New Fronts in the Health Care Conundrum

As Congress reconvenes after the July 4 recess, the health care spotlight again shines on the continuing struggle to tweak Medicare in various ways, including reducing payments to doctors. If the proposed 10 percent drop in physician payments stands (a bill backed by the American Medical Association that would have prevented the cuts was blocked last week) some fear that physicians would be disinclined to take on new Medicare patients as baby boomers are nearing Medicare eligibility.

Lack of access to health care can keep baby boomers in their jobs at a time when their employers would like to replace them with less expensive, younger workers. Many companies have stopped offering health benefits to early retirees but retiree health coverage is back on the plate at dozens of large businesses. According to a Business Week report, large employers are banding together to help retirees pre-and post-age 65 purchase insurance at discounted group rates. Under the Retiree Health Access (RHA) plan, which is sponsored by major insurance companies, employers aren't required to subsidize coverage, but the majority of them do so because employer contributions are likely to help keep premiums in check so workers may better afford to accept early retirement offers. According to the report, just how affordable the benefits will be is still unknown.

Other programs similar to RHA have sprung up. If the insurance companies behind these plans see strong business results, the plans also could become viable options for mid-size employers that are trying to provide good health coverage for both retirees and current employees as the health care landscape undergoes constant change. For example, physicians are adopting new business models that are adding to health care complexity. A growing number of primary care doctors in certain geographical areas have embraced the "concierge model," in which patients must pay a substantial annual fee for access to a doctor in addition to normal charges for services. According to Tom Lerche, Aon Consulting's Health Care practice leader, this phenomenon is limited so far to pockets on the east and west coasts. Lerche doesn't believe this will become a national issue. But corporate benefits managers in companies with large employee populations in those regions should keep the issue on their radar.