Be Prepared!

Be Prepared…Your House or Your Health? Today health care is everywhere — in the CEOs office and around the kitchen table. Five years ago it was in neither place. Does this mean that consumers are prepared for the tsunami of health care change coming? This article by our friends at Allexian Consulting describes some very real issues and some innovative models emerging to help consumers.

James D. Calver

Allexian LLC

Be Prepared!

The average consumer, Joe or Jane, age 25 or older, makes $32,000 per year, does not have a college degree, drives a car, lives in his or her own home, and holds a white-collar office job. They can tell you their grocery bill, the price and quality of food, their car price and monthly payment, their mortgage payment and house value. Ask Joe or Jane how much their health care costs —  the cost of treatments, the cost and quality of their plan, are they getting a fair price and you’ll get a blank stare.

In 2014 Joe and Jane are going to be hit by a health care tsunami. The average mortgage payment today is $700/month with $1000 of annual home maintenance on top of that. The price of health care for many families will exceed the cost of owning a home and become the biggest single expense a family has each year.

Consumers are unprepared.

For 50 years consumers have outsourced their health care. Employers chose employee health care plans and (mostly) paid for them. Physicians treated disease conditions paternalistically. Payers administered plans and guided consumer choice of their physicians.

Consumers need to in-source their care and take control.

The numbers are big. Between now and 2014, 30 million new consumers will be coming to terms with new health care programs. Surveys show that many employers will scrap their own health care plans and “dump” their employees into exchanges. The total number of consumers dealing with health care change will be far bigger than the 30 million from last year’s reform. We estimate that this will be north of 40 million consumers.

What does in-sourcing health care mean? It means taking control of all the key decisions of your own heal care. Choosing a plan, checking prices of treatments, being sure you’re getting a fair price, etc. Consumers need tools and information to manage their health care decisions.

What tools? What information? To answer these questions it is useful to compare other more familiar buying decisions — groceries and homes. When we buy groceries, we want to know the price in advance of getting to check out. We want to know the quality too. When we buy a house, we want to know the quality and price of the house, the cost of the mortgage, how much the utilities and taxes are and the general condition of the neighborhood. We also want to know how much ‘house’ we can afford and if we are getting a fair price. We get help from brokers in negotiating a fair price and get comparable house prices from Zillow and other rersources.

Buying health care isn’t exactly like buying groceries, nor is it exactly like buying a house. But it is has much in common with the two together. When you buy a health care plan, you want to know the cost and quality of the plan. You have to find a physician, you’d like to know the quality of the physician, patient experiences and quality of care. Some patients like to research their disease conditions. You want to know how much treatment is going to cost and if you’re getting a fair price (before you get to check out). You may want help negotiating a price for a big clinical treatment or procedure.

Some of these tools and information are available already. New growth business models are emerging.

Buying a Health Plan — Exchanges

Individual states will either run the exchanges themselves or outsource to a third party. Exchange businesses can charge a modest fee for operating the service that matches a consumer with a health care plan.  eHealthInsurance is a broker of health care plans. They advertise low plan rates and based on input from the consumer recommend a plan and estimate of monthly payment. From personal experience, this payment and what the health insurers eventually charge can be much higher — this is explained in the small print.

While coverage cannot be denied for pre-existing conditions, the insurers have latitude to charge more in monthly premiums for these conditions. The unwary consumer is in for some nasty surprises.

We recommend that exchanges use crowd-sourcing technology, in the style of Angie’s List, Amazon and eBay to provide reviews and feedback on plans. This information will help consumers make better and more informed decisions.

Researching a Disease

The availability of clinical information has undergone a tectonic shift. For the first time since the medicine men of old began treating ailments, all medical knowledge is available today via the web to a consumer. That shift contributes to the drive away from paternalistic clinical practice. Enlightened consumers of care use WebMD, Mayo, Cleveland Clinic and many others to research diseases and treatments.

Today 30% of consumers visit a medical web site before visiting a physician. That number is trending upwards annually. We think that creating a consumer pay model here will be difficult. For over a decade consumers have not paid directly for access to this information and we don’t think that will change.

