Fish. (AP Photo/Khin Maung Win)

Dutch people have an amazing standard of living, a high life expectancy, wonderful medical care, and insurance companies that were doing fine until the whole world went kablooie. How do they do it?

Jonathan Cohn looked at the Dutch system for the Commonweath Fund, New York, a health policy organization.

The Commonwealth Fund will be running a second part of the article. In the first part, Cohn ends up not going into detail about how the Dutch government manages to pay for the program, or how close (or far) the program comes to being self-sustaining.

Cohn talks about what the program looks like to the consumer.

The Netherlands averaged $4,914 in health care spending in person 2009, compared with an average of $7,960 in the United States.

All resident must own coverage, but the government tries to ease any hardship by providing subsidies for lower-income residents.

The Dutch government chooses a menu of coverage options, and residents choose from the menu each Janary.

All insurance policies include a package of basic benefits that includes most medically necessary services. The cost of coverage must be the same for all individuals. All plan designs must include cost sharing, but the maximum cost sharing is $250 per year, Cohn says.

Individuals pay a nominal premium of about $1,400 per year, and taxpayers in the top 40% help fund the program by paying a payroll tax.

The Dutch government runs a risk-adjustment program that helps insurers adjust for the fact that some attract sicker enrollees than others, Cohn says.

Dutch insurers also can offer supplemental benefits, such as vision coverage benefits, with rates based at least partly on enrollees’ health status

Only 1.5% of Dutch residents are uninsured, and, for the most part, they seem to have better access to primary care and urgent care than U.S. residents, in part because the Dutch have developed a large urgent care center system, Cohn says.

UBA Average Annual Cost Data

United Benefita Advisors (UBA), Indianapolis, a group that represents about 140 independent benefits advisory firms, says the average annual health plan cost at all participating employers is $8,688 per employee this year.

UBA has based that figure on results from 10,744 employers that offer a total of 16,421 health plans.

Alaska has the highest average annual cost per employee — $11,926. In New York, the runner up, the average annual cost is $11,308.

The cheapest state, Mississippi, has an average annual cost of $6,282 per employee. The next least expensive state has an average annual cost of $6,741.

Provider Payments

The Medicare Payment Advisory Commission (MedPAC) – a body that is supposed to help Congress run Medicare – voted this week to replace with the current “sustainable growth rate” Medicare payment formula with a formula that would keep primary care physicians’ reimbursement rates about the same and cut specialists’ rates about 5.9% per year for 3 years, then freeze rates for 7 years.

Dr. Peter Carmel, president of the American Medical Association, Chicago, was just one of many medical society leaders who put out statements blasting the MedPAC vote.

The country has to “repeal the broken Medicare physician payment formula,” Carmel said in the statement. “However, offsetting part of the cost of repeal through drastic cuts and long-term freezes to physicians falls far short of what is needed to preserve patients’ access to care…. Many physicians may also face upcoming payment penalties related to electronic prescribing, health information technology and quality reporting programs. Adding additional physician payment cuts to this mix will leave many physicians unable to care for Medicare patients or make the investments needed to participate in new models of care that can increase coordination and reduce costs.”

Consumer Incentives

As MedPAC was coming out with an opinion about physician incentives, the Bloomfield, Conn., health insurace arm of CIGNA Corp. (NYSE:CI) was investing in a program focusing on consumer incentives.

CIGNA bought a minority stake in Edington Associates, a startup company founded by Dee Edington, a University of Michigan professor.

Edington Associates will help employers “develop a culture of health as a business strategy.”

Dee Edington’s research has focused on developing and testing health improvement strategies.

CIGNA already uses a health assessment based on research by Edington and other University of Michigan researchers, and CIGNA has exclusive rights to a system that Edington and colleagues developed for analyzing health assessment responses. CIGNA now has extended its right to use the assessment system on an exclusive basis for at least 3 more years.

