Consumer-Driven Health Plans Have Yet to Gain Momentum

WASHINGTON – Consumer-driven health care plans have yet to catch on with most patients.

These high-deductible spending accounts were designed to empower patients to make informed choices about their health care and provide them with more options regarding providers and treatments.

The large deductibles in consumer-driven plans may be too burdensome for some people to handle, Paul Ginsburg, Ph.D., said at a meeting sponsored by the Alliance for Health Reform. “People are going to go into debt. Some are going to declare bankruptcy because of the burdens of paying for medical care under this different benefits structure.

“What if it just causes a barrier to people getting care that they really need?” asked Dr. Ginsburg, president of the Center for Studying Health System Change (HSC). In his opinion, these problems are going to limit the extent to which these plans can be used.

Enrollment in consumer-directed health plans continues to grow steadily, but it remains “a tiny fraction” of all employer-sponsored coverage, according to a study in the journal HSR: Health Services Research. Dr. Arnold Milstein of Mercer Human Resource Consulting and Meredith Rosenthal, Ph.D., assistant professor of health economics and policy at the Harvard School of Public Health, found that patients in consumer-directed plans were more likely to enroll in tiered-benefit model plans or networks than in employer-funded health reimbursement accounts.

Tiered plans, which categorize hospitals or physician groups by price and quality and assign lower premiums or cost-sharing to patients who opt for a preferred tier, may offer more flexibility and choice to consumers.

But as an HSC study indicated, employers seem to have doubts about the cost-saving value of any of these plans. In site visits to 12 nationally representative metropolitan communities, HSC found that few of the employers in these areas planned to adopt consumer-driven plans or tiered provider networks. One employer surveyed said that 70% of the firm's covered employees had health care costs of less than $1,000 per year. Giving workers a $1,000 spending account would encourage workers to use more services and raise costs, the employer estimated.

The biggest concern employers have about tiered plans “is that most of the tiering is occurring on cost information–not quality,” HSC spokeswoman Alwyn Cassil told this newspaper. “Employers need more evidence that the tiering is going to result in their workers being cared for by high quality, lower cost providers.”

One type of consumer-driven plan, health savings accounts (HSAs), does seem to be gaining popularity. America's Health Insurance Plans, an industry group, surveyed 500 privately insured individuals and found that 71% said they had a favorable opinion of HSAs as a new approach to financing health care.

HSAs combine individually owned savings accounts with traditional medical insurance, giving patients the opportunity to use tax-free funds to pay for routine medical bills. Under the Medicare Modernization Act, the plans must be established in combination with insurance coverage through a qualifying high-deductible health plan. Many consumers lack details about how the plans work, the survey said. But when educated about HSAs, most consumers react positively to the opportunity to play a more active role in seeking health care coverage, according to America's Health Insurance Plans' president and CEO, Karen Ignagni.

Consumers specifically favor the rollover of unused balances and the tax-free nature of the accounts, the survey said.

The problem with HSAs is “there's no flexibility for employers or insurers to design products,” because they have such a rigid structure, Ms. Cassil said, adding that concerns also exist that a low-income person might not have the money to invest in these accounts.

To use consumer-driven plans and other patient cost sharing tools more effectively, “we have to think of ways to refine it,” Dr. Ginsburg said.

One type of incentive for the patient would be to choose more efficient providers. As an example, “you could pay more if go to an inefficient provider or pay less if you go to efficient providers.” In the same line of thinking, a plan could employ incentives to use more effective treatments, such as higher cost sharing for treatments that are more discretionary, “that are seen as luxuries,” he said.

Consumer-driven plans shouldn't be the sole solution for medical care. Technology assessments, effectiveness research, information technology, and innovation in provider payments are also needed, Dr. Ginsburg said.

WASHINGTON – Consumer-driven health care plans have yet to catch on with most patients.

These high-deductible spending accounts were designed to empower patients to make informed choices about their health care and provide them with more options regarding providers and treatments.

The large deductibles in consumer-driven plans may be too burdensome for some people to handle, Paul Ginsburg, Ph.D., said at a meeting sponsored by the Alliance for Health Reform. “People are going to go into debt. Some are going to declare bankruptcy because of the burdens of paying for medical care under this different benefits structure.

“What if it just causes a barrier to people getting care that they really need?” asked Dr. Ginsburg, president of the Center for Studying Health System Change (HSC). In his opinion, these problems are going to limit the extent to which these plans can be used.

Enrollment in consumer-directed health plans continues to grow steadily, but it remains “a tiny fraction” of all employer-sponsored coverage, according to a study in the journal HSR: Health Services Research. Dr. Arnold Milstein of Mercer Human Resource Consulting and Meredith Rosenthal, Ph.D., assistant professor of health economics and policy at the Harvard School of Public Health, found that patients in consumer-directed plans were more likely to enroll in tiered-benefit model plans or networks than in employer-funded health reimbursement accounts.

Tiered plans, which categorize hospitals or physician groups by price and quality and assign lower premiums or cost-sharing to patients who opt for a preferred tier, may offer more flexibility and choice to consumers.

But as an HSC study indicated, employers seem to have doubts about the cost-saving value of any of these plans. In site visits to 12 nationally representative metropolitan communities, HSC found that few of the employers in these areas planned to adopt consumer-driven plans or tiered provider networks. One employer surveyed said that 70% of the firm's covered employees had health care costs of less than $1,000 per year. Giving workers a $1,000 spending account would encourage workers to use more services and raise costs, the employer estimated.