Researching Physician Quality of Care and Patient Experience

The best physician web information services focus on aggregating publicly available information on a physician — where they went to school, published papers, malpractice law suits, etc. Some companies, like Angie’s List, have attempted to capture patient experience. At their best these sites provide information of marginal value. Comments on care are unstructured and not attributed to a particular treatment or regimen.

Outcomes information as a measure of quality of care and meaningful patient experience remain elusive for the consumer today. We believe that there is promise in Vestar’s acquisition of Colorado based HealthGrades, the health care ratings company. Vestar also owns Press-Ganey, the hospital patient rating group. Also, new companies like DocInsight that deliver information on the patient experience show promise.

Estimating Treatment Costs?

Shopping for routine health care should be like buying groceries. NexTag, the web aggregator of prices for many technology and popular consumer items has been successful over the last decade. is a growing service provider that can help consumers understand the status of their health plan, i.e. how much they have to spend before meeting their deductible and provides local pricing information across providers for many routine treatments.

This step toward price transparency has far reaching ramifications and inserts supply and demand pricing pressure into local markets. Physicans pay for referrals and pay to be listed.

Naysayers will rant that it’ll never work and physicians will never sign up. Those same naysayers said the same thing about airlines and hotel groups 10 years ago. Today Travelocity, Orbitz and Expedia have a valuation in excess of the major airlines and hotel groups combined!

Getting a Fair Price

This is another area of great promise. helps consumers negotiate better prices for treatments with payers and takes a percentage of the savings. Society wins with lower cost care which in turn will force efficiencies in providers. Patients win with lower health care expenses.


Health care is about to undergo turmoil and change like never seen before. Surfers wait for “The Wave” and the Wave is coming.  Businesses need to incubate new growth and revenue models that help the consumer be prepared.

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Why Health Care Costs Keep Rising: What You Need to Know

ABC News


The below article provides some insights as to why healthcare costs continue to rise. Check it out!

Republicans and Democrats may disagree on what a health care bill should include, but both parties agree that dramatically rising health care costs need to be contained.

The U.S. government spent more than $2.3 trillion on health care in 2008, more than three times the $714 billion spent in 1990, according to the Kaiser Family Foundation. In 2008, U.S. health care spending averaged $7,681 per person in 2008.

To put that into perspective, the United States spends twice as much on health care as it does on food, according to the McKinsey Global Institute, even though the prevalence of disease is relatively less than in comparable countries.

At the same time, for consumers, premiums continue to rise sharply. Since 1999, they have increased 131 percent for employer-sponsored health coverage, according to Kaiser. Stories of families facing unaffordable premium hikes can be found across the country.

Health care costs are partly so high because they have been increasing rapidly,” said Stuart Guterman, assistant vice president for the Commonwealth Fund’s Program on Payment System Reform. “There’s a long list of factors like technology and the organization of health care that doesn’t promote efficient and effective care.”

Despite President Obama’s bipartisan health care summit last month, both parties continue to bicker about what should be included in a health care bill, with each side presenting its own argument on what specific health care costs should be contained.

Some experts argue that while the health care bill, as proposed by Obama and congressional Democrats, expands benefits and seeks to implement insurance reforms that would open up coverage to a wider scope of people, it does not address the core issues behind rising health care costs. Proponents of the legislation argue that it is a start and creates the foundation for sustainable changes in the long term.

Here are some of the drivers of cost increases: (more…)

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Healthcare Costs Rise, According to S&P Indices

Healthcare Financial Management Association

Healthcare costs continue to rise. Even though the rate of increase may have slowed, costs nonetheless continue to rise.

The average per capita cost of healthcare services covered by commercial insurance and Medicare programs increased by 6.19 percent over the 12-month period ending in February, as measured by the Standard & Poor’s (S&P) Healthcare Economic Composite Index.

Healthcare costs covered by commercial insurance rose by 7.97 percent and Medicare claim costs rose at an annual rate of 3.22 percent, according to the S&P indices. Overall healthcare costs continue to increase at a slower rate, according to the index. In the six-year history of the Composite Index, the highest annual growth rate was 8.74 percent in May 2010. With a 6.19 percent increase in February, claims costs growth rates have declined 2.5 percent in nine months.

