Election year brings focus on health care.

Americans are worried about health care in a big way. In recent Kaiser Health Tracking Polls, registered voters ranked health care third, behind the economy and Iraq, as the issues they most wanted the presidential candidates to discuss. Forty-two percent report that in the last year they or a family member encountered problems accessing health care due to cost. Sixty-six percent of those report their medical condition got worse as a result.

With the presidential race down to two candidates, Americans are examining how Senators Barack Obama and John McCain would reform health care. McCain's plan provides for universal access to health insurance but is against mandates requiring coverage for everyone. McCain's plan supports a market-based approach with individual choice and purchasing pools. Obama's plan mandates that all children are covered and provides for a "play or pay" mandate for employers. The play or pay approach requires employers to provide insurance or contribute to the cost.

Both plans incorporate tax changes. Obama's includes a federal subsidy to employers for catastrophic costs, income-based tax subsidies for purchasing coverage, and a limited subsidy for small employers. McCain's plan provides for tax credits ($2,500 individual/$5,000 families) for purchasing insurance, eliminating the employer tax exemption, and additional tax incentives, such as depositing excess tax credits to health savings accounts.

Obama's plan would allow state reforms as long as they meet the minimum standards of the national plan. McCain's plan allows states flexibility in Medicaid and encourages the development of innovative, multiyear insurance products. In California, 2007 saw a flurry of health care reform initiatives. From the Governor's Plan to four other major proposals, the efforts to expand health coverage stalled in January of this year. Governor Schwarzenegger promised not to give up on health care reform in California, stating, "One setback is just that--a setback. I still believe comprehensive health care reform is needed in California."

So while the political discussions move forward, let's take a closer look at health care in San Diego. To review our health care environment, it is helpful to understand two basic health care cost management choices: supply and demand. Managed care and HMOs provide supply-side management of health care costs through controls, such as gatekeepers, outcomes management, prescription formularies, utilization review and medical necessity. Demand-side management is driven by the insured. Often labeled "consumerism," the level of health care utilization depends on the choices made by the insured. Those choices may be influenced by financial reasons, rewards for compliance or information that encourages healthy decisions, frequently called transparency.

Unlike most of the country, Southern California still has a strong HMO environment. In San Diego, the top eight HMOs (in terms of the number of enrollees) show nearly 1.3 million members, 41 percent of the estimated San Diego population.

According to Ed Johnson, managing director at Anthem/Blue Cross, "San Diego members are still focused on the bottom line, their economic needs. They still want low co-pays and rich benefits."

San Diego's two largest providers of care, Sharp HealthCare and Scripps, have a critical influence on the delivery of health care. Sharp continues to support capitation, a fixed payment paid per member per month to the provider. Scripps, on the other hand, terminated its capitation contracts with insurance carriers and operates only on a fee-for-service basis. The impact forced insurance carriers to rethink how they delivered health care benefits in San Diego. Carriers offer companies employer-sponsored health plans with the option to offer employees side-by-side health plans--one with Scripps in its network and another, less costly plan, without Scripps in the network. Both Anthem/Blue Cross and Aetna have reported an increased interest in offering the "limited" or "concentric" network.

Although the supply-side management of HMOs may have waned in other parts of the country, it still plays a key role in San Diego. The trend toward demand-side management is a shift from the HMO growth of the 1980s that placed focus on provider behavior to focus now on the consumer. There is an economic objective to control rising health care costs, but also an equally important goal to improve access and quality of care. The key to success is engaging the consumer to affect behavioral change. This is a shift in thinking of heath care as an expense to looking at it as an investment. The trend toward health promotion, including wellness programs, health risk assessments, and lifestyle and disease management programs, is receiving greater attention.

Mike Giar, market head of sales and service at Aetna explains, "Wellness is not a product--it's a strategic approach that needs to engage the population in lifestyle changes."

Our current system manages disease. You get sick; the insurance carrier pays your claim. Instead of managing disease, the trend is moving toward managing health. Dr. Walter Willett, Harvard School of Public Health, has stated that better lifestyle habits can help prevent 80 percent of heart disease and 90 percent of type-2 diabetes.

According to the Centers for Disease Control, "chronic diseases--such as cardiovascular disease (primarily heart disease and stroke), cancer, and diabetes--are among the most prevalent, costly and preventable of all health problems."

However, only three percent of health care is spent on prevention. The CDC notes that 75 percent of total health care costs are spent to treat 45 percent of Americans who have at least one chronic condition.

Federal and state wellness initiatives recognize this trend toward managing health. Proposed legislation provides tax credits to employers that provide qualified wellness programs. For example, the Personal Health Investment Today Act of 2007 (H.R. 245) would allow the purchase of exercise equipment or participation in a fitness program to be qualified as tax-deductible "medical care" expenses. If enacted, it could allow reimbursement under flexible spending accounts, health savings accounts and health reimbursement arrangements. In California, legislation is pending that would require employers seeking to do business with the state to provide their California employees with wellness benefits (such as gym memberships). Both plans for the presidential candidates include provisions to invest in preventive care and improve the quality of care.

The economic trends in health care continue to receive national, state and local attention. The supply-side management of managed care and HMOs are still viable in San Diego. The trend, however, toward managing health and providing the consumer with the tools and education to make better choices, as well as providing incentives for positive behavioral change, should certainly be explored.

An advertorial submitted by Intercare Insurance Solutions, an employee benefits brokerage and consulting firm. Mike Barone is president of Intercare Insurance Solutions and Cathy Miller is the company's marketing manager.

For more information, please visit www.intercaresolutions.com.