Consumer-Driven Health Plans Work

Employees covered by Consumer Driven Health Plans (CDHP)  show that they work.  The Employee Benefit Research Institute has published their annual Consumer Engagement in Health Care study and found that individuals in CDHPs were more likely than those with traditional coverage to exhibit a number of cost-conscious behaviors.  They were more likely to say that they:

• had checked whether the plan would cover care;
• asked for a generic drug instead of a brand name;
• talked to their doctor about prescription drug options, other treatments, and costs;
• asked their doctor to recommend a less costly prescription drug;
• developed a budget to manage health care expenses;
• checked prices before getting care; and
• used an online cost-tracking tool.

What’s more, they were more involved with wellness programs:

• They were more likely than traditional plan enrollees to report that they had the opportunity to fill out a health risk assessment,
• They were equally likely to report that they had access to a health promotion program.
• They were more likely than traditional plan enrollees to participate when a program was offered.
• Among those not participating, they did not participate because they felt that they could
  • make the changes on their own;
  • they lacked time; and
  • they were already healthy.

Moral of the Story?

It’s a lesson the idiots in Washington (and some of us idiots working in or administering health plans) never seem to get — when it’s my money at stake, I’ll be cautious and act wisely. When it’s somebody else’s money — like an insurance company or, even worse, the government’s money — why not act stupid and wastefully?

*****After all, what I do doesn’t affect my pocket or premiums, so what do I care?*****

CDHP’s Are Growing

First, understand that a Consumer Directed Health Plan and a High Deductible Health Plan are different.  All Consumer Directed Health Plans are High Deductible, but not all High Deductible Health Plans are Consumer Directed.

In order to be Consumer Directed, the employee has to share in the savings achieved by wise use of the health delivery system. So just because the employee has to pay a big up-front deductible isn’t enough — like under an HSA Plan, he has to profit from his decision for it to be considered a Consumer Directed plan.

Consumer Directed Health Plans: In 2009, 4 percent of the population was enrolled in a CDHP, up from 3 percent in 2008.  This represents 5 million adults ages 21–64 with private insurance.

High Deductible Health Plans: Enrollment in HDHPs increased from 11 percent in 2008 to 13 percent in 2009, and that represents 16.2 million people.

“Could Be” CDHP’s: Among the 16.2 million individuals with an HDHP, 38 percent (or 6.2 million) reported that they were eligible for a health savings account (HSA) but did not have such an account. Overall, 11.2 million adults ages 21–64 with private insurance, representing 8.9 percent of that market, were either in a CDHP or were in an HDHP that was eligible for an HSA, but had not opened the account.

This last fact underscores my contention that you — the employer — have to participate in the funding of the HSA because often your employees can’t afford to.  And in the absence of some “skin in the game” they just won’t play.

So if you/we are serious that we want to see Americans engage in wiser health system utilization, we need the carrot as well as the stick.  Even stupider is the Washington DC belief that you can pay the whole thing and still somehow — usually by bureaucratic interference — achieve lower costs.

It’s all self-interest, folks, all self-interest.