The indices estimate the per capita change in revenues accrued each month by hospital and professional services facilities for services provided to Medicare patients and patients covered under commercial health insurance programs. The annual growth rates are determined by calculating a percentage change of the 12-month moving averages of the index levels compared with the same month of the prior year.

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Rising Cost Tops Employees’ Health Care Worries

Employers are still concerned about the rising cost of healthcare. Will there be any end in sight?

By Stephen Miller

U.S. employees’ greatest concerns about health care are rising costs, canceled coverage and new taxes on medical benefits. Their employers are most concerned about the lack of federal guidance on what requirements must be communicated to employees, according to a December 2010 survey by HighRoads, a benefits administration service provider.

“There appears to be a healthy skepticism on the employer’s part about the content and timing of guidance from the federal government on how to administer and communicate future plan changes,” said Kim Buckey, practice lead at HighRoads. “While most employers increased their communications efforts during the fall 2010 open enrollment period to communicate changes required by health care reform, there are still doubts about how effective those communications were.”

Buckey advised, “There is clearly an opportunity to do some follow-up communications—based on the actual employee elections during open enrollment—or employee sensing (surveys or focus groups) midyear to determine whether employees truly understood the impact of the year’s plan changes.”

Employees’ Concerns

The biggest concerns HR professionals and benefits managers are hearing from employees about how health care reform affects them, HighRoads found, include:

• Increased cost of coverage (noted by 50 percent of respondents).

• Cancellation of benefits (13 percent).

• Government taxation of medical benefits (13 percent).

• Ability to add adult dependents (12 percent).

• No real concerns (12 percent).

Increased Communications

While 88 percent of employers reported that they had increased their employee communications to address health care reform, many still worried that the communications might not have been enough. The biggest communications concerns employers had around health care reform for the year ahead include:

• Lack of federal guidance on what the requirements are or how any changes in guidance during the year might change what has been communicated to employees (25 percent).

• The disconnect on cost and existing plans, because the law is predicated on being cost neutral to taxpayers and allowing employees to not lose the coverage they have (13 percent).

• Making sure that employees are told everything that is changing under their plans (13 percent).

• Employee understanding of changes and how the changes affect them (12 percent).

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Health care’s hidden costs: $363 billion

Consumers beware of the hidden or extra costs associated with healthcare not covered by insurance or traditional Medicare. A recent article states that consumers are paying even more than was expected for out-of-pocket costs. The most alarming fact is that the average household income fell 1.9% in 2010 while health care costs rose 6%.

CNN Money

By Parija Kavilanz

A year after the passing of health reform, a new industry report revealed that consumers may be paying billions of dollars more in out-of-pocket health care expenses than was previously thought.

These “hidden” costs of health care — like taking time off to care for elderly parents — add up to $363 billion, according to a report from the Deloitte Center for Health Solutions, a research group.

That amounts to $1,355 per consumer, on top of the $8,000 the government says people spend on doctor fees and hospital care.

“We’re surprised that this number came in so high. It’s significant,” said Paul Keckley, executive director with the group.

The out-of-pocket costs that the government tallies usually include only insurance-related costs like premiums, deductibles, and co-payments.

Keckley said the study is the first to estimate how much consumers dish out on health care related goods and services not covered by private or government insurance.

These include: ambulance services, alternative medicines, nutritional products and vitamins, weight-loss centers and supervisory care of elderly family members.

“These costs can add up to billions of dollars, even eclipsing housing as a household expense,” said Keckley.

The Deloitte study found that half the hidden costs are for supervisory care, or the unpaid care given by family and friends.

“We compared on an hourly basis the average number of hours per month taken off work to look after a family member or friend, and lost wages in doing this,” said Keckley.

The report estimates the value of unpaid care is $12.60 per hour, or $199 billion a year.

“It has been one year since the passage of health care reform,” said Keckley. “We wanted to understand the financial context behind decisions that consumers are making about how they spend their money on health care.”

