“Consumer-Driven” Health Plans: Implications for Health Care Quality and Cost
By RAND
California HealthCare Foundation
June 2005
Confronted with double-digit increases in health insurance costs and consumer dissatisfaction with managed care, employers are looking for new ways to contain health care costs. The solutions that are emerging increase consumers’ financial responsibility and involvement in their own health care choices.
One new approach – “consumer-directed health plans” or CDHPs – involves increased incentives to make consumers financially responsible when they choose costly health care options.
This report is an overview of the current state of knowledge on the effectiveness of these approaches and tools. Each of three sections addresses one of the three benefit-design approaches – high deductibles, personal spending accounts, and tiered-benefit designs. (Another section) examines point-of-use decision-support tools.
… this literature review produced the following conclusions with regard to consumer health care use decisions and health outcomes:
* High-deductible plans can be expected to reduce health care spending, but it is unclear that they will lower the rate in growth of costs over time.
* Early evidence suggests that the availability of personal health spending accounts does not eliminate the incentive effects of higher cost sharing; but how consumers will respond as account balances accrue is unknown.
* The role of cost sharing on health outcomes is uncertain. The HIE (RAND Health Insurance Experiment) suggests that modest cost sharing does not have deleterious effects for most people, but other research indicates there is some level of cost sharing that may lead to adverse outcomes, especially for the poor.
* Little is known about how tiered-network plans will affect consumer choice of provider, although some studies suggest that price is not a large factor in provider choice.
* There is mixed evidence on whether the financial incentives in the new plan designs will decrease use of necessary and desirable services as well as unnecessary care.
* It is not known whether decision-support tools can and do promote more appropriate health care use decisions or help consumers purchase value.
http://www.chcf.org/documents/insurance/
ConsumerDirHealthPlansQualityCost.pdf
Comment: Thus the beginning of another prolonged and profoundly expensive national experiment on controlling health care costs…
At the outset, there is little evidence that CDHPs will have more than a very modest impact on global health care spending since most spending is concentrated amongst the few with the greatest needs. The great majority, who are healthy, are responsible for only a small portion of overall health care spending. On the other hand, considerable early evidence does indicate that CDHPs will have a negative impact on health care access and outcomes for individuals with modest incomes and with significant health problems; the important unknown is just how much suffering and death that will result from these policies.
The RAND HIE has been used as a basis for increasing patient cost sharing because it demonstrated that deductibles and co-payments do decrease health care utilization. Studies of large, healthy populations have shown that the decline in utilization has had a negligible impact on global health outcomes. But the subsets of individuals with significant problems clearly fare worse with cost sharing. Costs can be contained without using the blunt instrument of CDHPs that harms those with the greatest needs.
The importance of this RAND report is that it demonstrates there is not enough evidence to move forward with an approach to cost containment that will cause harm, especially when it will delay, most likely by a decade, the beginning of a process to ensure that everyone would have affordable access to beneficial health care services. We do know that CDHPs will never accomplish that.
Why proceed with such a wasteful experiment, especially when we know it will result in more suffering and death? Isn’t that what we’re supposed to be preventing?