Friday, July 29, 2011

What is Consumer Driven Healthcare? Why should you care?

Last week I wrote about the value of a health benefit plan for employees. Most people who responded to our survey voted that they would not trade their employer paid plan for $10,000 in cash. That implies that people value the “protection” part of their plan, above and beyond it just paying for their routine dental appointments.

Canadians have much to appreciate about our healthcare delivery system. Primary care in a hospital or a doctor’s office is generally covered by a provincial health plan. While you may need to wait to visit a specialist, you will not be presented with a bill at the end of your visit. In the US, the system is very different. Employers can pay upwards of $15,000 per employee for family coverage. Even then, the employee or patient may be faced with a large bill at the end of a hospital stay. That is all changing…

 In 2003, the US passed legislation allowing Americans to set money aside in a Health Savings Account (HSA) that is paired with insurance. The insurance was inexpensive relative to what was traditionally being offered and it also had a deductible. The user spends the deposits in the Health Savings Account (HSA) to satisfy the deductible and the insurance portion kicks in if you become very sick.

Coverage in sickness and in health!

Since you are spending your own dollars on health; you are motivated to stay healthy. This is changing behavior. People are spending money to maintain their health. They are also becoming more informed consumers. Comparison shopping and health outcomes are now being scrutinized by consumers; thus the handle Consumer Driven Healthcare. HSAs have been so successful in the US that they are now the fastest growing product in financial services industry; and that growth is continuing! In 2010, growth of these plans amongst firms with >1000 employees was 34%. In Canada, many large employers offer a traditional defined health benefit plan, using the HSA as a sweetener or add-on.

As the positive US experience spills up to Canada, more and more employers will start to offer the Health Spending Account as a standalone benefit plan because employees will request it.

Friday, July 22, 2011

What is a Health Benefit Plan worth to you?


Many Canadians have health benefit coverage through their employer which covers services such as dental, vision care and prescription drugs. The employer wants a healthy and effective workforce and is therefore willing to provide coverage for their employees. The employees appreciate the coverage in a defined health benefit plan and feel protected and secure knowing that their families are covered.


In fact according to the sanofi-aventis 2011 Healthcare Survey, 65% of Canadian employees think of their health plan as a strong incentive to stay with their current employer. When offered a choice between taking cash or a having a company sponsored benefit plan, 59% said they would choose a benefit plan over $10,000 in cash! So peace of mind is very important to Canadians.

What if you were able to have peace of mind and choice? You can have just that with a Health Spending Account (HSA) coupled with insurance protection. Your HSA pays for routine medical expenses using pre-tax dollars. You also use those same pre-tax dollars to purchase a low-premium insurance add-on. Providing you with the ability to afford many treatments of your choice and decide when you want to receive them.

With a lower premium, you are able to use the funds in your Health Spending Account to pay for the expenses up to the insurance deductible. Instead of having your employer decide how frequently you should be eligible for new eyeglasses or how much you should spend on each massage or chiropractic visit; you decide…..after all, it is your money!

Health Spending Accounts cover a wide-range of qualified medical expenses and can be the most efficient way for you to receive health benefits from your employer.
Protection + Choice = Healthy, Engaged Employees!

Friday, July 15, 2011

Why are health benefits not like insurance?

Insurance is supposed to be for unpredictable, catastrophic events. The concept is simple: many people pay a small amount for the protection against the “risk” of an event they hope will never happen to them. The cost of the protection is relatively small, so you don’t mind paying. You should never get “value” from this protection as it is intangible. You hope the event doesn’t happen and you never want to make a claim because your protection or premium will go up in price.

We all seem to understand this concept when it comes to our cars. You avoid making claims because your premium will rise and you want to have as high a deductible as you can afford. You know your car insurance won’t cover your regular car maintenance such as an oil change.


You would never insure your house when it is already burning partly because nobody would accept the “risk” even though it is already a known or predictable event. So how come this understanding has never been applied to health benefits? Why would you want to insure teeth cleaning? It is not risky and it is very predictable. If you do pay a premium for this “risk”, I can guarantee that it will be very expensive relative to the cost of the service. Why don’t you have a deductible for your health expenses and have protection or insurance for unexpected and high cost items? That is much more economical and allows you to decide how to spend more of your health dollars. That is what health spending accounts do best!

Friday, July 8, 2011

Why do Canadians believe “healthcare is free”?

This seems to be a common perception. All Americans and even most Canadians are aware that in the United States the hospital or your doctor sends you a bill after each and every visit. However Canadians have many healthcare services dispensed without having to pay for them on the spot. So the perception is that the service was free. Nothing could be farther from the truth! We are ALL paying for our healthcare. We pay through our taxes (EHT), we pay through our employers who often fund supplemental health benefit plans and we pay out of pocket through our after tax dollars. The problem with the perception of free healthcare is that we consume at will because we have no idea of the value of the services we use. I would never suggest you don’t go to the emergency room to “save your province money “but I would ask you to consider how you consume and why.


Most employer health benefit plans have a defined schedule of benefits. As an employee, you derive value from the plan by making claims without consideration of the cost. After all, you are entitled to the benefits. If you need a chiro visit- you should have it. But if you are buying new glasses which you don’t need simply because your plan offers you new glasses every two years, then you are contributing to the rising cost of your plan. There is a tendency to assume that you lose it if you don’t use it. The more that each plan member uses the plan the higher the premiums will be. Having a more flexible plan will allow employee’s to use the money for the services that their families actually use and allows employers to have more predictable costs. There are choices and options!

Your health benefit plan is considered part of your total compensation by your employer. Wouldn’t you like to have some influence on this important part of your compensation? After all, you are paying for it!