HSR (Health Services Research)
A Special Supplement to HSR
August 2004
Guest Editors’ Introduction
Consumer-Driven Health Care: Beyond Rhetoric with Research and Experience
By Anne K. Gauthier and Carolyn M. Clancy
The evidence and commentaries in this special issue, while needing to be interpreted with caution, are rich with lessons to help purchasers, policymakers, plans, consumers and researchers as consumer-driven health care continues to evolve. At the moment, the reality of consumer-driven health care appears to be neither the panacea promoters would wish nor the poison opponents fear, and there are still concerns for how the poorer and sicker will fare.
Commentary
Current MSA Theory: Well-Meaning but Futile
By George C. Halvorson
The MSA theory makes sense only until you add the actual cost data to the equation. Then the MSA approach runs into a real problem if you assume that the goal is to actually reduce health care costs. The typical MSA benefit package is irrelevant to expensive patients; irrelevant to cheap patients; and a potentially painful disincentive for chronic care patients.Despite its undoubted good intentions, that is not really a good care-based approach.
Commentary
Defined Contribution Health Plans: Attracting the Healthy and Well-Off
By Gail Shearer
The findings from these two studies (two studies in this special edition on consumer-driven health care plans or CDHCs) are troubling for another reason: because of the nature of adverse selection, over time, DCHPs (defined contribution health plan, a more apt label according to Shearer) may drive lower-deductible health insurance options out of the marketplace.
Bolstered in the health care market with the enactment of the health savings account provision in the Medicare bill, in a few short years, it is very possible that unpopular high-deductible health insurance coverage will be the only choice that many employees may face for their coverage in the employer-based market. Those with high health care expenses will face higher out-of-pocket costs than they would in the absence of DCHPs. It is troubling that this type of change in the health care marketplace will take place in the absence of a public debate. Advocates of medical savings accounts, for example, maintain that there should be a choice of plans. The reality is that over time, as adverse selection pushes the next “relatively healthy” group toward high-deductible plans, an insurance marketplace death spiral will result and ultimately will remove the very choice (a low-deductible plan) that employees want.
Concluding Commentary
Consumer-Directed Health Care: Will It Improve Health System Performance? By
Karen Davis
These studies are too preliminary and the consumer- directed health plan products too new to reach firm conclusions about their long-term value. However, concerns are raised by the initial experience. It seems clear that they are relatively more attractive to higher-income individuals. When health status is measured by prior utilization rather than demographic characteristics such as age or presence of chronic conditions CDHP plans appear to experience favorable risk selection. The downside of the growth of CDHP is likely to be increasing market segmentation, with lower-income and sicker individuals served by managed care plans and higher- income, healthier individuals enrolled in CDHP products. Without risk adjustment, sicker and lower-income individuals will pay higher premiums, and HMOs may eventually face a “death spiral” as unfavorable risk selection worsens.
http://www.blackwell-synergy.com/servlet/useragent?func=synergy&synergyAction=showTOC&journalCode=hesr&volume=39&issue=4p2&year=2004&part=null
And…
Kaisernetwork.org
Alliance for Health Reform
7/9/2004
Briefing: Consumer-Directed Health Care: The Next Big Thing?
Excerpts from the transcript of the Q & A portion:
Ed Howard: Time for one more question
Bridget: I’ll be very brief. I’m Bridget [inaudible] with the Energy and Commerce Committee. I spend a lot of my time working on the Medicaid program, and I have to tell you that every time I see that one of the states has made an application to put in their waiver to include HSAs I fall on the floor laughing, simply because I can’t imagine, since Medicaid was originally designed for people who have very low incomes to pay their deductibles and [inaudible] to have access to health care because they don’t have it. I would really just like to know how you would define a compassionate, competitive deductible for somebody who makes say $6,000 a year.
Michael Parkinson (chief medical officer, Lumenos, a provider of consumer-driven health care): …What we’re saying is, that if you look at the public resources, state and federal going into to pay for the Medicaid recipient and then even if you were broadly thinking about what went into everything around them that was meant to be health inducing behaviors, monetize that in a revenue neutral demonstration project to say, that is discretionary money that person can have. I’m not saying dealing with an HSA with $600 and make them come out of their own pocket. What I’m saying, think of the vehicle that has an insurance product and discretionary account that gives them disability control and support, somewhat like cash and counseling, and let’s basically do it…
Bridget: …the question I have is if you got somebody at that income level, they got a lot of things going on in their lives and you try to tell them that they can go out and shop for where they’re going to find a doctor who they’re going to pay, are they even going to know enough to ask the doctor what the right treatment or whatever, I think you’re just setting yourself up for a situation…
Michael Parkinson: That’s why we want to do a demo on the health care side. In reality here’s what we do. We assign you a personal health coach who helps you understand your case-
Bridget: That’s like a clinical trial for treating children. You’re going to take away health care services from people because you want to find out if it works or not.
Ed Howard: Gary, you have a comment?
Gary Claxton (vice president, Kaiser Family Foundation): What’s the risk that people, what happens when they do a bad job as consumers and they have absolutely no money, what happens? I think that’s Bridget’s question.
Michael Parkinson: That’s what happens today. We all pay for health care anyway in the end.
Gary Claxton: Some people have [inaudible].
Michael Parkinson: I guess I’m not expressing myself clearly folks. The community, the state of Tennessee, the state of Georgia, the state of Florida are paying 100% of all expenses in one way or another jointly with the feds.
Gary Claxton: You put them at risk [inaudible].
Michael Parkinson: I didn’t say anything about monetizing or giving them the average of the risk. I don’t want to do on the back of an envelope how this would work tactically. The reason that I came to the Hill today among others, is that you have the opportunity to think more broadly about designs in the employer sector, innovate and also I can tell you that there is some merits to this model as it relates . . . one of the things to me about this model, it’s very cost empowering and it’s very ennobling on the individual level. I personally, call me an idealist, but that’s another outcome of cash and counseling, people felt better about some of the things they can do, the choices that they had. I think that you might want to consider how this might work, that’s all. I’ll leave it at that…
http://www.kaisernetwork.org/health_cast/hcast_index.cfm?display=detail&hc=1224
Comment: The comments here will be limited to consumer-driven health care (CDHC) as a means to reduce health care costs by increasing patient sensitivity to the costs of care. Improving an informed patient-consumer choice through greater transparency in the quality of care delivered by physicians, hospitals and other providers is also frequently labeled as consumer-driven health care. Though an important but essentially unrelated topic, it will not be addressed here.
Many respected, objective health policy analysts have cautioned that it is too early to draw clear conclusions on the impact of these proposals which shift the burden of paying for health care to those who have greater needs. Implicit in their comments is the fact that we will need another decade or so of experience to discover just what will happen, just as we had followed the impact of a decade and more of managed care. But it is crucial to realize that these proposals were not created in an informational void.
An extensive body of health policy literature provides us with enough information to use informal simulations to project quite precisely the impact. We already know that erecting financial barriers to care, which is fundamental to CDHC, impairs access and results in impaired health care outcomes. Period!
Using Bridget’s words, “taking away health care services from people because you want to find out if it works or not,” is nothing short of health policy malpractice! This experiment will kill people. Let’s abandon it immediately!
