Category Archives: Healthcare

Easy Choices

Do simple names help employees make complex decisions?

HDHP/HSA: An Overview 

Since its inception in 2004, the adoption rate of the High-Deductible Health Plan (HDHP) has been growing. Today, approximately 30% of covered workers in the United States participate in an HDHP. Originally offered as an alternative to PPOs and HMOs, the HDHP was intended to incentivize consumer behavior in healthcare. Its plan design, which allows it to be paired with a tax-advantaged Health Savings Account (HSA), was distinct from existing medical plan options and the name alone made it easy for HDHPs to stand apart.

The Challenge of Naming a Plan

As acceptance has grown, so have the options. Employers are increasingly adding not just one HDHP, but multiple HDHPs. In these cases, quickly distinguishing one HDHP option from another through use of a descriptive plan name can be challenging. 

This is due, in part, to low understanding among employees of key medical plan features:

  • Premium: the amount the employee pays for the coverage each month
  • Deductible: the amount the employee pays for covered services before their insurance starts to pay
  • Copayment: a fixed dollar amount the employee pays for certain healthcare services
  • Coinsurance: the employee’s share of the costs of a healthcare service once coverage kicks in 
  • Out-of-Pocket Maximum: the most the employee pays during the plan year before the plan starts to pay 100% of the allowed amount

Generally, higher deductibles and out-of-pocket maximums result in lower premiums and multiple HDHPs are distinguished from each other by these amounts (rather than by features such as access to out-of-network providers).  

Comparing these multiple plans can be challenging for employees because there are many variables must be compared against one another.

  • How much will this cost me each month?
  • How much health care will my family use?
  • How much risk am I taking over the course of the year?
  • How much will my medications cost?
  • How much can I save in HSA over time?

These are not trivial one-to-one cost analysis. They are highly individualized and impactful for most employees’ health care budgets. Therefore, finding simple, easily understood names for the plans is also difficult and complicated.  

Common Approaches to Naming HDHPs

Metallic Plans (Platinum, Gold, Silver, Bronze)

This is likely the most familiar option, as it is employed by healthcare.gov. Similar to how they are used in the Olympics (or by jewelers), these metals distinguish plans by actuarial value with Platinum being the highest followed by Gold, Silver and Bronze. 

Metallic names seem to offer an immediate recognition of value. (Would you rather have an ounce of bronze or an ounce of Gold?) However, metallic names are problematic, because it’s not necessarily clear to the employee what that value means. 

It could easily be inferred that Platinum plans are most expensive, but that’s only true with regard to premiums. Yet, high premiums may be a waste of money for people who don’t use very much health care.  It could also be inferred that Bronze plans are worth less, but they could be a better deal for the employee based on their use of health care, and a greater ability to save money in an HSA. 

Deductible Amounts

Including the deductible amount in a plan’s name immediately conveys useful information about the underlying plan. However, as mentioned above, employees might not necessarily understand this concept. For example, some employees might be willing to pay higher premiums in exchange for a lower deductible because they may assume a lower deductible means “more” or “better” coverage.

Some employers use only the individual deductible in the name (which can cause confusion for those who choose family coverage), and some use both the individual and family deductible, (which can result in long or clunky names).

  • Single Deductible Approach: HSA $1,500 and HSA $3,000
  • Both Deductible Approach: HSA $1,500/$3,000 and HSA $3,000/$6,000

Comparative Descriptors

Another approach is to use descriptive terms that attempt to convey how the plans are different. However, these approaches have similar pros and cons as the metallic names; they have inherent meanings but might mislead employees.

  • HSA Premium and HSA Standard 
  • HSA Plus and HSA 
  • HSA High and HSA Low 
  • HSA and HSA Core 
  • HSA and HSA Basic
  • HSA and HSA Value 
  • HSA High Use and HSA Low Use

Non-comparative Descriptors

Another approach would be to use descriptors that merely indicate the two options are different without implying any comparison. These labels have no inherent meaning. Employees would have to learn what each means over time.

  • HSA Blue and HSA White
  • HSA 1 and HSA 2
  • HSA A and HSA B

Conclusion

There is no right or wrong approach to naming HDHPs. The metallic names, though simple and easy to understand, are imperfect. Other comparative and descriptive methods also fall short. Simplicity cannot be the ultimate concern. 

Employees need to understand the features of their health plans through effective communication and tools that help them model and compare the offered plans against their individual circumstances. Any name will work, if it is properly supported with information employees can usefully access and apply.

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Reimagined Healthcare

April Kyle's Keynote Address

Reimagine is one of those words that marketers have latched onto that probably should be reserved for solutions that are important, real and seriously proposed. 

Because reimagine is the right word for what has happened to healthcare at the Nuka System of Care in Alaska. Imagine a system where patients are owners, and preventing illness is as important as curing illness. 

Smith was a proud sponsor of the 2021 Aspirational Healthcare Conference. The CEO of Nuka, April Kyle, was the keynote speaker. Her presentation is an inspirational and informative explanation of how Nuka has actually reimagined healthcare.  

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Aspirational Healthcare

It’s time to change healthcare delivery in America

I went to see my doctor last week, and after arriving 15 minutes early as instructed, completing forms I have penned a dozen times before, then waiting 30 minutes past my allotted appointment time, we had a chat. He looked over my numbers and concluded, “I want you to lose 10 pounds.”

That was it. Meeting over. Pay at the door. Come back in six months.

