Consumer-Driven Health Plans
By the turn of the millennium, large increases in health costs again became commonplace. With the belief by some observers that the age of managed care was over, they began to search for alternatives. Consumer-driven (or consumer-directed) health plans have been offered as one such option.
Consumer-driven health care refers to a broad spectrum of approaches that give incentives to consumers to control their use of health services and/or ration their own health benefits. In the workplace, at one extreme employers may choose to provide an array of insurance products from which workers can choose, while at the other end an employer could increase wages but not offer any health coverage allowing workers to decide how to spend that extra money to meet their health care needs. Within those two endpoints, the consumer-directed approach varies in the degree to which consumers are responsible for health care decision-making. For example, one health benefits option that is at the heart of discussions about consumer-driven health care is the health savings account (HSA). Under this approach, the consumer is responsible for management of the account. HSAs are investment accounts in which contributions earn interest tax free. Consumers, their employers, or both may make contributions to HSAs. Consumers withdraw funds on a tax-free basis to cover medical expenses not covered by health insurance.Unused contributions roll over to the next year. HSAs must be paired with highdeductible health plans. If the HSA funds are exhausted and the deductible level has not been reached, the consumer is responsible for covering that gap. Once the consumer’s spending reaches the deductible level, then coverage from the hdeductible plan takes effect.
While consumer-driven health care can take on many forms, the premise common to all of the approaches is that by making enrollees more responsible for their own health care, it creates incentives for people to use services prudently. The expectation is that greater cost-consciousness on the part of consumers will result in lower overall health costs. In essence, the service and cost control functions administered by MCOs and providers under managed care shifts to enrollees under the consumer-driven plan scenario.
Proponents of consumer-directed plans assert the merit in having people take increased responsibility for their own health care use and expenses. They predict that this approach will lead to better-informed consumers, more appropriate use of health services, and lower overall spending on health care. Opponents express concern that this approach does not recognize the possible range of health conditions in an enrolled population. They argue that these plans benefit the young and healthy who use relatively few services, and, therefore, would not need to expend a great deal of time and energy making these health care decisions. However, these plans impose a greater burden on individuals with moderate to severe health conditions because of their greater-than-average use of medical services.
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