Getting traction

When Louisiana leads the nation in something, it is usually a measure of how far behind we are. But when it comes to health care benefits, Louisiana is leading the pack in the move toward consumer-driven plans.

The state's largest health insurer, Blue Cross and Blue Shield of Louisiana, has

"Consumer-driven is the way of the future," says Walter Brock, vice president of administration for Baton Rougebased Capital Valve and Fitting. "Everyone has to be prepared for it."

Consumer-driven health care, which was given a big boost by the Medicare Modernization Act of 2003, features high deductibles and low premiums. It is intended to shift health care decision-making to consumers by making them spend their own money on it-up to a point. But it helps policyholders by letting them set aside that money, pre-tax, year after year.

Proponents say HSAs will stem rising costs for small employers, who often face double-digit increases, forcing some to cancel benefits altogether. A 2005 survey by Mercer Health & Benefits found 37% of small businesses offered no coverage at all, up from 34% in 2004.

On the downside, critics argue HSAs will discourage policyholders from seeking preventative care, and they note consumers who face an emergency before they've accumulated adequate savings will be stuck out-ofpocket. Others wonder if HSAs simply shift costs around, while failing to address high health care and insurance costs themselves.

In any case, consumer-driven health care is catching on in Louisiana. But it is not always an easy transition.

HSAs and their employee-managed counterparts health reimbursement accounts - are intended to empower the consumer, but that requires consumer education. Baton Rouge-based Associated Grocers has had an HRA for a year, but it prepared for 18 months before implementing it. Employees were required to attend educational meetings and given tools to compare their 2004 out-of-pocket expenses through the preferred-provider plan with what they would have spent with the new plan.

The company had a 94% participation rate in 2005 for its HRA, and it expects the same for 2006. "This is a clear indication that our employees understand and accept [consumer-driven health plans] as the new trend in health care," says Employee Services Manager Angela Bivainis.

Community Coffee began offering a consumer-based health plan alongside a traditional plan in 1995, before HSAs or HRAs had entered the vernacular. At first, few employees got onboard, says Human Resource Manager Lia Thompson, but as word spread, the new plan flourished. The old preferred-provider plan was discontinued in 2003.

Thompson and Bivainis point to wellness and prevention as key components to the success of consumerdriven plans, most of which offer things such as yearly physicals that do not require employees to draw from their accounts.

Louisiana's eagerness to move to HSAs is due in large part to its business demographics. The state's economy is dominated by small and medium-sized firms, the kind bestserved by consumer-driven plans. Large companies have greater negotiating leverage to hold down the rates they are charged, so they have less to gain by going consumer-driven.

Meanwhile, the rest of the country lags. The Mercer survey found only 2% of businesses with 10 to 50 employees offered HSAs, even though those are the firms with the most to gain. Of all employees, just 1% have consumer-driven plans.

A look at Capital Valve and Fitting demonstrates, at least in part, why this lag exists. Although Brock adamantly supports consumer-driven plans, his firm still offers only traditional coverage.

Brock says his company's priority in choosing benefit plans is maintaining the status quo. When providers proposed prohibitive premium increases, the company would switched providers rather than go to consumerdriven. Brock's company was wary of confusing or angering employees, who are comfortable with traditional health plans.

But he says another steep increase will likely lead to a shift to an HSA, regardless of whether it is warmly embraced by employees.