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Rx for changeAlegent Health Employees Have Turned to a Health-Care Plan Designed to Contain Costs and Improve Their healthBilly HuberPatti HigginbothamDavid Grandy

Posted on: Tuesday, 27 December 2005, 18:00 CST

By Jonathan Wegner

Even from his vantage point as Lakeside Hospital's chaplain, Billy Huber said it was clear the economics of the health-care system had gotten out of whack.

There was no relationship between the cost of health care and how much his family used the system. He wanted to be a better steward of medical resources, but like most insured Americans, he didn't even have ballpark figures for medical costs.

"The underlying attitude is, 'I've already paid for it,'" he said. "I'm paying $400 a month for health care. Who cares how much it costs?"

Such sentiments make American business leaders cringe. As providers of the majority of the nation's private health coverage, businesses have struggled to handle ballooning health-care expenses in recent years.

Now Huber and 79 percent of Alegent Health's 8,400 employees have joined a completely different kind of insurance plan that may become a model for companies seeking to contain costs and improve their employees' health.

Alegent offers four "consumer-driven" health plans that force employees to take better care of themselves and to become more engaged with health-care expenses. Each policy has a high deductible -- even exceeding $5,000 -- but workers have special accounts to save pretax dollars for medical expenses. Because premiums are much lower for high-deductible plans, dollars normally sunk into potentially unused insurance coverage can be socked away in an account to help meet the high deductible.

Wayne Sensor, Alegent Health's chief executive officer, thinks the fact that the majority of the company's work force -- all of whom know about health care -- made the leap is a strong signal that such plans make sense.

"I don't think there is a silver bullet for health care, but I do believe consumer-driven health care is as close to a silver bullet as there is," Sensor said. "It's a societal question. It has to do with how I make my choices and what I think I'm entitled to."

To that end, he believes that businesses, insurance companies and health-care providers need to help Americans reconnect the dots between lifestyle choices and health-care costs. He also acknowledges that the health-care industry is going to have to rethink how it sets prices.

"The link between cost and charge is kind of funky in this industry."

Currently, the costs of health care and the charge to the consumer have little in common. That's because most hospitals contract with insurers to provide care at specific rates, Sensor explained. Those prices probably aren't what an individual consumer would be billed.

It hasn't mattered much until now, because most patients pay a small deductible and copays that account for a fraction of the actual bill. In traditional health plans, employers and insurance companies absorb the real costs almost exclusively.

That's changing. Insured workers have more at stake in increasingly popular consumer-driven plans. In such plans, money for health-care costs (up to the high deductible) comes out of pocket or from special health savings accounts and reimbursement arrangements.

Because consumers can keep those dollars to build a savings for future care, workers have financial incentives to choose a healthier lifestyle, buy generic drugs and shop for cheaper care options (like choosing a minor medical clinic over the emergency room).

Such systems are still working out some major kinks. Advice on whether an ailment requires urgent attention or less expensive treatments is rarely easy to get, and most consumers have difficulty finding even basic pricing information.

Reports on cost and quality are easier to find if you're buying a gas grill, Sensor said. "Information to make informed decisions is hard to come by. That's got to change."

Sensor said he developed the new plan in response to complaints about mounting healthcare costs he heard from Omaha executives after taking the helm at Alegent in 2004. Those conversations led him to rethink the health-care provider's role in the community and to develop a partial solution.

Sensor said one discussion with Union Pacific Corp. Chairman Dick Davidson gave him his "eureka" moment.

Sensor had told Davidson that he thought consumers needed to get more involved in making decisions if health-care costs were going to moderate. Davidson replied, "Well, Wayne, what are you doing with your 8,400 employees to engage them in health care?"

Sensor realized then that "the answer should be, 'I'm doing something other than what you are.'"

He wanted Alegent's plan to go beyond simply putting more health- care decisions in the hands of its employees and instead encourage workers to take better care of themselves.

Under the plan, preventive care is 100 percent covered. Workers can earn reductions in their insurance premiums through exercise, diet and smoking-cessation programs. Workers have incentives to undergo annual health evaluations.

"The majority of health ailments in this country are selfinduced," Sensor said, "so there's a disconnect between the cost of health care and personal choices."

The company also held extensive employee meetings and an education campaign that let workers test how different plans would affect their families. The system also includes nurses who can help employees decide the most cost-effective way to care for their ailments.

Workers like Huber, the Lakeside Hospital chaplain, said the information made it easier to take the plunge.

Of course, being a health-care organization, Alegent's workers have better access to pricing information, so for now such a plan may not be feasible for other companies to adopt. But Sensor believes health-care pricing and quality data eventually will become more transparent.

Billy Huber Title: Chaplain, Lakeside Hospital Age: 47 Status: Married to Kris Huber, a physician's assistant at One World Health Center Children: Mark, 19; Josh, 18; Bryan, 16; Luke, 12 Health plan: High-deductible insurance policy with a health savings account. Maximum out-of-pocket liability: $10,200 Insurance premium per pay period: $10 Maximum annual HSA contribution: $5,100 Why he took the plunge: "Part of it was a rejection of the entitlement mentality . . . the notion that people have that if something goes wrong with my health, somebody (else) has to take responsibility for it." Health and financial factors: Huber said his son cut his hand this year, which required surgery and forced the family to pay the maximum out-of-pocket in 2005. The family went with the highest-risk policy. He recognizes it's a gamble but said he thinks it will pay off: "I'm counting on my kids not to cut themselves every year, but with four teenage boys, who knows?"

Patti Higginbotham Title: Clinical nurse specialist, Mercy Hospital Age: 47 Status: Married to Brad Higginbotham, a dentist Children: Abbey, 22 (not in plan); Nate, 21; Alex, 17 Health plan: High-deductible insurance policy with a health savings account. Maximum out-of-pocket liability: $10,200 Insurance premium per pay period: $10 Maximum annual HSA contribution: $5,100 Why she took the plunge: "My husband liked that we were saving pre-tax dollars in an account we can take with us, but I'm more motivated by (the fact that) if I know this is my money being spent, I'll take better care of myself." She also likes incentives built into the plan that encourage healthy lifestyles. Health and financial factors: "Our premiums were going up, and for healthy people that just do mammograms and your normal checkups, the HSA really gave us more bang for our buck. . . . We're going to pay the same monthly, but the money is going into an account (instead of toward unused premiums)."

David Grandy Title: Interior operations director, Immanuel Hospital Age: 30 Status: Single Children: None Health plan: High- deductible insurance policy with a health savings account Maximum out-of-pocket liability: $3,000 Insurance premium per pay period: $16 Maximum annual HSA contribution: $1,000 Why he took the plunge: "I'm probably the ideal candidate for a consumer-directed health plan: young, healthy, single, and no (family) history of chronic illness." Health and financial factors: "I've gone six years since seeing a physician, so for me in thinking about a health plan, it's nice to know that those health (insurance) dollars come back to me. If I do things to take care of myself I'm going to build up a nice savings for that day down the line when inevitably I'm going to need to use the system."

Source: Omaha World - Herald

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