The biggest concern employers have about tiered plans “is that most of the tiering is occurring on cost information–not quality,” HSC spokeswoman Alwyn Cassil told this newspaper. “Employers need more evidence that the tiering is going to result in their workers being cared for by high quality, lower cost providers.”

One type of consumer-driven plan, health savings accounts (HSAs), does seem to be gaining popularity. America's Health Insurance Plans, an industry group, surveyed 500 privately insured individuals and found that 71% said they had a favorable opinion of HSAs as a new approach to financing health care.

HSAs combine individually owned savings accounts with traditional medical insurance, giving patients the opportunity to use tax-free funds to pay for routine medical bills. Under the Medicare Modernization Act, the plans must be established in combination with insurance coverage through a qualifying high-deductible health plan. Many consumers lack details about how the plans work, the survey said. But when educated about HSAs, most consumers react positively to the opportunity to play a more active role in seeking health care coverage, according to America's Health Insurance Plans' president and CEO, Karen Ignagni.

Consumers specifically favor the rollover of unused balances and the tax-free nature of the accounts, the survey said.

The problem with HSAs is “there's no flexibility for employers or insurers to design products,” because they have such a rigid structure, Ms. Cassil said, adding that concerns also exist that a low-income person might not have the money to invest in these accounts.

To use consumer-driven plans and other patient cost sharing tools more effectively, “we have to think of ways to refine it,” Dr. Ginsburg said.

One type of incentive for the patient would be to choose more efficient providers. As an example, “you could pay more if go to an inefficient provider or pay less if you go to efficient providers.” In the same line of thinking, a plan could employ incentives to use more effective treatments, such as higher cost sharing for treatments that are more discretionary, “that are seen as luxuries,” he said.

Consumer-driven plans shouldn't be the sole solution for medical care. Technology assessments, effectiveness research, information technology, and innovation in provider payments are also needed, Dr. Ginsburg said.

WASHINGTON – Consumer-driven health care plans have yet to catch on with most patients.

These high-deductible spending accounts were designed to empower patients to make informed choices about their health care and provide them with more options regarding providers and treatments.

The large deductibles in consumer-driven plans may be too burdensome for some people to handle, Paul Ginsburg, Ph.D., said at a meeting sponsored by the Alliance for Health Reform. “People are going to go into debt. Some are going to declare bankruptcy because of the burdens of paying for medical care under this different benefits structure.

“What if it just causes a barrier to people getting care that they really need?” asked Dr. Ginsburg, president of the Center for Studying Health System Change (HSC). In his opinion, these problems are going to limit the extent to which these plans can be used.

Enrollment in consumer-directed health plans continues to grow steadily, but it remains “a tiny fraction” of all employer-sponsored coverage, according to a study in the journal HSR: Health Services Research. Dr. Arnold Milstein of Mercer Human Resource Consulting and Meredith Rosenthal, Ph.D., assistant professor of health economics and policy at the Harvard School of Public Health, found that patients in consumer-directed plans were more likely to enroll in tiered-benefit model plans or networks than in employer-funded health reimbursement accounts.

Tiered plans, which categorize hospitals or physician groups by price and quality and assign lower premiums or cost-sharing to patients who opt for a preferred tier, may offer more flexibility and choice to consumers.

But as an HSC study indicated, employers seem to have doubts about the cost-saving value of any of these plans. In site visits to 12 nationally representative metropolitan communities, HSC found that few of the employers in these areas planned to adopt consumer-driven plans or tiered provider networks. One employer surveyed said that 70% of the firm's covered employees had health care costs of less than $1,000 per year. Giving workers a $1,000 spending account would encourage workers to use more services and raise costs, the employer estimated.

The biggest concern employers have about tiered plans “is that most of the tiering is occurring on cost information–not quality,” HSC spokeswoman Alwyn Cassil told this newspaper. “Employers need more evidence that the tiering is going to result in their workers being cared for by high quality, lower cost providers.”

One type of consumer-driven plan, health savings accounts (HSAs), does seem to be gaining popularity. America's Health Insurance Plans, an industry group, surveyed 500 privately insured individuals and found that 71% said they had a favorable opinion of HSAs as a new approach to financing health care.

HSAs combine individually owned savings accounts with traditional medical insurance, giving patients the opportunity to use tax-free funds to pay for routine medical bills. Under the Medicare Modernization Act, the plans must be established in combination with insurance coverage through a qualifying high-deductible health plan. Many consumers lack details about how the plans work, the survey said. But when educated about HSAs, most consumers react positively to the opportunity to play a more active role in seeking health care coverage, according to America's Health Insurance Plans' president and CEO, Karen Ignagni.

Consumers specifically favor the rollover of unused balances and the tax-free nature of the accounts, the survey said.

The problem with HSAs is “there's no flexibility for employers or insurers to design products,” because they have such a rigid structure, Ms. Cassil said, adding that concerns also exist that a low-income person might not have the money to invest in these accounts.

To use consumer-driven plans and other patient cost sharing tools more effectively, “we have to think of ways to refine it,” Dr. Ginsburg said.

One type of incentive for the patient would be to choose more efficient providers. As an example, “you could pay more if go to an inefficient provider or pay less if you go to efficient providers.” In the same line of thinking, a plan could employ incentives to use more effective treatments, such as higher cost sharing for treatments that are more discretionary, “that are seen as luxuries,” he said.

Consumer-driven plans shouldn't be the sole solution for medical care. Technology assessments, effectiveness research, information technology, and innovation in provider payments are also needed, Dr. Ginsburg said.