Health Care Panel Update

Submitted by Ron Wacks:

One of the featured activities of the 2003 Minnesota Small Business Expo & Conference, sponsored by MHEA, was the "Health Care Solutions" Forum. The forum included 5 members: 3 from the private sector and 2 from the public sector. The panelists participated in a 90 minute interactive public forum which covered the current climate and potential health care options and solutions for the small-based business community to consider.

Prior to the forum, each panelist responded to the following two questions:

What words would you use to characterize the health care environment for small business?

Is there cause for optimism that the health care situation will improve in 2003?

Their responses are posted on our website.

It's time to check in with our forum panelists to see what has changed and what may be on the horizon. Each panelist was asked the same 5 questions and their responses are listed below. They have been edited for grammar and spelling only.

Additional individuals may be asked these same questions so check this page to see periodic updates where new responses will be posted.

Feel free to contact any of the responders for more information and assistance.
Their contact information is listed below.

1. What changes, if any, have occurred to make health care coverage more (or less) affordable for "small-based" businesses in Minnesota? (we define "small-based" businesses as those small & home-based businesses with 25 or fewer employees)
   
   Agency for Healthcare Research and Quality (AHRQ):
   In terms of offers of health insurance, very small employers (less than 10) in Minnesota offer insurance to their employees at roughly the national average. Offer rates in firms with 10 to 24 employees are slightly higher on average in Minnesota than the rest of the country. From 1996 to 2001 offer rates for firms in both size categories have remained stable.
   
   In terms of cost, total premiums for single and family coverage have been rising in Minnesota and the rest of the country.
   
   In terms of acceptance by an employee of an offer of health insurance, take-up rates in small firms on average in Minnesota match the rest of the country and have remained stable from 1996 to 2001.
   
   Minnesota has one of the highest rates of insurance coverage in the United States. While employment-sponsored coverage is an important factor, Minnesota also offers several public programs that provide insurance coverage. Three of these programs provide coverage for low income children and adults. Two public programs are not income based and provide coverage for adults and families.
   
   Of the two non income tested programs, one provides coverage to county, municipal, and school district employees (Public Employees Insurance Program). This program allows employees of small public employers to obtain the cost savings associated with large purchasing pools. The other non income related program provides coverage for those denied coverage in the private non-group market (Minnesota Comprehensive Health Association). This high risk pool is state subsidized and enrollees face premiums that are not based on health status.
   
   BlueCross BlueShield:
   Right now the main drivers of overall health care costs are increasing prices charged by hospitals and more people using more services. Increasing drug prices, fraud and abuse and government mandates (HIPAA privacy regulations, for example) also add heavily to the burden. These factors are making health care less affordable for everyone, but often affects small businesses disproportionately.
   
   Solutions: Blue Cross launched MSA Blue and its suite of consumer-directed plans that help contain costs for small businesses ranging in size from self-employed individuals up to larger companies. Health plans are now offering more health improvement programs and case management options, as well as negotiating competitive rates with providers. Blue Cross has taken a leadership role in determining community-based solutions.
   
   With regard to changes we've made to keep our small group products affordable, we have changed the dispensing limitation for drugs from a 34-day supply to a 31-day supply, and also now require three copays for three cycles of oral contraceptives (previously it had been three cycles for one copay). Both of these changes reduce premium, and were supported by our agents as changes we should make. Second, our new product, Options Blue for Small Groups has just been launched and has been received enthusiastically. We think it may become a better consumer-directed solution for many groups, when compared to MSA Blue.
   
   Diversified Financial Group:
   The current health care inflation trend is 14% making health care coverage less affordable. Employers are creating plans that have greater employee out of pocket to reduce health care coverage costs. Health Reimbursement Accounts (HRA'S) are a good weapon in the employer arsenal. Medical Savings Accounts (MSA's) allow self employed individuals to reverse financial health care risk in their favor as well as providing an additional tax shelter.
   
   BASE (Benefit Administration for the Self-Employed):
   Take a look at the following links for some insight to this question:
   OTC Drugs to be Covered by Health Care FSA's
   Health Reimbursement Arrangements
   Reimbursements and other expense allowance arrangements
   
   
2. What changes, if any, are likely to occur in the next 6-12 months to make coverage more (or less) affordable?
   
   Agency for Healthcare Research and Quality (AHRQ):
   The cost of private employer-sponsored coverage is expected to continue to rise. There is a legislative proposal in Minnesota that would make health insurance mandatory. This proposal includes creation of a small group purchasing cooperative.
   
   BlueCross BlueShield:
   Blue Cross is launching Options Blue for small groups as of Jan. 1. This is a consumer-directed plan that doesn't require any money up front with accounts that don't follow employees if they leave.
   
   Nationally, Blue Cross is advocating tax credits for small businesses that offer health insurance as a direct solution; meanwhile, a coalition of more than 500 business and health groups is actively opposing association health plan arrangements that would simply shift money out of the state to large, national trade associations with no local control or oversight, while raising overall costs.
   
