September 23, 2014

Industry Outlook 2006 - Healthcare

Cost Shifting

Employees will face higher deductibles and co-pays by the end of the year.

Amy Keller | 1/1/2006
"I don't think there's any question that the cost of care is being shifted from employers and government to the end consumer, both in an effort to reduce some of the economic load on their companies and instill accountability and responsibility on the individual who is consuming healthcare."

Dr. Robert Kay
CEO, Cleveland Clinic Florida

An overhaul of Florida's $15-billion Medicaid program is set to begin this year. With Medicaid costs rising about 13% every year, the state-federal program that serves mostly low-income children, the elderly and disabled individuals threatens to consume nearly 60% of Florida's budget by 2015. Last year, Gov. Jeb Bush won a waiver from U.S. Department of Health and Human Services Secretary Mike Leavitt that should allow the state this summer to roll out a pilot program in Broward and Duval counties that will shift traditional Medicaid patients into managed-care programs. A special legislative session held in early December addressed implementation of the plan.

Richard Morrison, Florida Hospital's regional vice president for government, regulatory and public affairs, says he doesn't expect to see major effects right away because the Medicaid reforms, slated to be phased in over five years, will be limited initially to such small geographic areas. But measuring results should be easier in 2007: Within a year of being implemented in Duval County, the new system will spread to Baker, Clay and Nassau counties. The Legislature will determine when the program will expand to other parts of the state and the rest of the 2.2 million Floridians covered by Medicaid.


OUT OF POCKET: Consumers accustomed to $5 co-pays are in for sticker shock as companies pare their policies this year.

Privately insured Floridians, meanwhile, should expect to feel a pinch from rising healthcare costs in the form of higher deductibles and co-payments -- particularly toward the end of the year.

Randy Kammer, vice president of regulatory affairs and public policy for Blue Cross and Blue Shield of Florida, says some consumers accustomed to the $5 co-pays of the HMO era may experience "sticker shock" as they assume a larger portion of the expense of their medical care. "Cost-sharing is definitely a trend, and it's not going away."

R. Paul Duncan, the Gapenski professor and chair of the Department of Health Services Research, Management and Policy at the University of Florida, says consumers should expect to see increasing numbers of health plans in which they pay 20%, 30%, 40% and in some cases up to 50% of their healthcare costs.

Duncan says 2006 won't be the year that employers get out of the business of providing health insurance for their employees, but it will be the year more companies pare their policies and move toward providing group plans geared toward catastrophic coverage.

Kammer also expects to see a trend toward "increased transparency" of information related to healthcare costs, particularly on a non-emergency basis. "I think it's important for people to understand the difference in costs and quality" related to their healthcare choices, she says, and that ultimately will lead to increased competition.

Tags: Around Florida, Healthcare

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