked with HMOs as well as purchasers during his career, and was an original board member of the Washington Basic Health Plan, which provides catastrophic health care coverage to the working poor in the state. His bachelor’s degree comes from the University of Minnesota. He spoke recently with MANAGED CARE Editor John Marcille.
MANAGED CARE: Your clients are employers and many of our readers are managers and clinical executives in health plans. What do the two groups have in common?
BLAINE J. BOS: Health plans are just as interested in maintaining some semblance of the current employer-sponsored health care system as very large employers are. Both would take a very thoughtful approach to supporting any change to the current system. Small employers and employers in economically stressed industries, on the other hand, might be in favor of a radical change.
MC: So there’s common ground in national health policy?
BOS: That’s right. There’s also common ground in pressing forward to improve the general health and well being of the U.S. population. Health plans have shown that they have an interest in managing health, especially with their fully insured populations. And self-insured employers have that same interest in managing health, because they bear risk, but they are also very interested in improving the productivity of the workforce. The two go hand in hand.
MC: Which of the presidential candidates would be more likely to be embraced by large employers today?
BOS: There’s not enough clarity yet to create a groundswell of support or abhorrence. Employers have a wait-and-see attitude. There is some concern on the part of employers that the McCain proposal seems to be in favor of individual insurance. On the other hand, some employers are concerned that a mandate such as the one in the Obama proposal would create some problems. It is also unclear how important health care will be in the general election or in the next administration. When Senator Clinton was in the race, we knew as an industry that this was going to be one of the top three priorities of her administration, should she be elected president. Health care reform is not the seminal issue of either of the other campaigns.
MC: Does it surprise you that we haven’t been hearing much talk about a single-payer system?
BOS: Both candidates are staying away from that. Clearly Senator McCain would not be in favor of that particular type of proposal. He’s coming at it from exactly the opposite direction, which is free market individual insurance. It will be interesting to see how the debates go.
MC: In wanting to stick with an employer-based system in general, what opportunities or benefits do employers see?
BOS: My perspective is driven by how very large employers are approaching health care, because those are the companies I deal with in my day-to-day consulting work. And what they are interested in right now is using data to identify opportunities to improve the health and productivity of their workforces. They are using health risk questionnaires and medical and prescription drug claim data to identify individuals who are at risk for chronic conditions. They want to get those people into programs before they develop chronic conditions and improve the efficiency of the delivery of care for populations that do have chronic conditions. Global employers are also interested in this. They are moving employee assistance programs and wellness programs overseas to their global populations. There are various types of state-run health care systems around the globe, but employers still are able to affect the health and productivity of their employees overseas, even though they may not be able to deliver health care in the same manner through an employer-sponsored plan as they are in the United States.
MC: You’ve been tracking the activities of employers in the United States for years through the National Survey of Employer-Sponsored Health Plans. What are some of the most interesting things you’ve learned?
BOS: I’ve been associated with the survey since it started in 1986. One of the things that we saw then and we see now is that what large employers are interested in and how they are trying to improve the health care system ends up trickling down to smaller employers. Because smaller employers are typically fully insured and looking to health plans to provide them with the means to control the risk, the products large employers have initiated become more available in the fully insured market and in the smaller self-insured market over time. The other trend that has continued since 1986 has been that small employers typically provide less generous benefits than larger employers, because they are looking for a less costly environment.
MC: Do you ask the same questions every year?
BOS: The basics of the survey stay the same: How much are you paying for health care, what does your average plan design look like, and what are you charging your employees for health care? But questions on strategies and tactics are issues that are popular at the moment, and we’ve found that issues are hot for about five to ten years. In 1986, the strategic questions were how worried are you about AIDS and what are you concerned about in relation to HMOs? Push forward ten years and the big issue was, how effective are primary care physician gatekeeper programs? That was the hot issue in the 1996 survey. Today it’s all about consumer-directed health plans. Issues that were important in one decade are often not even visible in the next.
MC: What will the hot issues be in 2018?
BOS: They are probably going to be issues that are just barely being discussed today, such as the medical home concept and how a health plan will support that. That’s something that primary care physicians have become very interested in, and it may very well be one of the issues that we’re looking at 10 years from now. We might ask, how effective is the medical home? Can we measure a return on investment on this concept?
MC: We’re hearing a lot about the advanced medical home. Will it take 10 years for it to become widespread?
BOS: Right now employers are curious, but they have not embraced the concept. If they do embrace the concept, in 10 years we are going to want to measure the effectiveness of what has been put in place. That’s where we are today with disease management. We have been talking about disease management for several years, but the issue right now is how to measure ROI uniformly. How can we determine the effectiveness of a disease management program and how can we standardize reporting so that it doesn’t matter what vendor we’re using? It’s a cycle: An idea comes about, it becomes embraced because it’s philosophically correct, and then the CFO starts saying, “We are spending an awful lot of money on this. Prove to me that in fact this is something that is effective.” Then we turn to measurement evaluation, reporting, and those kinds of issues.
MC: So the business community believes that disease management’s cost effectiveness has been demonstrated?
