Asking the Question: What to do About Early Retirees?

There is a lively discussion going on over at John Goodman’s Health Policy Blog ( about what to do about early retirees and their health care needs. John points out that there are about 78 million baby boomers, and that if the past is a guide to the future, more than 80% of them will retire early (before eligibility for Medicare).

He points out that many of these early retirees will be in for a big shock when they start exploring the options they have for insuring themselves. High premiums, medical underwriting, and paying for insurance after taxes will all be new concepts to most people in this group.

So what to do? John has some ideas. He suggests allowing employers to help early retirees to acquire insurance by negotiating discounts and funding health savings accounts. He also would like to see early retirees have the ability to pay for health plans with pre-tax dollars. Finally, he suggests that both the employer and the employee should have the ability to save (pretax) in preparation for post retirement healthcare.

Health Plan Innovation Take: If John is right about 80% of this cohort retiring prior to age 65, this could be the biggest healthcare issue not currently being widely discussed in the media and other health care reform forums. We all know that the Baby Boomers have never been a generation to go along quietly. They are sure to raise ruckus as more and more of this generation find themselves in the individual health care market. It is time to prepare.

Check out John Goodman’s blog at:

Health IT Trends Point Way to Savings

The latest occurrences on the health plan innovation front seem to include the use of extensive web portals and online tools. These trends are recapped today in an article posted on AIS’s Health Business Daily website.

In the article, Steve Davis points out that, earlier this month, UnitedHealth Group became the first health plan to fully launch itself into the increasingly crowded field of online health content, personal health records (PHRs) and e-commerce. Steve notes that on that same day, Blue Cross Blue Shield of Massachusetts said a new partnership with Google Health would allow its members to import claims-based health information into a PHR. And, finally, he notes that last month, Aetna Inc. said it would give members access to Microsoft Corp.’s HealthVault PHR.

Davis writes that these announcements show a trend among health plans to capitalize on a population that increasingly relies on the Internet for health information, and an expectation that consumers will want to store their health data electronically.

Quoting Michael Solomon, who is an affiliated consultant at Point-of-Care Partners, a Florida-based firm that specializes in e-prescribing and electronic health records (EHRs): “Employers will increasingly demand that health plans…provide tools to help their employees manage their health” he tells HPW. “As more consumers move into consumer-directed and individual health insurance policies, health plans will be faced with an imperative to foster loyalty with their members and help them stay well.” He points to Aetna, which he says is “aggressively promoting” a health portal and PHR to its members through its ActiveHealth Management subsidiary.

However positive these trends appear to be, there are some potential drawbacks. For example, Davis delves into the question of what happens if pharmaceutical companies buy advertising space on the web portal. Also, with respect to the PHRs, he notes that they currently suffer from a lack of interoperability and portability standards meaning that insurers and other stakeholders will need to address differences in formats, content and other technical issues that are obstacles to interoperability and widespread acceptance.

Health Plan Innovation Take: Yes, there are still a number of issues to be worked out before health care can become paperless, but the rewards can be enormous. Just this week, the Congressional Budget Office said that the only healthcare reform plans that are capable of offering reasonable savings relative to their cost are the health IT plans.

Small Businesses using Health Savings Accounts to Attract Top Talent

Small businesses say that they are using creative, non-standard benefits programs such as telecommuting and flexible work schedules along with specialized benefits (such as flexible savings accounts, health savings accounts and supplemental life and disability insurance) to attract talent.

These were among the findings of a survey of 500 U.S. small- and medium-sized businesses conducted in November by TriNet HR, a San Francisco Bay Area, benefits and HR outsourcing company that specializes in working with small and medium-sized businesses.

“Today’s headlines understandably focus on people who have lost their jobs or are concerned about job security,” Burton M. Goldfield, president and chief executive officer of TriNet said. “But even in a difficult market, employers need to concentrate on motivating and incentivizing people to perform. You can attract and retain key employees if you have the right benefits strategy.”

Health Plan Innovation Take: This study seems to validate the idea that there is an opportunity for health plans to retain, and even grow, their small employer block of business if they get creative with their pricing, packaging, and marketing.

Read more about the survey.

Can the Dutch Lead us to Sensible Healthcare Reform?

A thought provoking piece appeared in this morning’s LA Times written by David Lazarus and urging healthcare reform efforts should begin without preconditions. “The employer-based system isn’t our only choice,” he writes, “and we should be open to alternatives (while ensuring that whatever’s taken away from workers in terms of an insurance benefit is returned in the form of extra pay or tax credits to cover new expenses).”

Mr. Lazarus does not swing all the way in the other direction either. Though he admits he would like to, he does not advocate for a single payer system. What he does do is search for some middle ground where employers are relieved of the burden of providing health care, everyone receives medical coverage, and insurance carriers are encouraged to compete for market share by keeping prices low.

A pipe dream? Can’t do it? Mr. Lazarus suggests that it can be done and has been done in the Netherlands, another country which previous had an employer-based system. He explains that until 2006, the Dutch combined employer-based coverage with individual policies as well as a government-administered insurance program. This became unwieldy and inefficient.

The Dutch introduced a system two years ago that did away with employer-based plans and government insurance, replacing them with a mandate that everyone buy individual policies.

At the same time, the government said it would play a more active role in keeping prices competitive and thus prevent individual policies from soaring in cost.

Lazarus quotes Pauline Rosenau, a health professor at the University of Texas, who says the U.S. should be looking to the Netherlands for guidance — about what to do and what not to do.

Rosenau is quoted as saying, “We can avoid their mistakes. We need to create a system that allows insurers enough freedom to operate, but at the same time regulates them so they compete on price, not on being able to avoid the very sick.”

“What’s clear,” Mr. Lazarus writes, “is that our own reform efforts should begin without preconditions. The employer-based system isn’t our only choice, and we should be open to alternatives (while ensuring that whatever’s taken away from workers in terms of an insurance benefit is returned in the form of extra pay or tax credits to cover new expenses).”

Health Plan Innovation Take: Mr. Lazarus is right. We should not take the employer-based health care system off the table just because the 180 million people who currently receive coverage from employers seem to be content. This discussion should be about improving access and quality of care while lowering costs. If there are better models that utilize the private sector, and are proven to work, we should be taking a good hard look at them.

UHG’s Continuity: Product Innovation, or Sign of the Times

The New York Times reported this week that the UnitedHealth Group has introduced a first of its kind product: the right to buy an individual health policy at some point in the future even if you become sick. That’s right, the new product called UnitedHealth Continuity, is not actual medical insurance, but is aimed at people who may have insurance now but are worried they may lose it and may not be able to obtain replacement insurance on their own.

Here’s how it works: It is much like the option on a life insurance policy that allows you to buy additional coverage at certain intervals without showing proof of insurability. Say that you are a 50-year-old male who lives in Columbus, Ohio, and you plan to eventually take an individual policy in which you would be obliged to pay the first $3,500 in medical bills. You would pay $32 a month for the right to eventually get that coverage or 20 percent of a policy that now costs $159 a month.

Is that a good deal? It depends. Keep in mind that most states let insurers refuse to sell new individual policies to anyone with a pre-existing medical condition. One major illness, say a bout with cancer, and you would be hard pressed to find a individual health insurance policy – at any price.

Is it worth paying several hundred dollars a year just for the right to purchase insurance – not necessarily at a standard rate – sometime in the future, maybe? Are people that concerned that they my lose their employer-sponsored coverage in the near future?

What are your thoughts? Leave your comments below.