A smaller company, SeeChange Health Solutions, San Francisco, says there will be 1 million people using its “Software as a Service” (SaaS) health incentive system starting in early 2012.

Health plans and employers can use the system to create customized systemized systems that can prod and cajole users to take specific steps to improve their health.

Cadillac Plan Tax

The Internal Revenue Service (IRS) Small Business/Self-Employed Division will provide ghoulish delight on Halloween – at 2 p.m. ET Oct. 31 – by holding a free video webinar on “Reporting of Employer Provided Healthcare Coverage on Form W-2.”

This webinar is for employers, tax professionals, attorneys, payroll professionals, “industry partners,” and anyone else who thinks the high-cost health insurance plan provisions in the Patient Protection and Affordable Care Act of 2010 (PPACA) are a lot scarier than fake spiders stuck fake cobwebs.

Attendees won’t get mini Snickers bars.

They will get to enjoy IRS views on matters such as when employers must begin reporting the cost of coverage on the Form W-2; transitional relief for certain employers, plans, and situations; how employers will report the cost of coverage on the Form W-2; and what valuation methods employers can use to determine the amounts to report on the Form W-2.

Quotable Quotes

Lori High, president of the group insurance unit at Prudential Financial Inc., Newark, N.J. (NYSE:PRU) – “Just last year our benefits study illustrated how many Americans intuitively know the importance of selecting their benefits, yet an overwhelming 68% said they make little or no effort in choosing their benefits each year.”

Proposition: Workers Should Drop Employer-Sponsored Benefits

Brett Goldstein, a Plainview, N.Y., author has written a book suggesting that consumers should try to buy their own individual health and disability benefits, and avoid relying employer-sponsored group benefit plans, because the Employee Retirement Income Security Act makes suing over problems with group benefits denials so difficult.

“If you are lucky enough to get a court date to sue your insurance company, the only thing you can sue for is the cost of the medical treatment the insurance company refused to pay, and that is it,” Goldstein says in a press release promoting his book, The Retirement Crisis.

Goldstein argues in the books that wrongful group benefits denials may force workers to use retirement savings to pay bills that health insurers ought to be paying.

 

Jonathan Cohn looked at the Dutch system for the Commonweath Fund, New York, a health policy organization. He noted that policymakers had the Dutch system in mind when they drafted the Patient Protection and Affordable Care Act (PPACA).

The Netherlands averaged $4,914 in health care spending in person 2009, compared with an average of $7,960 in the United States.

All resident must own coverage, but the government tries to ease any hardship by providing subsidies for lower-income residents.

The Dutch government chooses a menu of coverage options, and residents choose from the menu each Janary.

All insurance policies include a package of basic benefits that includes most medically necessary services. The cost of coverage must be the same for all individuals. All plan designs must include cost sharing, but the maximum cost sharing is $250 per year, Cohn says.

Individuals pay a nominal premium of about $1,400 per year, and taxpayers in the top 40% help fund the program by paying a payroll tax.

The Dutch government runs a risk-adjustment program that helps insurers adjust for the fact that some attract sicker enrollees than others, Cohn says.

Dutch insurers also can offer supplemental benefits, such as vision coverage benefits, with rates based at least partly on enrollees’ health status

Only 1.5% of Dutch residents are uninsured, and, for the most part, they seem to have better access to primary care and urgent care than U.S. residents, in part because the Dutch have developed a large urgent care center system.

Cohn does not talk in the article about whether the Dutch system is self-sustaining, whether it depends on government subsidies to function, and how the government comes up with the money to fund any subsidies.

UBA Average Annual Cost Data

United Benefita Advisors (UBA), Indianapolis, a group that represents about 140 independent benefits advisory firms, says the average annual health plan cost at all participating employers is $8,688 per employee this year.

UBA has based that figure on results from 10,744 employers that offer a total of 16,421 health plans.

Alaska has the highest average annual cost per employee — $11,926. In New York, the runner up, the average annual cost is $11,308.