   On a broader scale, as Medicare reimbursements continue to fall below costs, hospitals and clinics will increasingly charge higher rates to private insurance (which fully insured, small businesses end up paying) to make up the difference.
   
   Another cost-related change impacting small groups who purchase insurance is that the state premium tax will once again be a reality.
   
   Diversified Financial Group:
   Congress is contemplating Health Savings Accounts (HSA'S) as a tool against health care coverage inflation. It will allow all types of firms to set up higher deductible plans and use various funding methods (i.e. MSA'S and HRA'S together).
   
   BASE (Benefit Administration for the Self-Employed):
   From an HRA stand point, we don't see any changes to occur within the next 6-12 months.
   
   
3. 
   Knowing that obtaining affordable, accessible health care coverage is a top priority for small-based businesses and that it is as much of an economic viability issue as it is a health and wellness issue - what are providers, insurers, and policy makers doing to fill that need?
   
   Agency for Healthcare Research and Quality (AHRQ):
   Two general public policies regarding health insurance coverage have been targeted toward small employers; subsides to purchase insurance, and creation of small employer purchasing cooperatives. Subsidies can be directed toward employees and/ or employers.
   
   Purchasing cooperatives allow small employers to obtain the benefits of a large group purchaser, namely cost savings due to risk pooling and lower insurer administration costs.
   
   Employers are trying to control costs using innovation in health insurance. An emerging type of plan called consumer driven health plans attempts to couple something similar to a medical savings account with more consumer cost sharing. It is hoped that when consumer face more of the marginal cost of their health care they will make more efficient choices.
   
   BlueCross BlueShield:
   In addition to the answers above, Blue Cross also launched the nation's most comprehensive disease management program that now provides extra support for people with 31 conditions and chronic diseases --- These conditions afflict 10-15 percent of a population but are responsible for up to 45 percent of all costs; the first-year return shows a likely impact on trend of 2-3 percent by the end of the year.
   
   You'll also see greater pushes by insurers for tiered hospital networks and encouragement for members to make greater use of generic drugs. It's been estimated that a 1 percent increase in generic drug use results in more than $1 million in savings. And Blue Cross has seen its trend declining some this year.
   
   Policy makers have thrown out many ideas, such as allowing for-profit insurers into the state, but adding profit and shareholder interests to the mix will only drive up costs in the long run.
   
   Diversified Financial Group:
   More insurers are creating high deductible plans to meet employer's needs.
   
   BASE (Benefit Administration for the Self-Employed):
   From an HRA stand point, we are making it easier for a small business to obtain affordable health care through the use of an HRA.
   
   
4. What changes in the landscape can we look for to signal change?
   
   Agency for Healthcare Research and Quality (AHRQ):
   Rising unemployment and larger state budget deficits may lead to higher rates of uninsurance and leave states without the ability to provide health insurance coverage.
   
   BlueCross BlueShield:
   Look for policy makers to explore loosening restrictions and allow more flexibility in insurance products.
   
   Diversified Financial Group:
   Federal and state revisions to mandated benefits.
   
   BASE (Benefit Administration for the Self-Employed):
   With the rising cost of health care coverage, you can expect to see more small business owners finding alternatives for covering these expenses with products such as an HRA.
   
   
5. What do you suggest that small-based businesses do to obtain affordable, accessible health care coverage?
   
   Agency for Healthcare Research and Quality (AHRQ):
   Our authorizing legislation discourages us from making recommendations -- hence we prefer not to provide a response. Our mission is to provide the best available information so that decision makers and policy makers can then make their own decisions.
   
   BlueCross BlueShield:
   Don't give up until you've talked to your agent about MSA and high deductible options. Work with health improvement initiatives that can have a huge impact on your claims and subsequent premium rates.
   
   Diversified Financial Group:
   Find insurers that are committed to alternative approaches to health care financing. As most business owners depend on an insurance professional to guide them in their insurance decision making process, it would be important to work with health insurance agencies and professionals that are committed to providing health care alternatives as well.
   
   Diversified Financial Group is a nationwide health insurance agency that specializes in providing alternative health care funding to business owners, business groups and self employed individuals. On average we are able to save these entities 30% -40% of their health insurance premium while maintaining the same or better benefits.
   
   BASE (Benefit Administration for the Self-Employed):
   Small-based businesses with up to 3 employees could utilize a Section 105 HRA to deduct 100% of premiums and out-of-pocket medical expenses. The average BASE 105 HRA client averaged over $3000 in tax savings in 2002.
   
   Small businesses with more than three employees can utilize a BASE Group HRA, which allows an employer to set aside dollars to help the employee pay for their family's health insurance, out-of-pocket medical expenses, or any combination thereof. This allows for a small business owner to shift much of the financial responsibility of health care expenses to their employees without significantly reducing their benefits or increasing their costs.

Thanks to all of our panelists for again giving us their insight into this important topic.