There was no counseling on how to lose the weight. No connection to a nutritionist or someone who might help manage an exercise program. Not even a flyer of dos and don’t’s to guide me in my weight loss. 

Harumph.

That’s when I realized that my doc, like most healthcare practitioners in America, can help me when I am sick. But he doesn’t really do anything to keep me from getting ill. Oh, he feigns some minor interest in preventive medicine, but the fact is if he prevented me from getting sick in the first place, he’d be cutting into his own business. What incentive does he have to help me lose that extra 10 pounds?

Toward a healthier future

Isn’t it time we change healthcare delivery in America? Shouldn’t we be focusing our healthcare delivery services to prevent illness instead of just treating the sick? Most people would say YES to these queries, but are uncertain what to do about them. I’m happy to report a movement afoot that focuses on this long-standing, and fundamental problem. Smith Communication Partners is sponsoring the Aspirational Healthcare Conference, to be held July 14 and 15. The virtual conference brings thought leaders, executives and healthcare professionals together to discuss changes to healthcare delivery in the U.S. to lower costs and improve outcomes. The conference focuses on preventive care concepts versus our current structure of reactive healthcare services.

The Aspirational Healthcare Conference is the brainchild of Darrell Moon, CEO of the national wellness firm Orriant Health. Before launching his wellness company, Darrell spent part of his career running a healthcare system that included several hospitals. During that experience he came to the realization that the healthcare system in America needs a major overhaul. He points out that healthcare services are built for the providers to provide but have almost no focus on the customer. He and other similar leaders want to switch healthcare to be preventive focused and built based on the needs and wants of the customers in the community.

Malcolm Baldrige Award

Darrell has assembled national healthcare leaders, company leaders, heads of major consulting and brokerage firms, and professionals dedicated to the idea of preventive care to present at the conference this year. One of the presenters is April Kyle, the CEO of the Nuka System of Care in Alaska, generally regarded as the best example of healthcare delivery in the world by providing better results at a lower cost than any other system. The Nuka group has twice received the President’s Malcolm Baldrige Award for Quality.

I hope you can attend and join the drive to change healthcare in our country to focus on ways to prevent illness instead of just treating the disease.

You can register for the event with the code !SMITHCP$. I’ll see you there – 10 pounds lighter, no doubt.

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Not Ready for Prime Time: 3 Stories from Healthcare Consumers

Being a healthcare consumer isn’t easy.

Recently I was explaining what Smith does to some friends. Pretty quickly the conversation turned toward health insurance and healthcare costs—mainly HSAs and high-deductible plans. Cutting to the chase, folks aren’t happy.

Our HR clients are tasked with explaining the necessities, values and details of what often is called healthcare consumerism. In theory, consumer-driven healthcare has three key components:

  • More healthcare choice, information and responsibility is placed in the hands of employees
  • Employees come out-of-pocket for more of their health spending
  • Healthcare consumer choices create market forces that control rising healthcare costs

It seems reasonable and I hope it’s working.

However, theory and reality often diverge. Listening to my friends share their recent experiences helped shed light on real difficulties employees have as healthcare consumers. It seems that the market they are accessing is largely detached from reality in terms of pricing, accountability and transparency.

These three stories are illustrative because my friends all tried to be proactive, informed and careful healthcare consumers.

Patient-friend A needed corrective jaw surgery that was outside the parameters of his health insurance. His treatment plan with his dentist, orthodontist and oral surgeon came to around $8,000. This included $900 for the use of an outpatient surgery center, which was to be prepaid—a real bargain.

When he arrived at the hospital, to sign forms and pay the $900, he was informed that the bill was now $19,000. That’s right—$18,100 more than what he was expecting. He was shocked. He called his doctor while in the waiting room to “freak out” and cancel the surgery. Upon closer examination, the surgeon’s office manager realized that she coded the order incorrectly, neglecting to note that the patient would self-pay. She spoke with the hospital admissions person, sent over the corrected order, and guess what? The bill went down to $900.

Doesn’t that give you pause? Why is an insurer/employer billed 20 times more than the hospital will take in cash for the same service?

Patient-friend B needed her gall bladder removed. She chose the hospital because it was in-network and her surgeon’s practice was also in-network. Since her deductible had been met for the year (the reason why she elected to do the surgery when and where she did), there were no out-of-pocket costs for the operation.

However, after the surgery was performed, she received a separate $4,000 bill from a contract surgical nurse who assisted during the surgery. This nurse was not in-network, so the insurance wouldn’t pay the bill. It took months of wrangling, threatening and fighting to get the hospital and insurance company to intervene.

What’s an unconscious consumer to do?

Patient-friend C (OK, this is me) tried to determine the cost of a doctor’s visit to decide whether to do it in December or January as part of my healthcare budgeting. My family has a $7,000 deductible and we manage most of our healthcare costs through our HSA and FSA.

The visit wasn’t critical; I could have waited until my annual physical and it would have been covered. Still, I wanted to close out my FSA. Use it or lose it. My doctor’s office refused (claimed to be unable) to tell me how much I would pay for a visit beforehand. The only option I had was to have the visit and find out how much it cost at the conclusion. The cost ended up being more than I had in the account, thank you.

I wouldn’t agree to this scheme with any other purchase.

Employees are depending on us.

A recent study showed two things about employees and consumer-driven health plans. First, employees don’t fully understand these plans. Second, they count on employers to educate them on the details. If the stories I’ve shared are part of a universal experience, we all have a lot of work to do to help empower employees to receive good care in a difficult marketplace.

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