Whatever happened to co-pay island?
You may have heard, and perhaps have opinions about, the changing face of employer-sponsored health plans. Recent legislation in the health care arena has been well publicized by the media, and in fact the Supreme Court is evaluating its constitutionality even as you read this article.
But not all trends in health care are attributable to the changes in legislation. In fact, arguably the most important trend for employer-sponsored health plans and the employees covered under such plans has little or no link to the current legal quadmire.
Most of you are familiar with health plans in which you pay a co-payment for care, e.g. $10 for office visits with your internist, $25 for a visit with a specialist, and pharmacy co-pays of $10 per prescription. If this applies to you, you are basking in the sun of “co-pay island”. Read on….
Medical plans sponsored by employers have been using a flat dollar co-pay for years. These plans are attractive to both employers and employees for many reasons; simplicity, ease of administration, clear communication and expectations, etc. But what a co-pay system does not do was to help you, the health care consumer, to understand the underlying cost of the service provided. This, in turn, gave you little interest or incentive to use the most effective or efficient provider. Essentially, you were insulated from the actual cost of the services provided.
In the past, if you wished to select an excellent health care provider, proper information was limited. Some organizations, such as Leapfrog (http://www.leapfroggroup.org) are filling that gap by measuring the quality and the medical outcomes of hospitals and other providers. Leapfrog’s website reads in part: “You can probably get more information about choosing a TV than choosing a doctor or hospital. Leapfrog is changing that by working to make reporting health care quality and outcomes a routine feature of the US health care system. We provide information on health care quality so that you can compare hospitals and other providers, much like Consumer Reports”.
Today, many employers are using a co-insurance model as opposed to a co-payment model. What’s the difference? A modern co-insurance health care design may, for example, pay 90% of the cost of medical services, leaving 10% for the health care consumer to pay. ”It’s a back-to-the-future situation”, says David Carpentier, Vice President at USI, an insurance broker and consulting firm. “The new normal calls for the consumer to understand what he or she is purchasing. In the future, consumers will be asked to choose health care plans and providers very differently. “
“Co-pay island” has shifted to a system which connects informed consumers with providers. “Transparency is crucial”, David says. “Transparency in this context means that health care consumers have all the facts they need to make an informed decision. They know the price of the health care plan; they know what the doctor charges for a service; they understand when to use an emergency room, versus when to use an urgent care center, versus when to see their primary care physician.”
Many employers, recognizing that this change may be difficult for employees, have enlisted the help of brokers, communication experts, and other firms with experience in these types of plans. You may want to check with your own employer to see if there is help available. The next time Open Enrollment comes around—fall of 2012 for benefits in effect 1/1/2013—you should select your plan with eyes wide open.