0:00 /2:22Humana deals with health care reform

As health reform rolls out over the next few years, Keckley expects that out-of-pocket health care costs to consumers will increase quickly. Health care costs continue to rise faster than household incomes and insurers are passing along more costs to their customers.

The average household income fell 1.9% last year while health care costs rose 6%, he said.

“This is a perfect storm in which consumers’ hidden costs will only increase exponentially in the near future.”

The Deloitte study looked at the most recently available health care expenditure data from the government. The firm, with Harris Interactive, also polled 1,008 U.S. adults,18 and older, between Sept. 29 to Oct. 4, 2010.

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Retirement confidence falls to all-time low

A recent survey reveals that most Americans still don’t save enough for retirement. If the facts are correct, it appears that the majority of Americans will be working well past the age of 65.

By Larry Barrett

March 16, 2011

Most Americans still aren’t saving anywhere near enough money to afford the dignified retirement they all claim is so important to them. Even worse, most don’t even have any idea exactly how much they’ll need if they were to begin saving today for their golden years.

That’s the sobering truth derived from the 21st installment of the Employee Benefit Research Institute’s Retirement Confidence Survey (RCS) released Tuesday.

The only good news, according to Jack VanDerhei, research director of the Washington, D.C.-based EBRI, is that the majority of Americans are rightfully ignoring short-term economic improvements in the stock market and unemployment rates following several years of dismal performance. They now recognize that they are woefully behind the eight-ball in terms of properly planning and saving for their eventual retirement.

“There are many big, systemic factors redefining retirement in America today,” VanDerhei said during a conference call with reporters. “People are starting to wake up to this reality and changing their expectation of retirement. Unfortunately, the survey doesn’t find any evidence that people are changing their behavior — at least not yet.”

The RCS survey, conducted by market research firm Mathew Greenwald & Associates, found that more than half of the 1,260 respondents surveyed in January 2011 are “not all confident” or “not too confident” that they’ll be able to afford the retirement they want, the lowest level of confidence among workers in the survey’s 21-year history.

One of the main reasons so many people are so pessimistic about their retirement prospects is the simple fact that far too few workers are actually saving for retirement.

Currently, most Americans can expect an average retirement of about 20 years, and that number continues to expand as people live longer, while at the same time incur higher medical and cost-of-living expenses.

The survey found that the folks with savings of less than $25,000 are the most petrified about retirement and essentially resigned to the fact that they’ll either work throughout most of their retirement or never really experience one at all.

Forty-three percent of respondents with savings of less than $25,000 said they are not confident they’ll have enough money to afford a decent retirement, up from 19% in 2007.

Meanwhile, 22% of those with between $25,000 and $100,000 in savings remained less-than-confident about their retirements, more than triple the 7% who felt the same way in 2007.

This changing perception reflects not only most Americans’ disinterest in saving for tomorrow, but also the stark reality that most people aren’t expecting things to magically improve between now and the time they hit retirement age.

“Sixty-two percent of workers said they can save more than they’re saving now,” said Greenwald. “Most said they could dine out less, cut back on entertainment and, in some cases, wouldn’t really need to cut back at all to increase their savings. And while the sacrifices wouldn’t be that great, many still haven’t formed the habit of doing it.”

That so few have taken the time to reasonably figure out how much they’ll need to take that cruise to Alaska or keep them in prescription medications for 25 years or more speaks to just how invaluable retirement planning advice will be to this growing population of skeptical, unprepared workers.

Perhaps most depressing, the survey found that the percentage of workers who expect to retire after age 65 continues to increase, growing from 11% in 1991 and 20% in 2001 to a stunning 36% in 2011. Also, 74% of workers said they expect to have work for pay in retirement, more than triple the number (23%) of current retirees who are now working because they need the income.

“Even those who have achieved the highest levels of accumulation already, with more than $100,000 in savings, won’t be able to maintain the lifestyle they’re currently enjoying in retirement,” Greenwald said. “High accumulators still haven’t come to that reality. And 70% of all workers say they’re behind schedule when it comes to saving for retirement.”

