The Economy Took A Toll On Health

Employees who still have their jobs “are more worried about losing their benefits,” says Theresa McConeghey, dental products director at Principal Financial Group Inc., Des Moines, Iowa. “More members are going to the dentist. When these people do go, they’re getting more services done.”

In some cases, efforts to cut plan costs by passing more family coverage costs on to employees have backfired, by leaving employers with sicker pools of insureds, Mangan says.

Family coverage cost-sharing increases can lead to adverse selection problems, because workers will pay dearly to keep group coverage for family members with serious health problems, but they will buy other coverage, or go without coverage, for healthy, cheap-to-insure family members.

4. Layoffs and the temporary 65% COBRA benefits continuation subsidy program increased COBRA enrollment.

For a departing worker, the cost of COBRA coverage is usually 102% of the full cost of coverage. This year, the federal government is paying 65% of the cost for eligible involuntarily terminated workers, and the workers are paying just 35% of the premiums. Ceridian Corp., Minneapolis, a benefits administration firm, says the subsidy increased the COBRA take-up rate to 18%, from 12%, at its client employers.

The increase in COBRA enrollment contributed to higher third-quarter claims costs, insurers say.

But the subsidy program may have held down the average amount of claims per COBRA enrollee, because the pool of workers willing to pay 35% of the full cost of coverage is healthier than the pool of workers willing to pay 102% of the cost of coverage, Mangan says.

5. Individual health account plans continued to gain market share. About 4% of individuals in U.S. employer-sponsored group health plans are now in plans that offer health savings accounts or health reimbursement arrangements, up from 1% in 2005, according to the Employee Benefit Research Institute, Washington.

6. Researchers found that information technology might not be a magic wand for fixing the U.S. health care and health finance systems.

A team of researchers led by Ashish Jha says existing hospital electronic health record programs have done little to reduce the cost of care or improve quality. But the Jha team says health IT might pay off if it were being used better.