Yesterday, Reuters reported that Wal-Mart Stores, Inc. (Walmart), the nation’s largest private employer, has made three (3) significant changes to their employee benefits plan which will take effect January 1, 2012:
- Walmart will no longer offer health insurance to new part-time U.S. employees (those working less than 24 hours a week),
- Walmart will begin charging workers who use tobacco more for their coverage, and
- Walmart is reducing the amount it contributes to employees’ healthcare expense accounts by 50%.
Tis a sign of the times…
According to Walmart spokesman Greg Rossiter, “The current healthcare system is unsustainable for everyone and like other businesses we’ve had to make choices we wish we didn’t have to make. Our country needs to find a way to reduce the cost of healthcare, particularly in this economy.”
And Walmart is not alone in taking these steps in an effort to cut healthcare spending. Wells Fargo & Co. has plans to ask their employees to fund their own medical expense accounts or choose to pay higher insurance premiums and have the company fund them. Other companies such as General Electric have made similar moves.
Those who have known me for many years know that I’ve been highly suspicious of High-deductible Healthplans (often referred to as “HDHP” or “Consumer-driven” plans) since they were first created and popularized.
Why?
Because high deductibles fail to control costs and, more dangerously, often cause low- and middle-income patients to forego needed healthcare.
But don’t savings accounts such as HSAs, HRAs and FSAs solve that problem?
They could, if they were fully funded by the employer on Day One of the plan year. But they rarely are. So patients are still faced with huge out-of-pocket costs for expensive services like imaging, hospitalization, specialty drugs and so much more. Follow a few HDHP members to the grocery store (especially in January) and watch them struggle to make a “Bread or Med™” decision. If it comes down to buying bread for their family or meds for themselves, bread always wins.
Having patients not taking their medication is not good for healthcare cost control. And, as a result, we’re seeing (as in the news above) that even the largest, most profitable companies in America are having to cut back their contributions to those savings accounts.
The bottom line is that High-deductible Healthplans (HDHPs) are a cost shift – and the accompanying savings accounts were nothing more than an effort to make the high deductibles more acceptable to the ill. (Great for healthy and wealthy people. Bad for the ill and low income.)
And don’t be fooled when surveys claim an increase in enrollment in HDHPs. The reason for growth in these plans is not cost-containment (if they succeeded in cost containment, we wouldn’t be getting such news from Walmart, GE and Wells Fargo, would we?) Growth in HDHPs is simply the fact that all employers can afford anymore are the reduced premiums associated with HDHPs.
HDHPs are ineffective in addressing the compliance needs of those members who are fighting chronic disease or who are at-risk today (of developing disease in the future) and helping them get the early intervention healthcare they need in order to manage their disease or, better yet, make the necessary lifestyle changes to eliminate the disease altogether.
Advanced programs give all the support possible to diseased and at-risk members while holding them accountable through an integrated Standard-based Wellness Plan to be good, compliant patients. That’s key to an effective healthcare cost containment strategy.