The cheapest state, Mississippi, has an average annual cost of $6,282 per employee. The next least expensive state has an average annual cost of $6,741.

Provider Payments

The Medicare Payment Advisory Commission (MedPAC) – a body that is supposed to help Congress run Medicare – voted this week to replace with the current “sustainable growth rate” Medicare payment formula with a formula that would keep primary care physicians’ reimbursement rates about the same and cut specialists’ rates about 5.9% per year for 3 years, then freeze rates for 7 years.

Dr. Peter Carmel, president of the American Medical Association, Chicago, was just one of many medical society leaders who put out statements blasting the MedPAC vote.

The country has to “repeal the broken Medicare physician payment formula,” Carmel said in the statement. “However, offsetting part of the cost of repeal through drastic cuts and long-term freezes to physicians falls far short of what is needed to preserve patients’ access to care…. Many physicians may also face upcoming payment penalties related to electronic prescribing, health information technology and quality reporting programs. Adding additional physician payment cuts to this mix will leave many physicians unable to care for Medicare patients or make the investments needed to participate in new models of care that can increase coordination and reduce costs.”

Consumer Incentives

As MedPAC was coming out with an opinion about physician incentives, the Bloomfield, Conn., health insurace arm of CIGNA Corp. (NYSE:CI) was investing in a program focusing on consumer incentives.

CIGNA bought a minority stake in Edington Associates, a startup company founded by Dee Edington, a University of Michigan professor.

Edington Associates will help employers “develop a culture of health as a business strategy.”

Dee Edington’s research has focused on developing and testing health improvement strategies.

CIGNA already uses a health assessment based on research by Edington and other University of Michigan researchers, and CIGNA has exclusive rights to a system that Edington and colleagues developed for analyzing health assessment responses. CIGNA now has extended its right to use the assessment system on an exclusive basis for at least 3 more years.

A smaller company, SeeChange Health Solutions, San Francisco, says there will be 1 million people using its “Software as a Service” (SaaS) health incentive system starting in early 2012.

Health plans and employers can use the system to create customized systemized systems that can prod and cajole users to take specific steps to improve their health.

Cadillac Plan Tax

The Internal Revenue Service (IRS) Small Business/Self-Employed Division will provide ghoulish delight on Halloween – at 2 p.m. ET Oct. 31 – by holding a free video webinar on “Reporting of Employer Provided Healthcare Coverage on Form W-2.”

This webinar is for employers, tax professionals, attorneys, payroll professionals, “industry partners,” and anyone else who thinks the high-cost health insurance plan provisions in the Patient Protection and Affordable Care Act of 2010 (PPACA) are a lot scarier than fake spiders stuck fake cobwebs.

Attendees won’t get mini Snickers bars.

They will get to enjoy IRS views on matters such as when employers must begin reporting the cost of coverage on the Form W-2; transitional relief for certain employers, plans, and situations; how employers will report the cost of coverage on the Form W-2; and what valuation methods employers can use to determine the amounts to report on the Form W-2.

Quotable Quotes

Lori High, president of the group insurance unit at Prudential Financial Inc., Newark, N.J. (NYSE:PRU) – “Just last year our benefits study illustrated how many Americans intuitively know the importance of selecting their benefits, yet an overwhelming 68% said they make little or no effort in choosing their benefits each year.”

Proposition: Workers Should Drop Employer-Sponsored Benefits

Brett Goldstein, a Plainview, N.Y., author has written a book suggesting that consumers should try to buy their own individual health and disability benefits, and avoid relying employer-sponsored group benefit plans, because the Employee Retirement Income Security Act makes suing over problems with group benefits denials so difficult.

“If you are lucky enough to get a court date to sue your insurance company, the only thing you can sue for is the cost of the medical treatment the insurance company refused to pay, and that is it,” Goldstein says in a press release promoting his book, The Retirement Crisis.

Goldstein argues in the books that wrongful group benefits denials may force workers to use retirement savings to pay bills that health insurers ought to be paying.