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Consumer-Driven Health Care: Promise and Performance

I am always struck by the difference between the salesmanship of health plans offering consumer-driven health products and the reality of the data.

James Robinson and Paul Ginsburg have an article in the January 27th edition of Health Affairs with an objective review of the consumer-driven movement of recent years.

Here is the central point of the article:

The performance of consumer-driven health care has fallen short of both the aspirations of its proponents and the fears of its critics. Growth of the favored organizational forms, including HDHPs and individually purchased insurance, has been anemic. The forms of insurance and sponsorship originally embodied in the consumer-driven vision have mutated into forms far from those originally envisaged. This process is not unique to consumerism, but one well known to managed care, where the original group-/staff-model HMO was diluted into the loosely structured independent practice association (IPA)-model plan and the sponsorship framework of managed competition into the “total replacement” purchasing format of self-insured employers.

They also point out that:

  • Enrollment in HDHP/HSA plans grew from 400,000 in September 2004 to 6.1 million in January 2008–“a large absolute increase but still small in relation to overall enrollment in private insurance.” By comparison, HMOs continue to hold 20 percent of the employer market and POS plans 12 percent.
  • “The consumer-driven health care movement has been obliged to dilute its principles in light of the overuse of inappropriate services and underuse of appropriate services in the real world. HDHPs now incorporate elements of disease management for enrollees with chronic conditions; case management for enrollees with complex or comorbid conditions; and utilization management for patients using particularly costly drugs, devices, or procedures. Most of these medical management programs are obtained from the same diversified insurers that offer HMO and PPO products. Indeed, the potential for integration with claims databases is leading insurers to acquire many formerly independent medical management vendors.”
  • “The blind spot in the consumer-driven analysis of market performance concerns the importance of coordination in insurance, delivery, and sponsorship. The obdurate insistence on á la carte choice and retail purchasing pushed the theorists of consumerism into positing organizational and market dynamics that have not been observed in the real world.”

Consumer-driven principles have clearly impacted the design of mainstream health insurance plans for the better.

But consumer-driven principles have not changed the fundamental dynamics of our health insurance system nor have they turned out to be a silver-bullet solution.

In my mind, the fundamental fault with the logic that they would be was the belief that consumers could do what insurance companies, employer benefit managers, and even providers could not.

Robert Laszweski has been a fixture in Washington health policy circles for the better part of three decades. He currently serves as the president of Health Policy and Strategy Associates of Alexandria, Virginia. Before forming HPSA in 1992, Robert served as the COO, Group Markets, for the Liberty Mutual Insurance Company. You can read more of his thoughtful analysis of healthcare industry trends at Health Policy and Marketplace Blog, where this post first appeared.

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Jon KesslerEd HarrisNateJellabyBarry Carol Recent comment authors
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Jon Kessler
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Seems there are a few points that serious people can agree upon, but, interestingly, they are not being pushed in policy circles. Price transparency is good. How about requiring providers to disclose their prices and carriers to disclose their contract rates (including p4p) to customers? Price gouging is bad. How about banning price discrimination against self-payers? Giving me access to my medical data is good. How about requiring insurers (including Medicare) to make their claims data on individual members freely available to those members? Arguing socialism vs. libertarianism is entertaining but experts could do far more good if they spoke… Read more »

Ed Harris
Guest

The solution is simple. Effective use of HSAs and solid preventative coverage will save money for everyone…and keep the government out of the equation.

Nate
Guest
Nate

“If socialized medicine is so good, get a group of people together and create your own Great Society, lifetime membership HMO, and leave the rest of us alone.” Progressives already did this it’s called MA, NY, & NJ and they can’t afford it, that’s why they are so damn persistant on reforming the rest of the country so we can help pay for their Utopia. They are modeling it after federal income taxes and how you can write off your state and local taxes. Liberals can’t afford to live in CA and NY and pay those rediciouls taxes so they… Read more »

jellaby
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jellaby

Peter, I’m not saying there isn’t a need for commenting on the article. I just said I’ll leave it to someone else. “No it puts it in the hands of a non-medical person trying to figure out if they can afford the procedure, not whether it is medically necessary. In Canada, budgets and reduced access make medical people determine which patients need the care the most based on medical need, not what their bank account determines is the most urgent.” I’m sorry, but what procedures i need is a matter between me and my personal physician. It’s not the business… Read more »

Nate
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Nate

20% of a population will account for 80% of the cost in a sufficiently large insurance pool. For starters Peter stop slapping around your Red Herrings. Most people don’t have a procedure to shop for, most people don’t meet their deductible. Most people don’t have anything more complex then some office visits and a couple prescriptions. There is no one size fits all solution to healthcare. If you keep dismissing proven solutions because they only solve a portion of the problem not the entire system’s ills nothing will ever get done. “HDHPs are an insurance creation because they are lossing… Read more »

