The coming year may be a year the private health coverage market looks about the way it looked in 2007, but with higher costs and more campaign speeches.
For the past few years, the big question about the health insurance market has been whether "consumer-driven" health plans that combine high-deductible health coverage with health savings accounts or health reimbursement arrangements would bring about a revolution.
The question is still open.
About 37% of large and midsize employers now offer HSA plans or other health account plans, up from 28% in 2006, according the consulting arm of Aon Corp., Chicago, and the International Society of Certified Employee Benefit Specialists, Brookfield, Wis.
Employee uptake has increased more slowly. The Henry J. Kaiser Family Foundation, Menlo Park, N.J., and the Health Research & Educational Trust, Washington, found when they surveyed employers that the percentage of group plan members actually enrolled in health account plans increased to 5% in 2007, from 4% in 2006.
Efforts to measure the effects of HSAs and HRAs show that health account plans have had some success at holding down increases in medical costs.
Health account plan medical costs will increase about 7.4% in 2008, compared with an increase of about 11% in 2007, while preferred provider organization plan costs will increase about 9.9%, down from a 2007 increase of about 12%, according to analysts in the New York office of PricewaterhouseCoopers L.L.C.
CIGNA HealthCare, Bloomfield, Conn., a unit of CIGNA Corp., Philadelphia, says its own experience suggests that well-designed health account plans cut the annual increase in underlying medical costs about 12% in the first year and 5% in the second year the plans are in effect.
Some experts say health account plans are having less of an effect on costs than they could because of factors such as patient confusion.
Only 50% of health account plan members say they are satisfied or very satisfied with the ability of their current plans to protect them against the risk of major health care costs, compared with 65% of the tradition plan members, according to Towers Perrin Inc., Stamford, Conn.
Although more than 70% of the satisfied health account plan members say their plans are easy to understand and use, only 16% of the dissatisfied health account plan members say they understand their plans.
Despite the growing pains in the health account plan market, rising small group coverage costs are keeping small employers from adding health benefits as frequently as they used to, and that shift will continue to send workers into the individual health market in 2008, says Jeffrey Smedsrud, a senior vice president at Independence Holding Company, Stamford, Conn.
"I don't really see anything stopping that trend over the next many years," he says.
In place of traditional "major medical" plans, many employers probably will shift to offering narrower, higher-deductible "moderate medical" plans, and that means that even employees who continue to have group coverage will be looking for employee-paid supplemental products that can help pay deductibles, co-payments and other costs not covered by employer plans.
In this kind of changing environment, at a time websites can handle simple coverage sales, health insurance producers "need to be more than just a warehouse for pricing data," Smedsrud says.
Other forces that could rattle the U.S. health insurance market in 2008 include the presidential and congressional campaigns and interest in Massachusetts' "universal health" program.
Democrats, Independents and Republicans all list Iraq as the issue they most want to hear candidates talk about and health care as the issue they are second most interested in hearing about, according to the Kaiser Family Foundation.