“The bigger problem is that most haven’t changed their behavior and turned this pessimism into action to catch up,” he said.

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Medical bankruptcies a continuing problem, study finds

A recent survey reveals that medical bankruptcies continue to plague families in Massachusetts.

The Boston Globe

Kay Lazar, Globe Staff

The 2006 Massachusetts law that required nearly everyone to buy health insurance has not significantly staunched residents’ pain from medical bankruptcies, according to a new study.

A survey of Massachusetts residents who filed for bankruptcy in July 2009 found that 53 percent cited a medical cause, down from 59 percent who blamed a medical cause in a survey done in early 2007, before the state law had been fully implemented. But because of the small number of people surveyed, the difference was not statistically significant, according to the study in today’s American Journal of Medicine.

Lead study author Dr. David Himmelstein said medical bills are still causing bankruptcies because health costs in the state have continued rising sharply. High premium costs, along with large co-payments and deductibles, often expose families with insurance to substantial out-of-pocket costs, said Himmelstein, a professor of public health at City University of New York.

“People think they have reasonable insurance until they try and use it,” Himmelstein said. “You are carrying an umbrella and it starts to rain and you put it up and it’s full of holes. For most people, it just hasn’t rained yet.”

Himmelstein, who conducted the research while working as an associate professor of medicine at Harvard Medical School, is co-founder of Physicians for a National Health Program, an organization that pushes for national health insurance.

He said his findings suggest that the national health overhaul, which was largely modeled on the Massachusetts law and will take full effect in 2014, will not ease the number of medical bankruptcies, either.

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AARP survey finds N.J. seniors are facing financial, health care hardships

A recent survey by AARP reveals that many NJ senior citizens are having a hard time meeting their financial obligations and getting adequate health coverage. Healthcare costs continue to rise and benefits are shrinking. The fear is real as more and more seniors find themselves working well into their golden years in order to support themselves. Read the below article and review the survey.

Peter Van Ness used to be the picture of financial health: perfect credit scores, quick to pay down his credit cards, never late on bills. During 50 years of work, he said, not once did he need help making ends meet.

But he could use some help now.

“I am being buried,” said Van Ness, 67, of West Milford, who still works but must pay for his bedridden mother’s medical expenses, has three kids in college and won’t be getting any retirement benefits from his company.

“I have real problems even trying to supply food for the family,” he said. “Whoever said the golden years are your best years — I laugh like hell.”

Van Ness was one of 400 New Jersey residents over age 50 polled for a survey to be released today by the AARP. Like him, many of the respondents said they’re having a hard time meeting their financial obligations and getting adequate health coverage. About two-thirds said they don’t have all the resources or information they need to stay healthy, and three in four said they worry about the levels of Social Security and Medicare benefits.

“It shouldn’t be surprising that there’s real palpable fear out there because seniors are suffering,” said Douglas Johnston, legislative director for AARP-NJ. He said the state’s utility costs, for example, have risen for the last five or six years while Social Security payments, a major source of income, have remained flat the last two years.

“I frankly don’t know how they do it,” he said. “The median amount Social Security recipients get per year is $10,400. How do you live on $10,400 anywhere, especially an expensive state like New Jersey?”

Harry Padden of Irvington, 58, is nearing retirement from his job as an inspector for the U.S. Department of Housing and Urban Development, but he fears his pension may be cut before he leaves and said he’s already paying more for health care.

“I’m squeaking through paying my bills,” he said. “I’ve considered moving to Georgia or Florida — there’s higher wages and it costs you less. My daughter has indicated that if I go, she’s going to follow.”

The survey also found 84 percent of residents would prefer to get long-term care at home or in an assisted-living facility, as opposed to a nursing home. Johnston said the state could save money by investing more in home-based care, which he said costs one-third of what nursing homes cost.

“It gives people what they want, we’ve never met a legislator or governor who doesn’t agree — and yet it never seems to happen,” he said.

The AARP survey also asked New Jerseyans over 50 what they most want to do in their retirement years. Forty-two percent said travel, 23 percent said they would focus on hobbies and interests, 8 percent mentioned their jobs or careers and 6 percent said they would devote themselves to their families.

