Health Savings Account and Insurance Products and Health Insurance and Health Care & Insurance

Consumer-driven health plan only option for Marsh employees

October 8, 2007

Marsh Supermarkets Inc.'s decision to offer its employees a health reimbursement account as their only health insurance option this year has captured the attention of local employers and benefits consultants.

If Marsh succeeds at totally replacing traditional health insurance with a so-called consumer-driven health care plan, other local employers may follow suit, according to extensive local interviews conducted by the Center for Studying Health System Change.

The Washington not-for-profit noted there's already more acceptance of this new breed of health plans in Indianapolis than in other cities the center studies. But few employers--and none as big as Marsh--have made consumer-driven plans employees' sole option.

"The market was generally waiting to have a positive experience with this [total replacement]," said Debra Draper, director of site visits for the Center for Studying Health System Change, which presented its findings Oct. 4 from the 12 cities it examines. "A lot of employers were watching how their experience plays out."

Marsh officials declined to comment for this story. The home-grown grocery chain has nearly 14,000 employees spread over its 104 stores and catering businesses.

Consumer-driven health plans typically combine a health reimbursement or health savings account with high-deductible insurance. More employers have offered them over the last five years as federal lawmakers blessed them with tax-free status.

Advocates of such plans say they make customers more cost- and health-conscious because employees have more responsibility for their health care spending and can roll over the money they don't spend into future years. Employers hope more conscientious employees yield lower health care costs, or at least a slower rate of growth.

Nationally, health insurance premiums have surged 78 percent since 2001, according to the Kaiser Family Foundation.

Draper could provide no data to back up her assertion that attitudes in Indianapolis are more positive toward consumer-driven health plans than in other markets.

Still, it sounds reasonable, said local benefits consultants. Several factors could be behind the trend.

One possibility: the historic dominance of preferred provider organizations, or PPO plans, in Indiana, which serve as the platform for many consumer-driven plans.

Another option? Those incessant radio ads run in the mid-1990s by Pat Rooney, the former CEO of Golden Rule Insurance Co. in Indianapolis and an early champion of what were then called medical savings accounts.

"That Pat Rooney connection, because he's a national figure and he's local, there may be some validity to that," said Karl Ahlrichs, a local human resources consultant.

By one measure, Hoosiers are warming more to consumer-driven health plans than the rest of the nation.

Thirteen percent of Indiana employers with more than 500 workers offered a consumer-driven plan in 2006, compared with 11 percent nationwide, according to the Mercer Survey of Employer Sponsored Health Plans, which was released in April.

However, Indiana trailed the Midwest average, which was 15 percent.

Still, far more large employers in Indiana told Mercer, a benefits consulting firm, they are "likely" to offer a consumer-driven plan this year or next than did employers in the Midwest or the nation.

As many as 35 percent of Indiana outfits with 500 or more workers plan to offer a consumer-directed plan by 2008, compared with 22 percent for the Midwest and 19 percent for the nation.

"There seems to be more acceptance in that market," Draper said of the Indianapolis area. She added, "In other markets, they don't want to have anything to do with these things."

Many workers are skittish, too. Few workers given the option of a consumerdriven health plan have chosen it.

At Indiana's large companies that offered a consumer-driven health plan, only about 8 percent of their employees enrolled in that plan, according to the Mercer survey. Still, that total outpaces the Midwest and national averages of 5 percent and 3 percent, respectively.

Some local brokers say that before big numbers of employees enroll in consumer-driven health plans, it will likely require employers to follow Marsh's lead and make such plans employees' only option.

The challenge for large employers like Marsh is to teach their employees about a still-unfamiliar health plan, and do it at numerous offices and for employees working odd hours. In addition, retail workers--on the whole--are probably less savvy about benefits than white-collar workers, said Bob Boyer, a consultant at Mercer Health & Benefits in Indianapolis.

"You really have to make sure you're communicating well," Boyer said.

The Archdiocese of Indianapolis switched its 1,600 full-time employees with health insurance to health savings accounts this year. But the change didn't go down smoothly.

Even though the archdiocese's human resources staff held 70 face-to-face meetings at the 150 parishes and 70 schools, complaints about the change were still common.

"It wasn't a few folks here and there. It was a major, common concern among folks who had a concern," said Ed Isakson, the archdiocese's human resources director. He added, "It's challenging to go full replacement. The fact that people felt forced into it--and people didn't like that."

Isakson is glad the archdiocese did change, however. It formerly offered its employees HMO, or health maintenance organization, coverage through Advantage Health Solutions.

One employee found relief for back pain because he could use his health savings account for acupuncture, something the HMO plan didn't cover. Another employee used her health savings account to pay for a trip to Europe to receive treatment of a rare condition.

"It's really engaged people," Isakson said. "Before, we sent out information about health care and people didn't really care. Well, now they do because it's their money."

Mike Campbell, a benefits consultant at the Indianapolis office of Neace Lukens, said employers should embrace consumer-driven health plans to change employee behavior, not just to save money.

"If the employer is looking at it just to shave costs, to control costs, then they're going to have a rough go of it," Campbell said.

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