Depending on one's point of view, consumer-directed health care (CDHC) is primarily an effort to: (1) control health care costs; (2) give patients more control of their health care; or (3) give patients “skin in the game”—that is, the discretion and responsibility for spending dollars on the level of health care they wish or on non-health care expenses. In practice, CDHC involves enrollment in high-deductible health insurance plans that may or may not be associated with a personal health savings account (HSA) or a health reimbursement account (HRA).
An HSA is a government-sponsored tax-advantaged savings account that may be used to pay for qualified medical expenses; it must be paired with a health plan whose minimum deductible is $1,000 for individuals or $2,000 for families.
An HRA is similar but it is owned by the employer and does not require enrollment in a high-deductible health plan (an HDHP is usually defined as one with a deductible of at least $1,000).
The impact of such plans on the practice of medicine could be substantial, and not always for the better. Some providers fear a dramatic decrease in the use of products and services if such plans become the norm. I am a novice on this topic, so it was a recent flurry of papers on the subject that prompted this column.
Among them are two papers with some early data on the effects of consumer-directed health care by M.B. Buntin et al and by J.M. Yegian in Health Affairs online (www.healthaffairs.org: Volume 25, No. 5, 2006; Web pages 516–530 and 531–536, respectively). Also, several recent perspectives that appear in Health Affairs online (Goodman JC; Ginsburg M; Miller T; 24 October 2006) and in the New England Journal of Medicine (Bloche MG; 16 October 2006) express a variety of opinions on CDHC.
The Buntin paper addresses the usage of high-deductible insurance with personal health savings accounts, the cost and usage of care compared with traditional insurance, and the frequency of “favorable selection” in which healthier patients choose such health plans leaving less healthy patients in traditional plans.
Enrollment in High-Deductible Health Plans
The authors and others report that the enrollment in HDHPs is still quite low. In data collected in 2005, only about 10% of privately insured non-elderly adults were enrolled, and only about 10% of the enrollees had an HRA or HSA. About 20% of employers that offer health insurance also provide HDHPs, and about 4% offered such a plan with an HSA or HRA option.
But the authors state that demand is growing, with enrollment nearly tripling to 3.2 million since early 2005 and forecasts predicting enrollment of 15 million to 30 million in five to 10 years. Also, 25% of firms that offer health insurance that do not offer HDHPs say they plan to offer them in the next year.
Studies of favorable selection have so far found little difference in the average age of subscribers in HDHPs and traditional plans, but the former have higher incomes than the latter.
Also, those in HDHPs seem to be in somewhat better health, based on data showing that usage of insurance was somewhat less prior to enrolling in an HDHP. So there appears to be a modest favorable selection for those enrolled in HDHPs.
Savings in Cost and Usage in HDHPs
The data show declines in the cost of care for enrollees in HDHPs, with high-end estimates of 4% to 15% and low-end estimates of 2% to 7%. However, the data are largely speculative and based on projections and must be viewed as provisional until better data are available.
These studies provide varying results because they depend on factors such as the proportion of enrollees in a plan, favorable selection, and whether they also have HSAs or HRAs. Also, the baseline may be a moving target in response to these new plans—i.e., traditional plans may adapt to changes in the market.
Comparison of the usage of care is also difficult because of favorable selection, but the data that are available show a decrease in the usage of health care services in HDHPs. Two studies at a single employer showed lower usage of care for those enrolled in HDHPs than in traditional insurance. The cost of care, both out-of-pocket payments and plan spending, also was less.
Anecdotal reports in the trade literature report as typical savings for employers of 10% relative to expected trends, with some reporting savings of 20% to 25%. However, some of these results refer only to employer savings and may be due to cost shifting to the employee.
Quality of Care in HDHPs
While studies have shown a decrease in the use of care by enrollees in HDHPs, reductions occurred in both care deemed efficacious and in services that are less effective. However, there was a clear reduction in the use of emergency services for less urgent problems, and care was not reduced for services regarded as highly effective for non-poor children (no mention of the poor children).
Add to these indecisive results and the difficulty of defining quality, and the best one can say is that the effect on quality is mixed and far from settled.
Care of the Chronically Ill in HDHPs
A major concern for those in high-deductible health plans is the coordination and cost of chronic care. Several case studies show a substantial increase in out-of-pocket medical costs for those with chronic illnesses, such as diabetes. Prior studies had demonstrated that increased patient cost-sharing reduced the use of both necessary and unnecessary care.
However, more recent studies of tiered pharmacy benefit plans show that increased cost sharing leads to a reduction in the use of prescription drugs, including maintenance drugs for those with chronic illnesses such as diabetes and hypertension. (Studies of cancer patients, if they exist, were not cited in these reports.)
The expert commentaries accompanying these papers demonstrate the breadth of opinion concerning consumer-directed health care. John Goodman is a strong proponent of such models of care because he believes that rationing of care is necessary and because, he says, patients are in the best position to choose the best use of the dollars in a system lacking infinite resources.
He also points out that patients may forego even necessary care because they live paycheck-to-paycheck and simply don't have the cash. That is why he believes health savings accounts are an essential part of high-deductible accounts. He concludes that the health plan must be well-designed to mitigate the omission of “necessary” therapy.
Marjorie Ginsburg, in her paper entitled, “Rearranging the Deck Chairs,” has a different view. She believes CDHC “reflects health care providers' failure to deliver value and unrealistically assumes that consumers can make sound, cost-effective medical decisions.”
She goes on to say that the problem is not so much the overuse of services that are within the control of consumers (e.g., going to emergency rooms rather than urgent care centers), but also the overuse of services that require physician authorization, such as diagnostic radiology or hospital admission.
She believes patient preferences should always be taken into account, but that such preferences cannot be a substitute for clinical indications and professional judgment, particularly for care that provides the best opportunity for long-term health.
In Tony Miller's paper, he advocates for consumer-directed care. He was the co-founder and CEO of Divinity Health, one of the first consumer-directed health plans. He believes conventional health plans are part of the problem, pointing to deductible auto insurance as a better model.
An essential aspect of the CDHP he founded was that it required an HRA. He believes decreasing or removing much of the current insurance regulations would allow development of even better financial models in the future.
M. Gregg Bloche reviews the history and arguments for and against CDHC and then points out the major problems with this approach: Nearly all payers do not publicize their prices, there is a lack of information on providers' quality, and there is no means of assessing the efficacy of providers' tests and treatments.
“Research on efficacy has been limited by the resistance of drug and device makers and medical specialty societies, which fear that such information might reduce demand for their products and services. Health plans have the data to conduct more of this research but lack incentives to support it.”
If these reports seem confusing and inconclusive, it's because they are. If the data are sparse and incomplete and experts seem to hold doctrinaire positions on the issue, how are we to understand the choices well enough to advise our patients? The many variables within and between plans make it very difficult for patients to make choices that are in their best long-term interests.
Despite the paucity of data, the experts agree on one thing: Consumer-directed health care is here to stay and it is growing rapidly.
Employers are embracing this approach as a means of reducing their health care costs. The track record of our health care industry does not bode well for the development of consumer-directed health plans that are patient-friendly; that do not create disincentives for obtaining necessary care; and that provide transparent information on cost, quality, and efficacy.
The unintended consequences of these plans, even if done with good intentions, could be disastrous for the health of many, particularly those in lower socioeconomic groups.
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