Open Questions

Choosing a health benefits plan can be a headache, even in the best of times. The process known as “open enrollment,” during which workers make changes to their medical insurance for the coming year, now rivals tax season in its tedium and complexity, and this year promises to be especially challenging.

First, and most obvious: Prices are going up, big time. “We’re seeing increases from about 15% all the way up to 40% in some cases,” says Kirby Bosley, who heads the health care practice in Los Angeles for William M. Mercer Inc., a worldwide human resources management consulting firm. Consumers will feel the hit immediately, in increased premiums, higher co-pays and fewer health plans to choose from, experts say.

Second, the kaleidoscopic network of health maintenance organizations, preferred provider organizations (PPOs) and physician groups that deliver care is more unstable than ever, rived by contractual disputes and bankruptcies. When contracts are broken or health providers fail mid-year, patients are often left without coverage to see their own doctors, and without access to their medical records.

Finally, the terrorist attacks earlier this month not only have strained insurance resources worldwide, analysts say, but also have delayed legislative action on managed care reforms--including a measure that would have required doctor groups to continue seeing patients for up to a year after HMO contracts end.

To get the best coverage possible, it’s crucial to understand how these forces will play out, patient advocates say. “It’s never that simple choosing a plan, because there’s a lot of individual considerations about your own condition,” says Elizabeth Imholz, director of the West Coast regional office of Consumers Union, “but I think it will be particularly complex this year.”

Absorbing Higher Costs

Jason Gottlieb, who teaches first-and second-graders at the Walden School in Pasadena, already has had to adjust to the cost. Struggling to support a family of five on his salary, Gottlieb has been paying about $550 a month this year to insure his family and was facing an increase of at least $100 for the same coverage in 2002. “It’s always been a struggle for us, and this was just too much,” he says. This open enrollment period, he chose to enroll his three children in a state program called Healthy Families, which provides heavily subsidized insurance for children in families with incomes up to about $35,000 a year. The cost: $9 a month per child.

“It saved our souls,” he says. Now all he has to do is find a low-cost coverage for himself and his wife. “As of now, we are uninsured.”

Throughout the state, employees like Gottlieb are spending more time than ever figuring out how to respond to the cost increases, according to Dede Kennedy-Simington of Garner Insurance Services, which has been helping to manage health benefits for Walden and three other private schools in the Pasadena area. Some workers are spending their raises on health coverage, she said; others are downgrading their benefits, agreeing to pay higher hospital deductibles in exchange for lower monthly premiums.

Unlike the last bout of inflation, in the early 1990s, this year businesses cannot lean on HMOs, doctors and hospitals to accept any more deep cuts. HMO growth has skidded to a halt, and there are no more savings to be squeezed out of the managed care system, health policy researchers say. The only solution that businesses now see is to pass the price hikes on to workers. Hughes Electronics, for example, had basically accepted the increases in past years. But it won’t absorb the big price hikes being quoted by HMOs for 2002, said Dr. Pamela Hymel, vice president of medical services and benefits. Instead, “we will let the market dictate where people sign up,” she said. The HMO cost increases will make PPOs and point-of-service plans--which allow more freedom when choosing doctors--much more attractive to many Hughes employees, she said.

In California and across the nation, the increases are hitting employees in small and midsized companies particularly hard, benefits managers say. Bonnie Robinson, corporate benefits manager at Bourns Inc., an electronics manufacturer in Riverside with 1,000 domestic employees, says she is trying to hold the line on the company’s benefits--it now picks up 85% of the cost for employees and 60% for dependents. “We’re hoping not to change that, and not to pass on most of the increased cost,” she says. Still, the price hikes are going to bite: She expects premiums for the most expensive family plan Bourns offers to jump by about $50, to nearly $300 a month.

Business analysts say that, to keep workers insured, employers will be considering several options to try to keep their premiums as low as possible:

* Increased co-payments . “Because of inflation, you’ve got to increase those co-payments; otherwise, the employer is paying a higher and higher percentage of the premium,” says health-benefits consultant John Garner of Garner Consulting in Pasadena. “A few years ago, $15 co-pays were unusual and $20 were unheard of. Now, $15 isn’t all that unusual, and $20 is becoming more frequent.”

* Increased hospital deductibles . Companies are trying to encourage workers to use lower-cost hospitals by increasing deductibles for visits to hospitals considered to be high-cost, inefficient facilities. Deductibles of $200 or $250 may be imposed, compared with no deductibles for favored hospitals.

* Disease management programs . Analysts expect many more people to seek to control their personal out-of-pocket costs by taking advantage of screening, preventive measures and advice available through wellness programs sponsored by employers. These are aimed at people with high-cost conditions: diabetes, asthma, congestive heart failure, low back pain and high blood pressure.

* Multi-level drug pricing . Because drug costs are the biggest single factor involved in driving up premiums, companies will be fiddling with different ways to make workers sensitive to the costs.

