HEALTH

Decoding Health Reform 2.0

BY Rob Eder

As I write this column, it’s the final Super Tuesday primaries in eight states, including here in New York, before the big mid-term elections in November. And if the Sunday morning news shows are right, the Democrats are in for a spanking. Given the present state of the economy, the stagnant job market and the American electorate’s need to find someone to blame, it’s really kind of inevitable.

Certainly, health reform hasn’t proven to be the societal glue keeping the country together that many in Washington had hoped it might be. More and more the polls indicate that Americans are unsure of what ObamaCare really means for them—whether it means less or more for people who already have health care. An August Kaiser Health survey found that 43% of Americans still had a favorable view of the health-reform act; 45% had an unfavorable view.

I have been fairly certain that the Patient Protection and Affordable Care Act of 2010 would morph and evolve into something quite different from its present form long before we have reached the official implementation date in 2014. While HHS, CMS, the GAO and every other fancy acronym that interprets the laws Congress writes and the President signs figures out how to take the massive piece of legislation from words to action over the next few years, the shift in power this November will feed something I have called Health Reform 2.0.

To be sure, it will be called something else, something MUCH longer by the time it becomes law. And while I can’t predict everything the new version will contain, I am certain it will favor the use of more private sector-driven solutions—like retail clinics.

The introduction of a Senate resolution in late July designating the first week of August as National Convenient Care Clinic Week is a good sign that the ladies and gentlemen on the Hill are aware of the important role clinics will play in the future.

I also believe that Health Reform 2.0 will reintroduce eligibility for tax deductions for over-the-counter purchases under flexible spending accounts. Why? Because eliminating OTC eligibility from FSA plans stands in diametric opposition to the overarching spirit of health reform.

Under the old rules, depending upon what tax bracket you were in, you could save anywhere from 15% to 20% on every healthcare dollar spent by allocating a certain amount of pre-tax dollars to an FSA each year—including most OTC remedies. Under ObamaCare, OTC eligibility has been scrubbed from FSA plans to help pay for the total cost of the plan.

But eliminating OTC eligibility from FSA plans will drive up total out-of-pocket costs for millions of Americans who have come to rely on the exemption to make health care more affordable. According to the Bureau of Labor Statistics, as of March 2007, 33% of American workers who worked for companies with 10 or more employees participated in FSA programs.

This is precisely the kind of thing Americans don’t like about ObamaCare. But it is a relatively easy thing to undo.

In 2003, the Republicans took the Clinton White House’s vision for universal health care and turned it into the Medicare Modernization Act of 2003, creating the Part D drug benefit. It isn’t perfect, but it is an example of a market-based solution that has helped make the cost of healthcare more manageable for the average senior.

Maybe that’s the new definition of bipartisanship: the Democrats made health reform an issue; now it’s up to the Republicans to figure out how to pay for it.

Either way, I believe Health Reform 2.0 will favor more private-sector solutions that incentivize consumers to make smarter, more cost-efficient healthcare purchasing decisions that save real dollars for patients and payers. Kind of the way it worked when you could use tax-free dollars to pay for your OTC purchases if you were on an FSA plan.

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GNC to sell branded retail, food-service equipment

BY Allison Cerra

LOS ANGELES General Nutrition Centers has inked a deal to sell its retail and food-service equipment with the help of IMG Licensing and The Legacy Cos.

IMG’s licensing agreement for GNC with The Legacy Cos. will give way to the creation of GNC-branded products, such as blenders and juicers, which will be distributed in the company’s stores. The products will retail from $150 to $400, IMG said.

The agreement will run through 2015.

“GNC has set the standard as an industry leader in the nutritional supplement business and is truly dedicated to helping its customers improve health and quality of life. Teaming up with The Legacy Cos. to expand its brand and create this new and exciting product line will continue to solidify GNC’s brand and its commitment to providing exceptional products and services to consumers,” said Tim Rothwell, IMG EVP and co-managing director of worldwide licensing.

Added GNC EVP Tom Dowd, “GNC is very excited to partner with a high-quality manufacturer that can produce a variety of products that complement the healthy lifestyle of our customers.”

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Drug stores’ success relies on customer service

BY Jim Frederick

WHAT IT MEANS AND WHY IT’S IMPORTANT In the never-ending battle for customer loyalty, independents rule and service is still king.

(THE NEWS: J.D. Power and Associates’ pharmacy study addresses cost, customer service. For the full story, click here)

The latest national customer satisfaction survey from J.D. Power and Associates showed that personalized, above-and-beyond service still outweighs price for a majority of consumers — even in a dour economy beset by economic uncertainty and joblessness. A majority of the more than 12,300 pharmacy customers polled by the big research firm in May and June of this year gave their highest satisfaction scores to pharmacists that took more time to answer their questions, help them find over-the-counter medicines and, perhaps, even remembered their names and family situations.

This, despite the growing cost sensitivity among Americans about the prices of their medicines and the out-of-pocket expenses they incurred at the pharmacy counter. As Jim Dougherty, J.D. Power’s director of the healthcare practice, put it in a conference call to discuss the survey results, “Pharmacies that are focused on service garner the highest levels of satisfaction … even in an environment where cost has become increasingly important.”

That’s good news for small-scale, owner-operated independent pharmacies. It’s also good news for the Big Three drug wholesale giants that operate the major networks of independents, franchised and otherwise, that scored the top results.

Again this year, survey respondents ranked independents tops in overall satisfaction. Customers gave their highest scores to Good Neighbor Pharmacy, the huge network of some 3,700 independents that operate under the buying, merchandising and store-support umbrella provided by distribution and health services giant AmerisourceBergen. The two largest groups of independent-owned franchises, McKesson’s Health Mart and Cardinal Health’s Medicine Shoppe Pharmacy, ranked second and third, respectively, in the poll.

Among mass merchants, Target’s pharmacy operation got highest satisfcation marks for the fourth year in a row, while Publix rated tops among supermarket pharmacies.

Efforts to give the best possible service pay off, both in additional revenues and in measurable customer loyalty. Highly satisfied customers can bring in an additional $227 each year in prescription business, researchers found. What’s more, J.D. Power reported, “brick-and-mortar pharmacy customers who are highly satisfied … are more than three times more likely to say they ‘definitely will’ return to their pharmacy and 10 times more likely to say they ‘definitely will’ recommend their pharmacy to others, compared to customers with low satisfaction levels.”

That’s a lot of free word-of-mouth advertising.

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