Though he talks of moving, Padden said spending time with his family was a major reason he’s still in New Jersey.

“My grandson is in a basketball team, and I don’t really miss a game,” he said. “I’m driving over now.”

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Major Reforms in Student Insurance Proposed

Looks like there may be some hope for college students regarding insurance coverage.  In an area that has long been neglected, Congress has now introduced new regs to the Affordable Care Act which will require colleges and universities to provide health insurance coverage to students.

By Ria Patel

In quest to make lives of University students better, the Congress has decided to introduce new plans in the existing health care law, which will be in effect from the next year.

The reforms proposed, will be in favor of college students, who have estimated number of 3 million at present.

Till now, the area of student insurance was widely neglected, partly because of its uncertain and short validity duration.

But now after, bringing the student health insurance plans offered by colleges and universities to the same level as that of the 2010 federal Affordable Care Act by the U. S. Department of Health and Human Services, the need for further amendments is strongly felt.

The new reforms will ask colleges and universities to provide the health insurance to students, even if they are less than 18 years or have underlying medical conditions like diabetes or other discrepancies.

The law will also take care of benefits borne out of student plans. The schemes, which currently have very less boons, will observe a boost to minimum of $100,000 before September 2012 and more than $2 million after that.

The Universities will also be asked to maintain the coverage, in case the student is down with ill-health. No student will be punished if he forgets to give a proper account of its medical history.

Meanwhile, the Health and Human Services Department has sought public comments and views on proposed amendments till April 12.

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Californians Bracing to Pay More For Health Care

It’s 2011 and healthcare costs continue to rise. California’s are bracing themselves for large increases in their medical insurance costs. Unfortunately, California is not the only state. The winds of rising healthcare costs and insurance premiums traditionally blow from West to East.

Anita Vogel

It’s the perfect storm in California when it comes to rising health care costs, with millions bracing for huge increases in their monthly insurance bill. What’s happening? The Golden State is one of many states that doesn’t allow for rate regulation. In addition, California is home to most all of the big insurance companies and the largest market of uninsured people. At the same time major insurers are racing to beat a July 1st deadline requiring these companies to publicly justify their rate hikes.

So, what the people of California are left with are massive increases in their health insurance premiums, to the tune of nearly 60 percent when it comes to Blue Shield in particular. Just today they caved in to public pressure and agreed to join every other insurance company in California like Aetna, Anthem Blue Cross and Pacificare to wait sixty days to raise their rates, but there’s little doubt those rate hikes are still coming later this spring.

In the meantime economists say the tough economy is also playing a role in causing insurance companies to raise their premiums. “Healthy people are dropping out of insurance,” says Dr. Neeraj Sood of the University of Southern California, ” and what happens then is it is basically the unhealthy people who are left with insurance and they cost much more and therefore premiums have to rise.”

But patients are not the only people affected by rising prices; Doctors are also feeling the heat. Dr. Mark Weiss, a long time podiatrist in Century City, California, is also a victim of bigger health care bills. “About a year and a half ago, I opened up my mail and there was a 600 dollar a month increase in my premiums for a policy that was less than good,” says Weiss. His Anthem Blue Cross coverage had gone up more than 20 percent, at the same time his patients were experiencing huge rate hikes. As a result, some of his patients dropped their insurance coverage and Weiss and other area doctors say they had little choice but to concentrate on patients who pay cash for their visits. “My overhead keeps on going up, my reimbursement goes down and that is why a lot of the doctors in the community don’t take any insurance,” adds Weiss.

And as insurance companies gear up for the new federal health legislation to take effect in 2014, many expect they’ll continue to raise their rates, out of concern for how the rules might change in the future. That prospect has patients around the nation worried what that means for them.

Ely Zimmerman, who is a regular patient of Doctor Weiss admits he knows many who have thought of taking their chances and dropping their health insurance all together, but says he won’t do that. “I can’t go without health insurance,” says Zimmerman. “You hear stories of friends who have heart attacks or strokes, so you can’t be without health insurance, I feel like there’s no choice.”

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