Four Questions About Consumer-Driven Health Plans

Do employees really want the responsibility for making decisions about purchasing health care coverage--and are they prepared to assume that responsibility?

July 2, 2003
The underlying assumptions about health plans that promote consumerism are worth a critical look. Some questions include the following:

To what extent do these "consumer-driven health plans" actually save money? Because these plans are relatively new and preliminary financial analyses are just emerging, it’s difficult to accurately predict the financial impact on a given group. There’s anecdotal evidence of lower utilization among employees who chose the consumer-driven health plan option, at least in its early years. However, it’s too soon to reach any definitive conclusions about potential long-term savings and their magnitude.

Might these new plan designs increase employer costs? If a consumer-driven plan is offered as an option beside existing health plans, traditional coverage options could experience adverse selection if healthier employees select the consumer-driven option. Proper design, pricing, and actuarial techniques must be applied to mitigate the risk of anti-selection.

Further, it’s advisable that all plan options sponsored by the employer belong to a single (usually self-insured) risk pool to avert the impact of a downward spiral in one plan if a healthier population migrates from it to another. Certainly, extensive study of individual group utilization will determine further employer strategies for reducing risk.

Do employees really want the responsibility for making decisions about purchasing health care coverage--and are they prepared to assume that responsibility? Some Americans who are frustrated by many of the restrictions associated with managed care (e.g., gatekeepers, reduced networks, mandatory pre-certification, and drug formularies) have been clamoring for unrestricted access to health services and providers for years. Surveys indicated that many individuals want to be responsible for their own health care decisions, and want immediate access to reliable information to support those decisions.

In the current system, employees tend to be passive plan participants until a health issue is vital to them. In the new models, the theory is that employees will become engaged and educated, as they are provided with tools to navigate the system that they can trust--and not just at the point of care. Some analysts warn that even with these tools, employees are likely to lack the discipline and sophistication to master an increasingly complex system. Critics also point out that even the best-intentioned employees may not have sufficient time to become more informed about health care treatment options and purchases, especially if they have child care and/or eldercare responsibilities and may be working at two or more jobs.

Is enough information available to help employees make decisions about care with confidence? Under these plans, employees should have a greater incentive to do more research on available treatment options, their efficacy, and potential costs. Whether sufficient information is available--in user-friendly format--to meet this demand is debatable in the current environment. To help employees make more informed decisions regarding treatment, the health care industry must expand this intelligence to help employers make reliable medical information Web sites/telephone services readily accessible.

Reprinted by permission. Copyright © 2003 by The Segal Group, Inc., the parent of The Segal Company. All rights reserved.

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