Critics Give Grim Prognosis for Consumer-Driven Health Plans

Consumer-driven health care is either just getting started or is already on its way out. Both perspectives were presented recently at the National Consumer Driven Healthcare Summit in Washington, ruffling more than a few feathers.

Unlike many health insurance industry events that generally preach to the choir, the summit featured presentations from two Washington-based groups that have been highly critical of the consumer-driven health movement: the New York-based Commonwealth Fund and the Yonkers, New York-based Consumers Union.

Sara Collins, assistant vice president at the Commonwealth Fund, presented findings of the 2nd Annual EBRI/Commonwealth Fund Consumerism in Health Care Survey, which found that enrollment in the plans has been virtually static since 2005.

Jim Guest, president and CEO of the Consumers Union, offered his impressions of the study.

“Consumers did not drive HSAs,” Guest says, referring to health savings accounts, a foundation of consumer-driven plans. “They may be good for the wealthy and the healthy,” but HSAs are mostly driven by “employers trying to save money and insurers trying to increase profits.”

Just six years after it was introduced, the death knell is already sounding for the health plan model, says James Robinson, newly named editor in chief of health care industry journal Health Affairs and a former economics professor at the University of California, Berkeley.

“The vision of self-directed care has faded” and is being replaced with population-based health management approaches, he says during another panel discussion during the three-day meeting.
In addition, employers and insurers are not adopting consumer-driven plans at the rate that had been expected, and the individual market is not developing to allow employers to get out of the health care business, Robinson says.

Contrary to the original objective of consumer-driven health care—that plan members be given the freedom to choose providers—most consumer-driven plan members are choosing providers that
are linked to managed care networks, “demonstrating that they value the role of the health plans in negotiating unit prices and providing utilization management,” Robinson says.

In fact, many early consumer-driven companies have “been swallowed up by the incumbent players,” he says, pointing to acquisitions of Lumenos, which Indianapolis-based WellPoint has acquired, and Definity Health, which now is owned by UnitedHealth Group.

“High-deductible plans have grown a lot more slowly than people anticipated,” Robinson says. As a result, the market is evolving to a new concept, which he called “managed consumerism,” or “Consumer-Driven Health Care 2.0.”

In this evolution, intermediary intervention such as disease management is being welcomed to help manage chronic conditions, many of which are the result of unhealthy behaviors, Robinson says.
During a later session at the conference, Greg Scandlen, president and founder of Consumers for Health Care Choices in Hagerstown, Maryland, and co-chair of the conference, countered Robinson’s remarks, calling his coined term “managed consumerism” an oxymoron.

Scandlen attributed the slowdown in the rate of increase in health care costs over the past few years to the emergence of consumer-driven health care, comparing the current situation to the impact that managed care had in the early 1990s.

“The CDH movement is transforming health care,” he says. “The products are being adopted faster than any other type of plan in my lifetime.”

He says the reason consumers are selecting products with managed care networks is because that is all that insurers have been offering, but that will soon change.

Scandlen also took exception to the suggestion that the incumbent insurers have taken over this fledgling market. “Several of the original companies have been acquired, but the entrepreneurs are busier than ever,” he says.

Filed by Joanne Wojcik of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.