mployee health care in America has been a something of a study in false panaceas.
In the post-World War II age of prosperity, our original model––indemnity plans
paid by employers––prevailed for three decades, until cost creep and utilization
began to redden company ledgers. Then came the rise of the HMOs, posting steady
cost-control success until savings were eroded by double-digit health-premium inflation.
It proved that the HMO solution, despite its advantages, was all too vulnerable
to market forces.
The recent era of cost-shifting—which was initially, though
begrudgingly, tolerated by employers and employees who conceded that the burden
of health care inflation must be shared—is proving an unsustainable solution. Indeed,
neither side of the cost-shifting transaction ever viewed it as the ultimate answer.
Now, at the start of a new century, there’s hope that health care consumerism and
account-based consumer-directed health plans will generate a wave of personal responsibility
on the part of employees for benefits, controlling costs and helping preserve the
fraying health care covenant.
It’s no panacea, of course––not yet. And it’s hard to say
how it will evolve in the current environment, as presidential hopefuls and Congress
debate the ideas of universal health care and single-payer solutions. But we know
this consumerist trend is at least real. A survey conducted annually by Mercer Health
& Benefits (including nearly 3,000 employer participants in 2006, statistically
projectable to all employers with 10 or more employees) showed that the percentage
of all surveyed employers offering a consumer-directed health plan based on either
a health reimbursement account or a health savings account tripled in 2006, from
2 percent to 6 percent, as small employers began adapting the new plan type in significant
numbers for the first time.
Meanwhile, growth was strong among large employers, with consumer-directed
health plan offerings rising from 5 percent in 2005 to 11 percent among employers
with 500 or more employees, and from 22 percent to 37 percent among jumbo employers
(20,000 or more employees). Foreshadowing the rising consumerism tide, when asked
what types of plans they expected to offer five years from now, 61 percent of employers
with 500 or more employees indicated that they’d be offering one or more consumer-directed
health plans.
More important, perhaps, the increased consumerism efforts
and consumer-directed health plan adoption may point the way to greater cost sustainability.
Consumer-directed health plans delivered substantially lower cost per employee than
either preferred provider organizations or HMOs in 2006. But like any hopeful trend
in the early stages of success, the rise of consumerism in health care demands a
reality check, and already it’s evident that a parallel trend is threatening to
slow the momentum of positive change––for now, let’s call it "CDH vs. CDH."
As observed in the above-cited annual research and in extensive
client experience, there’s CDH (cost-driven health care), and then there’s CDH (true
consumer-directed health care). Cost-driven health care is actually a cost-shifting
effort masquerading as consumerism, and this less than sustainable solution may
begin with a benefits manager under pressure from executives to "do consumer-directed
health care" for the purpose of immediate cost savings.
As a result, an HSA-compliant plan typically is added to the
benefits menu along with current plan offerings, but with little or no company contribution
to the HSA, little or no investment in tools, information or support for participants
in the HSA, and no long-term education or communication strategy for the program.
Predictable results can include very low adoption by workers
or, if the offering is forced, significant employee relations issues. Cost-driven
health may also foster poor choices or unintended health consequences for those
in the program. There may be a short-term dip in company costs achieved through
cost shifting to workers, followed by a longer-term cost-increase trend driven by
poor health and lagging productivity issues.
As for genuine consumer-directed health care, it’s precisely
the CDH we mean when we talk about the rise of consumerism. But it requires more
effort, energy and involvement by all stakeholders to successfully launch and sustain.
For plan sponsors, that means such commitments as adopting a documented multi-year
health strategy; adding account-based or consumerist health plans as significant––if
not the only––options over time; and making meaningful contributions to any health
account so that most of the participants can reasonably expect to manage their health
with the funds provided.
It also demands a concerted effort to provide support, tools
and information to help employees become more involved and informed health care
consumers. And all of this needs to be wrapped in a compelling communication package
with ongoing educational elements that continue long after implementation.
That’s a tall order, requiring a level of discipline from
all stakeholders that was never required under the indemnity or HMO models, and
which employees have struggled with in the cost-shifting era. But with consumer-driven
health care done right, positive behavior changes, improved companywide health status
and cost savings can often be seen over time. And even then, employers need to monitor
the program, adjust elements as necessary and guard against unintended consequences
such as care avoidance or a disproportionate impact on lower-paid or ill workers.
No, a consumerist panacea will be a hard-won victory, fought
not only in the trenches of innovative programs to create involved and informed
consumers, but also on the battlefields of good benefit and health-plan management
basics, vendor negotiations, network discounts and access, disease management programs,
and health assessment and improvement efforts. But amid all the uncertainties and
complexities that define the health care landscape in today’s increasingly global,
fiscally fragile corporate universe, the advent of consumerism sounds a note of
sense and sustainability. Its success calls for a commitment to consumer-driven
health care––with no illusions.
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