Many questions on health costs
November 14, 2014
Managing rising health care costs throughout Pitkin County is a paramount issue with many local employers, but finding ways to cut costs while still providing a high level of care hasn't been easy.
That's why the Aspen Chamber Resort Association, Aspen Valley Hospital and the Valley Health Alliance put on a program Wednesday where they identified some key health care cost issues but admitted that the answers were still coming.
Speakers included Pitkin County Manager Jon Peacock, Aspen Valley Hospital Chief Financial Officer Terry Collins and Valley Health Alliance Executive Director Kathleen Killion.
Like many of the people who attended the program, Peacock spoke from the perspective of an employer who provides health benefits and discussed affordability of and accessibility to health care.
Peacock has been county manager for four years, and in that time, he's seen the county spend close to seven times more on health care for employees than on core functions, like fixing road infrastructure. That wasn't problematic, Peacock said, as he felt it's the right thing to do for employees, but what really caught Peacock's attention was the amount that health care was increasing per year.
"We were seeing those costs increase by double digits," he said. "Our revenues were going up maybe 2 to 4 percent, but we saw our health-plan costs increasing by 10 percent or more."
Recommended Stories For You
Peacock said the traditional ways to address the rising costs are to look at reducing benefits, cutting services and increasing deductibles.
"We do what we can to try and contain costs," Peacock said. "That means we're putting more responsibility on our employees to fund their health care. We did not sit down with our providers or necessarily with our employees to talk about this. That led to us having a discussion, starting with Aspen Valley Hospital, to find out if there's different ways for us to talk about health care costs for employers. The hospital thinks there is, but they don't have the answer yet. That led to us forming the Valley Health Alliance."
The Valley Health Alliance consists of the area's five largest self-insured employers: Pitkin County government, city of Aspen government, the Aspen School District, Aspen Skiing Co. and Aspen Valley Hospital. Collectively, the entities represent about 4,300 workers.
The alliance seeks to help the five employers find better ways to manage the rising cost of health insurance, with a goal that centers around its so-called "triple aim" to improve health care quality and the overall patient experience, to reduce cost per capita for health care services and to improve overall health through population health-management efforts.
"If we just do those things, how hard can it be?" Peacock asked. "Well, we found out it's actually pretty hard. There are really only two elements that drive health care costs: how much a service costs and how much you consume. So there's two things we're looking at as a health care alliance, and that's how to reduce the amount of health care we're consuming and how can we have a healthier population."
Collins provided an in-depth look at the pricing side to the health care equation. He explained how most hospitals charge different rates for similar functions and broke down how those costs come about.
He gave an example of how someone having a natural baby delivery could see two very different costs, depending on a few key elements, like how many minutes were spent in the operating room, how many drugs the patient had to use, whether anesthesia was used and whether there was an overnight stay.
"It would be very possible to have two healthy babies delivered on the same day with very different charges," Collins said. "The difference between a $4,000 delivery and an $8,000 delivery depends on those factors."
Collins also explained the discrepancies he found within the insurance exchanges, which are set up to give people a place to shop for affordable insurance. In Colorado, there were 11 regions created, which are conglomerations of counties. Pitkin County is in Region 11 along with Garfield, Summit and Eagle counties.
Region 11 has the highest premiums of any region. Collins did some further analysis and found premium numbers and rates didn't match up with the numbers provided by the Center for Improving Value in Health Care.
"These kinds of databases are not helping us," Collins said. "I found some of these databases disturbing."
Killion talked about the research she's done specifically within the Aspen area on how to identify "red flags" while looking for opportunities to improve health coverage. She pointed out that many people access their health care through emergency-room visits, which is more expensive, rather than going through a primary physician.
"We're looking at how we can tighten up the reins," Killion said. "We're really focused on evidence-based results and not just doing things because that's the way we've done it for 15 years. We're looking at how we connect individuals with primary care and also working with employers on benefit design. We're really asking: How do we incent individuals to change behavior? Changing the culture in any organization is challenging."
Peacock said that at the county level, there would likely be a move toward high-deductible health plans.
"One of the key elements we see coming from the Affordable Care Act that will impact employers is the excise tax that kicks in in 2018," he said. "It's a 40 percent fee on every dollar over a certain plan threshold. If that tax were in place today, it would add between $850,000 and $900,000 onto our $3 million-plus plan. It's really an incentive to create more consumer-driven health care models where, in theory, consumers make better health care decisions."
Peacock reiterated that the goal Wednesday was to present the challenges facing employers and individuals with health care costs.
"If you came here seeking solutions, we should have apologized up front and told you we don't necessarily have those right now," Peacock said. "But it's important for us, as a community, to be engaged in the complexity of this."