HEALTH PLAN 2009
Paul Fronstin, PhD, is the director of the health security and quality research program at the Employee Benefits Research Institute.
The most significant influence on health care delivery for the next several years — as it has been for the last several years — will be increasing costs, which I believe will continue to inflate at 10 percent to 15 percent a year.
The result will be cutback in the comprehensive nature of health benefit design, meaning fewer covered services at increased cost to employers and employees. I believe premiums will continue to inflate for several reasons.
First, capital investments by health plans in information technology and by providers in medical technology will continue to drive up costs, perhaps not at today's annual increase of 50 percent to 60 percent, but significantly. Second, the population is aging, creating an increasing demand for services. Third, malpractice premiums will continue to rise. Fourth, consolidation of insurance companies and provider organizations will continue, resulting in fewer health plans for employers to negotiate with and increased negotiating clout for providers with those plans — both of which will drive up costs.
Today, the average annual premium per employee is about $3,400 a year. By 2009, the average premium could well be between $6,000 and $7,800 a year. Employees will, no doubt, be expected to carry a greater burden of this cost. That is already happening, and won't stop in the next five years. Copayments, deductibles, and coinsurance will be higher, and there will be an increased emphasis on tiered benefit structures for drug reimbursements. In fact, the use of generics will probably be encouraged by larger copayments for second and third tier drugs. We are already seeing tiered hospital benefits, and that trend could easily continue.
In addition, assuming a 0.8 percent growth rate in the uninsured, there could be 63 million people without health insurance in 2009. The cost of health care and the number of uninsured will translate into a significant amount of political turmoil, and whoever the Democratic and Republican nominees are in 2008, they will be forced to confront what by then will be a crisis for the nation in the affordability of health care.
(It could well be Hillary Clinton versus Bill Frist, and both would be strong candidates in relation to health care. If history is a guide, the Democrats will probably offer a solution based on social programs designed to protect the uninsured, and the Republicans will probably offer a solution based on tax credits designed to offset increased premiums.)
The nature of managed care will continue to evolve. We won't see a return to capitation because providers have learned an important lesson — they will accept a very limited amount of risk.
But the fact that 20 percent of our population accounts for 80 percent of our health care expenditures will not change as the population ages, and the prevalence and treatment of chronic diseases will continue to drive up costs.
Because they have the information systems and databases necessary to identify enrollees with chronic diseases, managed care plans will continue to be perfectly situated to address that problem. Health plans, therefore, will place an increasing emphasis on disease management and improved co-ordination of care.
Whether recent changes in Medicare will greatly affect private plans is difficult to predict. The provision allowing tax-free health savings accounts (HSAs) is fairly restrictive and may do little to encourage the fixed contribution-based system now receiving so much media attention. Medical savings accounts have been around for years and have had little impact on plan design.
What we do know is that costs will continue to rise, and that the delivery of health care in 2009 will be largely shaped by that inflation.