Consumer-Driven Medical Plans - Where's The Traction?

Confusing times for those of us looking for the silver bullet to control health care costs.  For the last ten years, the solutions was simple - Consumer-Driven Health care was going to engage employees and make them educated consumers of health care, driving costs down.  Now, more and more articles point to the stalling of consumer driven plans through low enrollment and questionable satisfaction.  From the Wall Street Journal:

"A survey by the Kaiser Family Foundation and Health Research and Educational Trust found that enrollment in consumer-directed health plans sponsored by employers, when dependents and companies with fewer than three employees are excluded, was 2.7 million in 2006, compared with 2.4 million in 2005. Nineteen percent of employees who have a choice between consumer-directed health plans and traditional plans select consumer-directed plans, according to the Kaiser Family Foundation/HRET.

Employee benefits company Towers Perrin last month published a survey that found many enrollees in consumer-directed health plans believe they have less ability to find high-quality health care providers than enrollees in traditional plans. In addition, the survey found that only 29% of enrollees in consumer-directed health plans attempted to save funds in their HSAs for future medical expenses. According to the Journal, one "reason for the frustration is the uphill battle that many consumers describe in trying to shop for their health care."

That doesn't sound good for consumer-driven health care. 

Additionally, In a stated attempt to avert greater health costs down the road, a number of major companies, including Marriott International, Pitney Bowes, and carpet-maker Mohawk Industries, are providing free drug programs to help employees manage chronic health conditions like diabetes, high blood pressure, asthma, and depression.  The move runs counter to the currently popular concept of consumer-directed health care, with these companies said to recognize the limits to shifting too much of the cost of health care to employees, especially when it results in poor patient compliance with drug regimens.

So consumer-driven plan penetration has stalled and companies are now resigned to providing free drugs to avoid/defer big ticket costs related to disease management situations.  Looks like it's up to free thinkers like Andy Grove to come up with an idea to get us out of this mess - read Grove's national health care thoughts from Fortune here... 

Comments

[Paul]

If you compare Health Savings Accounts to the adoption of IRA growth, for example, you will see that HSA adoption compares very favorably. There was a pleateau in IRA growth as the administrators worked out the kinks and worked on educating the public. The same kind of plateau seems to be happening in HSA growth, which, by the way, only represents a portion of individuals covered by consumer directed health plans. If history rings true, there will be a large increase in the speed of adoption in the next couple of years.

Second - consumer-driven health care requires that consumers have a say in health care decisions, together with pricing transparency. We are in the early years of a process of re-educating the whole population to care about their own medical expenditures, which takes time. Additionally, medical providers are just beginning to be more open about health care pricing, which is required for a consumer to make an informed choice.

The WSJ article is much deeper than your post suggests, and your selective quotes paint a slanted picture of the article and the situation. If your goal was to present the most pessimistic bias one could take regarding CDH, I think you succeded.

[Kris]

Paul -

The bias quote is a little dramatic. I write how I feel as a HR pro trying to get it done, and right now CDH's aren't cutting it. The more CDH's work, the better it is for me - that's my bias. We're over a decade in on this concept and traction is hard to come by. Those are the facts.

Like your thought on the IRA comparison. If you have some data to ponder, share it with a link for all to see. In terms of pricing transparency, any thoughts on when that will occur? I see my run rates for sticker price for procedures vs. what the big Blue Cross networks can force doctors to take, and the differences are dramatic. You have to figure out a way to address that gap before the market has a shot at providing true transparency.

Encourage you to drop a note back regarding how HR pros can get better participation in their CDH's if you have a perspective that can help. Can't wait on the macro view when you are managing a plan that takes a trend increase of 8-15% per year...

Kris