BOS: Disease management has been embraced, and there is general agreement that it is having a positive impact on the health and well being of people who have chronic conditions. The questions now are: How can we measure that to be sure we are getting the best return on investment for these programs, and how do we improve our return? Many people believe that the way is to increase participation, but incentives do not appear to be working. Employers are now asking whether they should be looking at reimbursing people at a lower level rather than paying them to take care of themselves.
MC: Employers might stop offering employees incentives to take health risk appraisals?
BOS: Yes. Many employers who have been using incentives for five or six years are disappointed by the fact that to improve participation they end up having to pay employees more and more, as opposed to having employees and their dependents naturally gravitate toward these programs based on word of mouth. Historically, when different health plan designs are offered, word of mouth drives growth in enrollment. That happened with HMOs, and it is happening with consumer-directed health plans. But we don’t see it happening in this case. Employers have become frustrated with the lack of appropriate participation in disease management and wellness programs, so they are changing their strategy. Instead of saying, “We’ll pay you $50 to complete a health risk questionnaire annually,” they are saying, “If you don’t do the HRQ, you are not going to get full benefits, or you are going to have a higher deductible. And if you are identified as having a chronic condition or being at risk for developing a chronic condition and you refuse to participate in a disease management or wellness program, you will also have to pay more.”
MC: That’s pretty tough. Are companies doing this already?
BOS: Some companies are looking at it. Some will be introducing it in the next plan year.
MC: Do consultants like you drive all of this, or do you implement and elaborate on ideas that come to you from the business community?
BOS: It’s a combination of both. Sometimes a client is looking for the consultant to offer new ideas, and in other cases the client looks to the consultant for help in implementing a program smoothly.
MC: What else can health plans learn from the annual employer survey?
BOS: Each year the major health plans ask us what we see as the next big thing with employers. We don’t advise them for a fee, because that would create a conflict of interest, but we sometimes provide them with aggregated survey data that they can mine on their own to make decisions about product development and where they will have a specific market niche.
MC: What trends have you been tracking recently?
BOS: One thing we have been measuring is the renewed interest in on-site clinics and on-site pharmacies. This is an important topic, but it has been a cyclical one. The last time it was a big issue was in the ’90s. Health plans need to realize that they are going to be seeing more of these.
MC: Does the establishment of these clinics create problems with continuity of care?
BOS: If the geography makes sense and it ends up being convenient not only for the employee but also for the family members to participate in the program, it potentially becomes a replacement for the family physician. But it really depends on how the program is designed whether you’re going to have significant continuity-of-care issues.
MC: Are employers operating their own clinics and pharmacies?
BOS: There are many options. They can build them, contract with the local health care establishment, or contract with a vendor that will manage them.
MC: Must there be a certain number of employees in a specific location to make this viable?
BOS: It depends on your population. If you have a population that has a tendency toward poor health or is older, this can be effective in much smaller populations. If you have a reasonably healthy population and folks are younger, you need to have a much larger population. The ?geo?graphic footprint of your employee population is also important. If they are spread out all over the place and people are driving 50 miles to work, they are much less likely to use the services. It takes thoughtful research and planning to decide exactly how this can be effective.
MC: What products should health plans be developing to meet the needs of purchasers today?
BOS: Any health plan that’s not in the business of consumer-directed health plans ought to be. The 2008 survey is in the field right now, but we are already hearing anecdotal evidence of a growing interest in full-replacement CDHPs. That discussion is happening much earlier than we expected.
MC: If you’re surprised, have you come to any conclusions as to why it is happening?
BOS: There is more and more evidence that people change their behaviors when these plans are offered, though there is not a consensus. We also believe that the decision whether to offer a consumer-directed health plan has been taken out of the hands of human resources and has risen to the C-suite. At that level, it becomes a philosophical issue: “This is the vision of the organization. This health plan fits the vision of the organization about our employees. Let’s do it and do it well.”
MC: Choosing a health plan isn’t always based solely on cost?
BOS: At the fully insured level, employers need to have a partnership around cost. They don’t expect health plans to just pass on the cost of risk every year but to manage the risks. Mid-size, self-insured employers also expect health plans to offer them bundled products that look like what larger employers are doing. And the very largest employers are interested in service. They expect health plans to provide them with the kind of data that allows them to look at their risk pool and identify opportunities. Large employers also understand that it’s difficult for them on their own to identify quality providers, and they need to partner with their health plan to be able to get at the quality issues.
MC: How do employers feel about the quality of service that health plans are providing now? Is it sufficient? Is it what they expect? Is it deficient? What is the relationship now and what should we expect?
BOS: It’s an issue of managing expectations. Some employers have been with the same health plan for decades, and they have built the kind of relationship that can weather changes in management or the way services are provided. Other employers change health plans frequently, and most of the time that change is not based on cost, it’s based on service. That’s different for small employers, who most often change because of cost.
MC: Thank you.
The basics of the survey stay the same: How much are you paying for health care, what does your average plan design look like, and what are you charging your employees for health care?