Wednesday, October 14, 2009
Leave consumers in the driver's seat
From the RoundTable blog
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Robert B. Vernon
Vernon, of Roanoke, has worked 29 years in health plan marketing and in business development consulting for physicians and hospitals. He is a past president of the Virginia Association of Health Underwriters.
During the summer, the debate about health care reform transformed into a political fight over health insurance reform. One casualty of that fight may be one of the most promising health care financing ideas to emerge in decades: consumer-driven health care.
This idea was meant to address a problem long recognized by health care economists as a key driver of rising health care costs: the tendency of most insurance plans and Medicare to divorce patients from the true cost of health care services. Conversely, patients who pay directly for health care are inclined to shop for the best cost and quality health care services available.
In the early 1990s, consumer-driven health care plans emerged as a way to engage patients more directly in the cost of their services and to provide incentives to lead healthier lifestyles. Consumer-driven health care was given an important impetus by a federal tax law that allows Americans to save and spend dollars for health care services tax-free through a vehicle called a Health Savings Account -- provided that the HSA is attached to an insurance plan with a relatively high deductible, typically $2,000 to $4,000 per individual per year.
In addition, most consumer-driven health plans provide full coverage for preventive services such as physical exams, preserving an important wellness component. And the high deductible makes the insurance policy more affordable than traditional health plans. The money consumers save tax-free in their HSAs helps pay for service not covered under the high deductible amount.
After passage of the HSA tax law, insurance companies expanded the offering of consumer-driven health care plans to employers and individuals. Today, several million such policies exist in America. Most insurance companies couple their HSA and high-deductible plans with Web sites that provide cost and quality information on local physicians and hospitals. Combined with insurer-sponsored wellness programs, this information helps patients become wiser shoppers for health care and better stewards of their own health.
Financial incentives for wise shopping, good information on the cost and quality of health care services and wellness programs combine to constitute a comprehensive consumer-driven health plan.
As health care reform in Washington morphs into health insurance reform, the future of consumer-driven health plans is in doubt. Under health insurance reform, Congress will set minimum health benefit levels for any government-subsidized health plan (public option or not). The minimum levels proposed so far include rich benefits and limited cost-sharing -- just the opposite of what consumer-driven health plans do to engage the patient in value shopping for health care services.
To help pay for such expensive plans, some proposals also curb the tax advantage of HSAs by limiting the amount Americans can save in an HSA and restricting the use of individuals' savings in these accounts.
The result will be health insurance "reform" that does not provide Americans with incentives to be wiser shoppers for health care services or to lead healthier lifestyles. In this scenario, the "reform" we get from Washington will not result in real cost savings and may doom the most promising health care cost and quality improvement idea to emerge in decades -- consumer-driven health care.