The Health Plan Carousel

At the same time, many employers are narrowing their insurance choices. An alarming number of HMOs have pulled out of rural counties altogether, for example, and many doctors are bailing out of HMOs in favor of higher-reimbursement plans. Even the biggest buyers, such as the state of California, with 1.2 million members, have pruned their list of HMO offerings. Smaller employers have much less leverage, and many dropped from several choices down to two or only one, consultants say. “I’ve seen more of this activity this year than in the previous couple of years,” says Bosley, of William M. Mercer.

The result is that, whether they want to or not, many workers are going to have to switch from a known plan and trusted doctor to an unfamiliar health plan with unfamiliar coverage policies. Daniel Zingale, director of the California Department of Managed Health Care, the state’s HMO regulator, says he’s nervous about people repeatedly changing HMO plans, which, he says, gives HMOs little reason to focus on preventive care because they figure the patient will be in another plan within a few years. “This creates even less of an incentive for keeping people healthy.”

That’s why advocates say that it is especially important this year for consumers to compare health plans on the basis of how the plans cover certain conditions. One place to start is the HMO Report Card (above), which has some broad data on patient satisfaction. The National Committee for Quality Assurance, an independent organization, also has a system of audits to measure health plan performance, and rates them on a star system (https://www.ncqa.org).

But Zingale says this is not enough. “It is very important to find out exactly what the plan’s policy says about your own specific condition,” he says. “Don’t just read the brochure--call the plan, and ask for specifics about your own situation.”

Don’t hesitate to call your doctor, either, advocates and consultants say, and ask which health plans work best, which are more likely to provide easy access to care and which are less likely to challenge a doctor’s judgment about procedures or referrals to specialists.

Many doctors have experience with a variety of insurers, and their office will know the plans’ reputation. “Your doctor will certainly know about the relationship he or she has with the plan,” says Dr. Marcy Zwelling, an internist in private practice in Long Beach, “and it’s worth asking. If your doctor doesn’t have a good relationship with the plan, you need to know that.”

Staying With Your Doctor

All patient advocates agree that the central partner in this health insurance dance ought to be your doctor. But keep in mind that doctors often contract with one or more physician groups, the for-profit networks of doctors that in turn negotiate contracts with hospitals and health plans. And many of those relationships are not stable.

Patti Pinto, 54, an office manager at the Sequoyah School in Pasadena, says she had to switch health plans a couple of times during the last two years, once because the physician group her doctor belonged to went bankrupt. “It took me four months to get my records from the bankrupt group,” she says. “It was nothing complicated, but you don’t want to all of a sudden be green with no history. For a woman, your baseline mammogram at 40 years old should follow you.”

Pinto says she’s willing to pay $30 or more in increased monthly premiums to stay with her doctor--but wants to know that coverage for visits won’t suddenly be canceled because of some financial or contract problem beyond her control.

That’s why advocates are now advising consumers to inquire about the financial health of the HMOs and the doctor groups with which they contract. State regulators say that nearly a quarter of physician groups in California are now in precarious financial straits. And in just the last year, the state has taken control of three HMOs with severe financial problems, most recently Tower Health, which has some 111,000 enrollees in the Los Angeles area.

The Department of Managed Health Care posts some financial information on health plans on its Web site, https://www.hmohelp.ca.gov. But this month the California Medical Assn. sued to block disclosure of financial information on physician groups, and the information is not public. “One thing you can do is call the health plan and ask about the financial stability of the group,” says Zingale. “They certainly have some of that information, and they may share some of it with you.”

Under current law, health plans must give members some notice in the event of a contractual breakdown or financial problem. Still, Zingale says, many recent contract disputes have come without warning, leaving patients in coverage limbo.

“We have had calls from patients who are stranded in the parking lot of their medical facility, just after finding out their medical group has gone bankrupt,” Zingale says. “They may lock the doors and the medical records are inside, and there’s no way to get at them.” State regulators have limited ability to force quick release of records, he says, so consumers have little choice but to appeal to their doctor and the physician group.

Early this month, the state Legislature was considering several proposals to keep consumers informed, covered and cared for in the midst of bankruptcies or contract disputes. But legislators dropped the debate in the wake of the terrorist attacks of Sept. 11. In Washington, the attacks have knocked the patients’ rights debate so low on the agenda that last week Gov. Gray Davis wrote a letter urging Charles Norwood (R-Ga.), a key player, not to lose sight of the importance of continuity of care amid the current crisis.

As bewildering as all these changes are, the bottom line is simple: We’re all going to have to pay more to see the doctors we want to see. As the larger world of managed care twists and turns, advocates say, consumers in the end must ask themselves how much they’re willing to pay to stay with a doctor they trust.

A few weeks ago, Maria Cochran, 54, of Long Beach, called to make an appointment with her doctor of 12 years. Told that her doctor was no longer “on the plan,” Cochran did something many physicians hope will become more common in the coming year--she paid cash.

“I’ll switch plans later to stay with her,” Cochran says, “but in the meantime I wanted to make sure I got to see her. It was worth the $100.”

Zwelling, Cochran’s doctor, says it never hurts to call a physician’s office and ask how much it costs for an office visit. “It may be as little as $30 or as much as $100. When it’s peace of mind and your health, what’s $100? That’s a Laker ticket.”