The much-anticipated consumer-driven healthcare movement has entered Orange County quietly, according to local hospital chief executives.
“We really haven’t seen an increase in consumer-driven healthcare,” said Larry Ainsworth, chief executive of St. Joseph Hospital-Orange. “HMO/PPO premiums are very competitive. Consumer-driven plans would struggle to break into the lock that these products have on local employers.”
Consumer-driven plans, which aim to make employees more accountable for their health costs, typically include a medical savings account and high deductibles.
Nationally, plans that incorporate health savings accounts and high deductibles had enrollment of 3.2 million people as of January, according to America’s Health Insurance Plans, a Washington, D.C.-based trade group. That’s more than triple the number of people insured by the plans in March 2005, according to the group.
Locally, it’s a different story.
The continuing strength of health maintenance organizations and preferred-provider organizations are seen as a better choice.
At Children’s Hospital of Orange County, “while we have experienced a slight increase in the number of patients who access our system via health reimbursement arrangements, health savings accounts or high deductible health plans, the majority of our patients are covered by a commercial health insurance product with traditional HMO or PPO coverage,” said Kimberly Chavalas Cripe, the hospital’s chief executive.
Fountain Valley Regional Hospital Medical Center has seen some increase in patients who have the plans, said Chief Executive Deborah Keel.
Fountain Valley officials believe there will continue to be an increase in patients coming to the hospital with consumer-driven healthcare coverage, though Keel said those tend to be “healthier” people.
Cherry-Picking
Critics of consumer-driven healthcare have argued that the plans, because of their design, will cherry-pick healthier people, leaving an older and sicker pool of people in traditional healthcare plans.
Consumers typically choose health insurance coverage that provides the most convenient access at the lowest cost,with cost generally serving as the driving factor, said Melinda Beswick, chief executive of Anaheim Memorial Medical Center.
“Most people do not anticipate becoming ill or injured,” Beswick said. “Therefore, when choosing medical coverage, they elect the plan that has the lowest impact on their paychecks.”
In South County, consumer-driven healthcare hasn’t affected Mission Hospital Regional Medical Center, according to Chief Executive Peter Bastone.
“I agree that OC will be a tough type of market for these types of plans to flourish,” Bastone said. “These plans can be expensive, as they tend to have high out-of-pocket expenses. Once consumers realize the potential increases in their costs, it will be a deterrent for them to choose a consumer-driven plan.”
And OC’s traditional reliance on medical groups to deliver healthcare already may have affected choice of coverage, said Sander Domaszewicz, the OC-based national consumerism practice leader for Mercer Human Resource Consulting LLC, in a previous interview.
“We’ve got a fairly well-managed HMO environment where a lot of the consumerism responsibility has been put on the shoulders of medical groups to try to make sure people are getting the appropriate services and coordinated care,” Domaszewicz said.
Employers’ Efforts
Selling workers on consumer plans would take a lot of effort by employers, Domaszewicz said.
“That’s the understatement of the year,people don’t like change,” he said.
Hesitancy about health savings accounts could be related to a lack of clarity about how they’d work, said Richard Afable, chief executive of Hoag Hospital Memorial Presbyterian.
“While HMO and PPO premiums are competitive in California, the hesitancy on healthcare savings accounts seems to be more about not knowing how well these plans will work in the long run,” Afable said.
More experience with consumer-driven healthcare is necessary before it takes hold among insurance buyers, he said.
Still, Hoag has seen a rise in consumer-driven healthcare, according to Afable. He said the hospital also is seeing many patients who he called “able-but-otherwise uninsured,” or patients who are self-covered with minimal coverage and no plan for major health problems.
The hospital’s bad debt has risen 50% during the past year, “all based on these types of patients, rather than charity or near-charity care,” he said.
Chavalas Cripe of CHOC, which has more than 1,800 workers, said the national trend suggests there will be increasing interest and enrollment in consumer-driven healthcare.
“But I believe that California employers, CHOC included, are still able to offer and provide their employees with standard HMO and PPO options,” she said.
Although there are indicators that suggest the annual cost hike of traditional managed care benefits to the state’s employers has tapered slightly, Chavalas Cripe said she believed that California businesses “will no doubt continue to explore consumer-driven alternatives in order to provide new coverage or maintain existing benefits for employees.”
