Few can design truly affordable coverage

October 1, 2007

Every time I look through the sales fliers in the Sunday newspaper, I'm amazed by all the stuff we can buy. Toys, such as satellite radios and video game systems, are just the beginning. Today, you can even buy high-end cleaning products for your bath or shower at more than 10 times the price of a simple sponge and some cleanser.

It has me wondering whether Americans in general are undisciplined spenders with all these tempting goodies in sight, and whether they could be doing a much better job of saving for unanticipated healthcare expenses instead. Forgo the iPhone and tuck that cash into an HSA? Skip the robotic floor sweeper and pay your doctor bill?

With premiums growing twice as fast as wages and inflation to double what they were in 2000 or more, according to some estimates, I would think that we'd be buying fewer gadgets because we have less money to throw around.

"Since 2000, the median household income adjusted for inflation went down 2%," Lotke says. "College tuition went up 37%. Health premiums went up 87%. Fuel prices doubled. That's roughly how it's been for the last 20 years."

More women have entered the workforce, creating the increase in two-income households, while also increasing the amount spent on childcare. According to Lotke, teenagers are working more now, too.

"You're just making it," he says. "Maybe you shouldn't have bought that extra item, whatever it was, but that wasn't the thing that pushed you over the edge. What pushed you over the edge was when you broke your leg. You hit $2,000 in medical bills, and you couldn't work as much as you used to."

DROPPING PRICES

Wal-Mart, which sells all the goodies and gadgets mentioned above, recently announced the overhaul of its employee health plan to make it more affordable. The big-box retailer is an empire that has deep enough pockets to create affordable coverage, which few other companies are able to do.

For 2008, Wal-Mart has pledged $5 premiums, elimination of hospital deductibles, coverage grants of $100 to $500, and a longer list of its notorious $4 generic drugs, available to employees only.

Low-premium plans would call for deductibles as high as $2,000, which might be a turn off, especially for many of Wal-Mart's workers who earn $20,000 a year or less. Some workers qualify for Medicaid, but another 125,000 have no health coverage at all. Reportedly, there will be 50 plan options with various combinations of deductibles and premiums, but only time will tell if the uninsured employees are motivated to enroll.

The earliest criticism of the new program thus far has been about the waiting periods for eligibility. New part-time employees must wait a year before they can sign up for coverage, but that's a recent improvement over the previous two-year waiting period.

MCOs would be wise to watch Wal-Mart's progress in the initial year of the program, paying attention to the adoption rates of the plans and which combinations seem to be the most popular. Learning from another's growing pains can be the best education of all.

Julie Miller is editor-in-chief of MANAGED HEALTHCARE EXECUTIVE She can be reached at julie.miller@advanstar.com