D-H Tweaks Health Plans To Cut Costs
Employee Premiums to Rise, As Will Out-of-Pocket Price
Lebanon — The health benefits offered to Dartmouth-Hitchcock employees are going to be a little less “rich” as the region’s largest employer tries to cut costs and avoid a tax under the Affordable Care Act.
Starting next year, employees will share more of the burden for coverage, with their contributions rising an average of 3 percent, according to a brochure that went out to employees this week. Also, Dartmouth-Hitchcock is encouraging more of its employees to stay within the system for their own care, while smokers will pay more for coverage and prescription drug benefits will change.
Nearly 7,000 employees are insured through Dartmouth-Hitchcock health plans.
Dartmouth-Hitchcock will continue to cover most of the cost of the health plans offered, but in shifting more of the cost to employees, the organization is trying to curb spending and avoid the so-called “Cadillac tax” that will go into effect in 2018 under the federal health reform law known as Obamacare. That tax penalty would come to an estimated $3 million, according to Gregg Meyer, executive vice president of population health at Dartmouth-Hitchcock.
“We believe that we ought to get on a pathway over several years which will get us to a point where we can provide the best benefits possible for our employees and their dependents while at the same time avoiding that excise tax, because we think that there are a lot of other things that we would like to use that $3 million for,” Meyer said in an interview Thursday.
The Cadillac tax has been among the more controversial parts of the 2010 health reform law. Proponents argue that benefit-rich plans insulate workers from the high cost of care and encourage patients to order unnecessary tests and visit the hospital too often, driving up U.S. health care spending, according to a recent report by the Robert Wood Johnson Foundation. But detractors have said that health coverage may become more expensive because of Obamacare and subject to the tax for reasons other than generous benefits.
Starting in 2018, health plans that are considered too generous will be subject to a 40 percent tax for every dollar that they exceed a pre-established cap on health spending. The annual limit is $10,200 for individual coverage and $27,500 for family coverage, according to the foundation’s report.
By those standards, Dartmouth-Hitchcock offers health insurance that would be considered too rich. So, employees will share more of the burden in the future. The $500 deducible plan will become a $750 deductible plan, and then be discontinued in 2015, the brochure said. Also, the $1,300 deductible plan is going up to $1,400 next year. Out-of-pocket maximums will also rise.
Like any employer, Dartmouth-Hitchcock is trying to control spending on health insurance, Meyer said. Costs to provide health coverage to Dartmouth-Hitchcock employees next year are expected to rise 3 percent, according to the brochure. Employee health claims at Dartmouth-Hitchcock are expected to top $87 million next year and in order to “keep our health costs affordable, it is important that we all take responsibility for our own health,” the brochure said.
“ We’re looking at our health care costs. We’re no different,” Meyer said. “One of the other drivers (of the benefits change) is for us to say, ‘What are the means by which we can provide a great benefit to our employees and their dependents and at the same time to be good stewards of our costs?’ Because we’ve seen our costs go up just like everyone else.”
Dartmouth-Hitchcock also is encouraging employees to get prescription drugs via mail-order and wants employees to seek their primary care within the Dartmouth-Hitchcock system rather than go to other providers. When an employee gets care outside of the system, Dartmouth-Hitchcock loses twice, Meyer said, because the money it is paying to cover that person is going to another provider. Dartmouth-Hitchcock wants its employees to be its patients, too, and so is expanding services in its top-tiered “D-H preferred network,” which favors Dartmouth-Hitchcock providers.
“We believe that we offer very high quality care and we think we have the data to back that up and we provide that care efficiently, as well,” Meyer said. “And we believe it is in the interest of our employees to get their care within the D-H system whenever possible.”
If an employee or their dependent covered in the preferred network is traveling outside the region and has a health care emergency, then they would be held harmless if they had to go to another doctor, Meyer said. No one is being forced to take a certain plan or change physicians, he said, and there are a handful of non-D-H providers included in the preferred network, including White River Family Practice and New London Hospital.
To accommodate additional primary care patients in the system, Dartmouth-Hitchcock is scheduling evening appointments, expanding hours on the weekends and connecting patients with a team of providers, including nurse practitioners and physician assistants, so that it doesn’t have to hire more primary care doctors , Meyer said. It is also using technology so that patients can connect with providers online in “virtual visits.”
On top of these changes, smokers will have to pay a little more than everyone else next year. Employees and their covered dependents who use tobacco will pay $15 extra on their premiums per pay period. The $15 “tobacco use premium” will be removed within two payroll periods if the person stops smoking or completes a free tobacco cessation program.
The intention is not to collect more money, but rather to encourage healthier workers, Meyer said.
“Nothing would make me more delighted than to never collect a nickle on that,” Meyer said.
More information on the benefits changes will be distributed over the coming month, said Aimee Gilio, director of benefits. Nearly 100 information sessions will be held with employees between now and Nov. 4 at Dartmouth-Hitchcock sites around the Twin States, Gilio said.
Chris Fleisher can be reached at 603-727-3229 or firstname.lastname@example.org.