Top of Mind: Consumer-Driven Plans Scrutinized

In their efforts to contain health-care costs, companies are pinning great hopes on consumer-driven health plans (CDHPs), programs that combine high-deductible health insurance with a personal savings account, such as a health savings account. But a slew of studies in the past few months have raised questions about the long-term viability of this approach. A recent study by The Conference Board, for example, noted low selection rates among employees who could choose such plans from among others, and meanwhile, a survey by Towers Perrin found low levels of satisfaction among employees enrolled in such plans compared with those with traditional coverage.

So is the drive toward health-care consumerism stalling out? "My own suspicion is that it's not going to be nearly as popular as people had either hoped or thought, " says Dr. David Mirvis, professor, University of Tennessee Health Science Center. "The configuration of consumer-driven health plans is very complicated, including the high-deductible plans, the saving accounts, and the assumption of patients being informed enough to make wise purchasing choices. You end up with a very complicated matrix of issues that people have to navigate to get through."

Given the complexity of the choice facing consumers, the availability of detailed information is crucial. "The assumptions are that there will be all of this information out there to help you make decisions, and that you'll be able to understand the information and use it. For most people at least, some of those assumptions are extremely difficult," says Mirvis. Even when health-care purchasers do their homework, "their options may be limited by their insurance plan," he adds. "You may have a hospital in town that gets five stars and another that gets three, but your insurance only pays for the three."

For David Knott, senior vice president with consulting firm Booz Allen Hamilton Inc. in New York City, the prognosis for the CDHP market is good. "I think that what we're seeing in the market is a fairly typical series of rounds of experimentation with some of the new offerings. We know that the marketplace continues to struggle massively with affordability. This has historically been true for individual, small-group employers and less true for some of the very large employers, but we now see even massive companies like GM, Chrysler, and others really crippled with some of their health benefit obligations. The underlying trigger or driver of the need for innovation -- to get to some sort of private-sector solution -- is still there."

A new survey of almost 3,000 consumers enrolled in private insurance plans and 600 physicians by Booz Allen Hamilton provides evidence that employees in such plans are more savvy purchasers of health care. "Consumers in a consumer-driven offering were more likely to ask for prices up front and were also more likely to try to negotiate prices with the providers," Knott reports. "These are clearly early signs, but they are still interesting because individuals have not been in these offerings all that long. Even though in most cases they've been in these plans only one to three years, they're already starting to exhibit what we would call the more typical consumer behavior that you would find in other industries."

He adds, though, that "while people in consumer-driven health-care offerings were more likely to seek out information, they're still very disappointed with this information and want better cost and quality transparency."

Dr. Paul Keckley, executive director, Deloitte Center for Health Solutions, points out that state governments are actively promoting mechanisms to engage consumers more directly in health-care decisions. "In 34 states, price transparency is either legislated or in the process of being legislated," he reports. In these states, "prices for health services and, in some cases, costs for health services must be readily available to the general population through some mechanism that's policed." In addition, "there are 24 states where we have various types of quality metrics being promoted, so consumers can compare."

Keckley has seen some slowing in the rate of adoption of CDHPs, but he notes that these plans are only one part of the drive toward consumer-based health care.

"Companies are tiptoeing into it," he adds.