Doctors, hospitals and insurance companies have been blamed for the huge rise in health care costs over the past decade, but we need to look closer to home for the real root causes of the high cost: ourselves.
Companies in the United States are paying an average of $12,700 per year for a health plan that covers a family of four. Employees are paying $1,600 more per year for their share of family coverage premiums. A 2009 report from the National Coalition on Health Care warned that health care costs could soon outstrip company profits.
In most debates, the issue has been framed as a health insurance problem. But the high cost of health insurance is only a symptom of the real problem. What we really have is a health problem, driven by a well-documented increase in obesity and other behavior-related health problems, and the removal of the consumer – the patient – from the health-care process.
We have somehow been lulled into thinking health insurance equals health. We have developed an unrealistic belief that our current system can fix whatever happens to us and that someone else will pay for it. It has been a perfect recipe for our current cost catastrophe.
Another hot-button issue in health care is the idea of rationing. With managed care, rationing is already happening, so the important question should be who does it: the government, the insurance company, the doctor or you? The health-care reform discussion has included the idea of developing a universal, single-payer plan on the Medicare model, which would make the health-care system even more unmanageable than it is today. It would take the managed care model to a whole new level, and the government would ration health care.
Albert Einstein said, “We cannot solve our problems with the same thinking we used when we created them.” A more market-driven approach, one that puts the consumer in charge of managing both their health and their health care, is a better choice.
As chief executive of nHealth, a Virginia health insurance provider, I advocate the adoption of a consumer-driven model. I’ve heard from many business owners that the accelerating annual premium increases for employee health insurance is hammering their budgets. Several of them have said that they are considering dropping health coverage completely because they can no longer afford to offer it. Others have said that they’ve had to choose between giving employees raises or health benefits – they can’t do both.
A consumer-driven plan can help a company gain control of costs and their employees gain control of their health. An example a consumer-driven plan is the one that Safeway Supermarkets started offering its employees in 2006. That plan, which focuses on preventive care, has a $2,000 deductible and limits annual out-of-pocket expenses to $3,000 for family coverage. The plan also includes a health savings account, which both the employee and the company contribute to, that the employee can use to pay out-of-pocket health-care expenses. Safeway saw cost savings of 11 percent in the first year the plan was in effect, and employees spent 30 to 35 percent less out of pocket on health care.
Compare those figures with the rise in average health care premium costs in Virginia between 2000 and 2007 – 82.5 percent, with the bulk of that percentage borne by employers – and it’s easy to see that something has to be done, and soon, to keep both business budgets and the health-care system from collapsing under the strain of escalating costs.
nHealth adopted a consumer-driven health-care plan in early 2008, and we reduced our premium by 45 percent, allowing us to invest more than $80,000 in our employees’ HSAs. After that investment, our net savings was still 20 percent. When we renewed our coverage this year, we had a 0 percent increase. We’ve also seen an increased level of employee engagement in managing their health care. Some have lost weight, one has quit smoking – all of them are making the connection between their behavior and health-care costs.
That’s the central issue: We must make the connection between our behavior and our health. Consumers must be the drivers – not the government, not employers – of making decisions and taking actions that improve our health and our interaction with the health-care system. Affordability has been compromised by our deteriorating collective health and the removal of the consumer from the process. We must regain control of ourselves to gain control of the cost of health care.