Kaiser Permanente, one of the oldest and largest HMOs, is going to offer PPOs, high deductible plans, and plans with Health Savings Accounts. This marks a significant change by the big HMO, one that at first seems odd.
But from a business perspective it makes a lot of sense, for two reasons
Adverse selection – Kaiser (KP) is afflicted with the bane of the health insurer, an older and aging population. Over 800,000 members are over 65, and over 55,000 are over 85.
The over-65 population represents fully 10% of all members, and that percentage is growing. To balance the higher risks, and higher costs, generated by the older folks, KP needs to get more young, healthy people to sign up. Their lower expected costs will help subsidize the older folks’ higher costs (which run 30% greater than average member expenses), thereby keeping KP financially viable.
Mission – KP’s mission is to provide access to care and take care of people. With prices on even their lowest-cost plans above $6000 for a family in California, Kaiser found more and more people simply could not afford coverage.
The high deductible plans are less expensive, are more attractive to younger individuals and families, and will also help introduce these customers to the HMO. And once people get into Kaiser, most are quite satisfied.
If they weren’t, KP wouldn’t be so worried about attracting younger members to offset their older loyal members’ health costs.
Congratuations Kaiser! Unlike many who think that high deductible plans are only attractive to the healthy and wealthy, Kaiser understands that affordability matters. Even for people who can’t really quite afford the high deductible, the peace of mind that comes from knowing that you and your family are protected if you suffer a catastrophic medical event is worth a lot. Indeed, a significant percentage of CDHP and HSA buyers were previously uninsured.
This is a little off topic, but do you have any views as to the impact of drugstores starting to have on-site clinics staffed by an RN and a PA on the HC system? I have to believe that there are an awful lot of Dr. visits that could be eliminated, and perhaps a fair number of ER visits….
I’m not sure about the drugstores but I did just hear over the weekend that Concentra is entertaining the idea of opening clinics in the WalMart stores, which would go along way towards cutting down the number of ER visits in many communities.