The Cost of Health Coverage in the Sunshine Economy

Nov 7, 2016

Like mangoes, snowbirds and hurricanes, even health insurance has a season and this is it -- open enrollment season. This is the time many companies give their employees a window to check out any changes to health care insurance plans, including how much more it will cost. It’s also the time Obamacare health insurance plans open on the federal government’s Healthcare.gov site for the 28 states using it, including Florida.

 

Health insurance is a major expense for most people. It comes out of your paycheck or out of your bank account each month. Along with it come the direct out-of-pocket expenses like co-pays to see a doctor and deductibles. Like all insurance, for that money, you are buying to transfer some of the financial risk of paying for escalating health care costs to an insurance company.

 

Here's the average health insurance costs if your get it through an employer:

Here's the average premium increases over the past three years for health insurance plans offered through Healthcare.gov, including Florida Blue's price hikes:

  

In Florida, the biggest is Florida Blue. About 2 of of every 5 Floridians with individual health insurance get it through Florida Blue. One in three with insurance through a small employee gets it through Florida Blue. More than half of big employers use Florida Blue.

 

WLRN spoke with Penny Shafer, company’s leader in South Florida about the Affordable Care Act, the employer-based health insurance market, pricing, costs and how all of this impacts our regional economy.

EXCERPTS

On pricing environment for health insurance:

What you're seeing is trying to balance the affordability of the plan itself with a member cost share. That's true across the whole spectrum. We have to drive people to become better consumers of their health care dollar -- whether it's what their employers are spending, what they're spending out of their own pockets or what their coverage would allow and becoming better users of those health care dollars.

On the cost of coverage:

At the macroeconomic level we were at about 17 to 18 percent of the GDP (spent on) health care before we passed the Affordable Care Act. The good news is we have more people covered today but they continue to use the benefits in the same way that the rest of us did before. So now we're approaching 20 to 22 percent of the GDP (spent on health care). We have to bend that cost curve through education, better consumerism and understanding how better to use the (insurance) benefits. If we all keep using it the way we've always used it, it's unsustainable. 

On sharing the cost burden of health insurance:

I think what the employers have learned is if you don't have any skin in the game you probably aren't paying quite as much attention to how you're spending the dollars. (A worker who pays nothing out of their paycheck for health premiums) or has a very low deductible and really not reaching into your pocket very often (begins) to be desensitized to the cost of care and the shopping that you kind of have to do today.

On what's driving the cost of coverage:

Some of the historic drivers would be the way we pay for services. It's a fee-for-service illness model instead of a preventive wellness model. Every (medical) code comes with a cost. The more codes you put in, the more cost you've got. There's a certain amount that's defensive medicine.

(Another) piece is you've got companies now that are shifting to the minimum essential benefits plans that are associated with the Affordable Care Act. A small group employer is not obligated to offer by law (but) they are moving into the minimum essential benefits that are covered under the new plans (offered) under Affordable Care Act. So that's going to raise the prices a bit.

On ACA exchange plans and small group employer-based plans:

If you think about being able to embrace in a plan the strategic partners that can provide a cost benefit to the employer and to the employee who has a cost share, that embraces some of those delivery models. Think about patient-centered medical homes and ACOs(accountable care organizations). If you've got organizations that are strategic partners that are working with you, you can translate that into a lower cost for an employer and you still have the benefit, but you may be able then to bend the cost curve a bit.

On health coverage cost increases outstripping income gains in the local economy:

It's not sustainable. I think a lot of it's about our pattern of utilization. First, it's about the lifestyles that we're leading. It's about what we've chosen to do. It's about using our health care dollars wisely and it comes back to the medical trends that we're going to have to pay more attention to. It's wonderful that we have new technologies. They make a big difference in diagnostics and other things. It's wonderful that we have new drugs that are changing our lives and curing us of things. But being able to start to bend some of those trends is very important because it's not sustainable at the current rate.