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Cost Shifting

"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. Duncan says much of the transparency movement can be credited to employers, "who want to know what they're getting for their employees" and want to ensure they're getting the best care.

Expect to hear more about "informatics" -- a buzzword for, among other things, organizing data to provide comparisons of facilities and care providers. Patient care also will get a boost from other IT developments, including greater interconnectivity, which will better integrate information on payers and providers. Such innovations can prevent duplication of tests and provide greater mobility for patients.

More so-called boutique or concierge doctors will sprout up around the state to cater to a wealthier clientele. For an annual retainer fee, which can range from $1,500 to $10,000, these doctors promise everything from same- or next-day appointments to telephone access.

Alternative methods of financing healthcare, such as health savings account, which combine savings accounts with high-deductible health insurance policies, will also gain ground.

Ultimately, as costs continue to spiral, Dr. Robert Kay, CEO of Cleveland Clinic Florida, says that consumers are going to get much more involved in their healthcare choices, including treatments. Kay anticipates an increase in "pay-for-performance" practices, a growing trend with both insurance companies and government toward paying institutions and physicians for either outcomes or standardization of care. "Scorecard medicine and 'pay-for-performance' all dovetail together," Kay says.

Person to Watch

CEO, AlphaStaff
Boca Raton

Can a 25-person company shop for health insurance as well as a 25,000-employee company? Jay Starkman, CEO of AlphaStaff, says yes. His Boca Raton-based PEO enables small and midsize companies to offer competitive employee healthcare benefits programs. How does he do it? "We have a sponsored health plan through Aetna healthcare. Because of the large pool of companies that make up our employees, we are able to control our costs and intelligently shop for what's best."