Peter
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Peter

First Jellaby the article does need commenting on as it brings out some HDHP real life facts. “All consumer driven health care does, is put the power to answer those questions in the hands of the individual, which is where it should be in the first place.” No it puts it in the hands of a non-medical person trying to figure out if they can afford the procedure, not whether it is medically necessary. In Canada, budgets and reduced access make medical people determine which patients need the care the most based on medical need, not what their bank account… Read more »

Nate
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Nate

Peter do the math, most HDHPs reimburse at 100% after the deductible is meet, this means your annual OOP is 1200-5000 or what ever your deductible is. Your standard plans almost always have higher OOP then that. Further co-pays usually don’t count towards your OOP so you keep paying those the entire year. Why don’t you do some basic research before running off at the mouth? If you have serious medical bills your better off with a HDHP. If your really healthy your much better off with a HDHP, it’s only a small percentge of people with moderate claims that… Read more »

Jellaby
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Jellaby

Correction in my long post: Medicare obviously isn’t for those who have trouble paying their bills. Medicaid is. Sorry about that.

Jellaby
Guest
Jellaby

Peter, I’ll leave commenting on the USnews article to someone else, but I would like to take issue with your comments. You said, “My feeling right now is that HDHPs are doing nothing to control money driven medicine,…” Health care will always be a judgement based on value. Is it worth it to pay $2500 to get an MRI to eliminate the 2-3% possibility that my headache might be a serious life-threatening problem? In the current system we have, and in the system that Canada has, those questions are answered by insurers and employers here, and bureaucrats and politicians in… Read more »

Barry Carol
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Barry Carol

Price and quality transparency have a long way to go to get to where they need to be in order for consumer directed plans to realize their potential. Here is what I would want with respect to transparency. First, for discrete items like prescription drugs, I want to know the full cost (not just my co-pay) of all drugs in the relevant therapeutic class that might be appropriate for me and, for a specific drug, which local drug store charges the least. If it’s an imaging procedure, which local imaging center or hospital charges the least (based on contract rates,… Read more »

Peter
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Peter

Greg, maybe you could comment on this: http://www.usnews.com/blogs/on-health-and-money/2008/4/17/high-deductible-health-plans-for-many-too-costly.html I’ve also been reading about an increasing number of insured who can’t pay their deductible. My feeling right now is that HDHPs are doing nothing to control money driven medicine, just transferring risk and costs from insurance companies to individuals. They also do not give us better access to primary care but will help somewhat for catastrophic illness, unless you get a cronic condition that not only drains your high deductible but does not help you pay the premiums if you can’t work. And if hospitals see less patients (less billings) due… Read more »

Carl Doty
Guest

I completely agree Greg. Growth in CDH is not anemic…as I pointed out on Laszewski’s blog, going from zero accounts and zero dollars in HSAs to more than six million accounts and $8 billion in assets in just 4+ years is hardly anemic. And that doesn’t even account for the HRA-based plans out there. Are CDHP’s a silver bullet? Of course not. Are they for everyone? No. But we will see nearly a third of the commercially insured in this country enrolled in one by 2012. The real question is, will the insurers and providers actually empower consumers with the… Read more »

Greg Scandlen
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Greg Scandlen

Sorry, Bob. Ginsburg and Robinson are simply wrong about all of this.They aren’t looking at the evidence. Here is how I wrote it up in my newsletter this week — Jamie Robinson and Paul Ginsbrg have paired up in Health Affairs to take another shot at consumer driven health care. This is one of the most peculiar articles I’ve read on the subject. You can tell which author wrote which part of the piece. Paul Ginsbrg of the Center for Health System Change has long been a skeptic, but willing to look at the evidence. Jamie Robinson of UC Berkeley,… Read more »

RED-MD
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RED-MD

CDHC will probably run its course> Let’s hope we can have the political will to implement a national health plan during the next 4 years. Incrementalism won’t work, although a primary care ‘medical home’ and electronic medical records (now used by only a minority of US practices) would be a good start. We are the only developed country without a NHP, and going broke spending $2+ trillion annually. And fewer USA med school grads are entering primary care training-FP’s and general internists are crumbling under paperwork, disrespect, and poor compensation-and Medicare is much to blame for this attitude! The health… Read more »

Margalit Gur-Arie
Guest

I don’t know, but every time there’s a mention of “consumer driven”, “consumer directed”, “empower the patient to make decisions”,etc., somehow it always ends up with patients having less coverage and patients having to make tough choices regarding what treatments to forgo. The health insurance discussions always deteriorate into arguments over percentages and statistics regarding a bewildering array of trade terminology. Why does it have to be so complicated? Is this variety of strategies and structures in place to achieve efficiency? Or is this in order to obfuscate the inherent conflict of interest between a for-profit insurer and the health… Read more »