Consumer-directed healthcare was launched several years ago based on the premise that providing consumers with financial incentives to select cost-effective health services would reduce the high costs and low quality that have become pervasive in the healthcare industry. This "incentive" was a dramatic shift of financial responsibility to the consumer in conjunction with the implementation of lower premium/ high deductible plans. The intent was to decrease excess healthcare expenditures while encouraging comparison shopping for necessary patient care.
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The market's initial response has been increasingly positive. In Forrester's 2005 Best Practices "Health Plans' CDHP Tool Kit," analysts estimated that consumer-directed healthcare plan (CDHP) enrollment will reach 12 million, or 7 percent of the commercially insured market, by 2007. Additionally, just over half of the employers queried in Forrester's August 2006 Trends "What Roadblocks Hinder Employer Adoption Of Consumer-Directed Health Plans?" indicated that they either currently offer, or plan to offer, a CDH plan within the next two years.
The federal government also has demonstrated strong support for CDHP as indicated by its passage of the Medicare Prescription Drug, Improvement and Modernization Act of 2003, which led to the development of tax-free health savings accounts (HSAs) to complement CDHP offerings. Moreover, the Bush administration has proposed tax deductions for healthcare premiums related to individuals' purchases of HSA plans.
Although this transformation of our nation's healthcare model offers the potential for significant reduction of healthcare costs, there are strong fears reverberating throughout the industry. Specifically, we face the dilemma of getting exactly what we asked for--significant movement to CDH plans. If market forces dictate behavior, the early adopters will be those that stand to profit most, which will likely include those that are paying top premiums without high usage of benefits. In other words, the healthiest of the population could move from standard group insurance to CDH plans. This could result in the remaining population being heavily weighted towards those with chronic illnesses and high healthcare usage and costs. In the long run, that could increase overall healthcare premiums and lead to reduced employer-supplied healthcare insurance plans.
There is considerable concern that those who have selected a CDH plan will decrease their healthcare usage even when the care is appropriate and helpful. This short-term tactic of saving money by limiting essential care will result in a long-term increase in healthcare costs as illnesses go undetected and health risks become emergency care issues.
This frightening scenario becomes even greater for a provider who must now present various treatment options and prices to the consumer for their selection. Consumers may opt for the less expensive treatment, not fully comprehending the possible differences in efficacy of treatment or detection of illness. Providers must then convince the consumer to pay for the more costly treatment, or face a possible lawsuit themselves if the treatment does not result in improvement--or worse case, if the patient's disease condition remains undetected and takes a significant turn for the worse.
The real litmus test is whether consumers are happy with their CDHP selection. The most recent industry studies indicate that consumers are not satisfied with the benefits they are receiving through their CDH plans. On the contrary, they have been shocked by the serious impact of high deductibles on their finances and surprised to discover how little information is available to help guide their healthcare selections and purchases. In fact, many are considering switching back to their previous health plans when and if they are available. This rejection of CDH plans by consumers could deeply affect employers and overall CDHP adoption if it leads to reduced employee retention and hiring as standard health plan offerings are replaced with CDHP options.
Consumer-directed healthcare is, admittedly, a disruptive innovation for the industry and will continue to cause angst among stakeholders as it becomes the new de facto standard. In the meantime, marketplace frustrations can be assuaged through various strategies.
First, we need to address the deficiency in patient-centric tools--and consumer education about those tools--that enable consumer access to the information required to make informed healthcare decisions. There is a healthy debate about which healthcare stakeholder should lead the consumer education outreach. In many ways, it is the responsibility of everyone to spread the word about the advantages of CDHP and the new patient-centric tools.
On the other hand, many industry pundits would assert that the burden, or opportunity, lay within the payer's realm. With healthcare databases that include pricing for prescriptions, common medical procedures and provider services, payers are uniquely situated to expand the level of transparency and consumer access to this convoluted system of negotiated rates.
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