Second of five stories
TUESDAY, Aug. 23(HealthDayNews) -- Employers large and small are having a devil of a time putting the brakes on health-care spending. So more companies are taking an approach that basically puts ordinary Americans in charge of their medical expenses.
That's the idea behind "consumer-directed" health care, a new trend in health benefits design. Introducing people to the actual cost of medical care, the theory goes, will make them shrewder purchasers of medical services, diagnostic tests and prescription drugs -- and help hold down the rising cost of health insurance.
Think about it. If you had to pay several hundred dollars to see the doctor, instead of a nominal co-payment, wouldn't you make sure you were getting the best care for your money? You might ask your provider if the tests he or she is recommending are really that necessary. You might shop for a better, or less expensive, hospital, if you could get good comparative data. You might even consider using a generic drug instead of a pricier brand-name product.
Over the years, consumers have grown accustomed to having health-care benefits provided to them as part of their total compensation package at work. But employers say they can no longer afford such programs.
"We've created a nation of very entitled people who think they can have almost everything," said Helen Darling, president of the National Business Group on Health, a Washington, D.C.-based organization that represents more than 200 businesses, mostly Fortune 500 companies.
Proponents of a consumer-directed model believe that injecting a dose of consumerism into the health-care equation will reduce overall use of care, improve the quality of care people receive and tame health-care inflation.
As an incentive for consumers to take more responsibility for their care, Congress created tax-free health savings accounts (HSAs). Effective January 2004, these accounts allow consumers and their employers to put away pre-tax dollars for out-of-pocket medical expenses.
Anyone who sets up an HSA must be enrolled in a high-deductible health insurance plan. With the exception of some preventive care, this type of coverage takes effect only after a steeper-than-usual deductible has been met.
But critics say the programs may not be for everyone. As high-deductible health plans become more commonplace, chronically ill people will be forced to bear greater out-of-pocket costs. These people won't be able to save up a lot of money because they'll spend the deductible amount every year. So any incentive to contain costs will be lost, the critics contend.
"For young healthy people and families, they may well end up being the winners; the problem is somebody else is likely to be the loser," said Gail Shearer, director of health policy analysis in the Washington. D.C., office of Consumers Union.
High-deductible health plans can be a cost saver for employers, depending on how a plan is structured and priced, said Tom Billet, a senior health benefits consultant in Watson Wyatt Worldwide's Stamford, Conn., office.
HSAs are gaining ground among large employers. Eight percent now offer HSAs and another 18 percent plan to offer them in 2006, according to a new survey by Watson Wyatt and the National Business Group on Health. And although 47 percent said they are considering offering these accounts, employers have some concerns -- almost half (49 percent) aren't sure HSAs can help lower their health-care costs, the study found.
Generally speaking, small employers who replace traditional insurance with high-deductible health plans are likely to realize greater savings, as a percentage of their total costs, than large employers who offer them as an alternative along with other health plan options, experts say.
For many employers, the appeal of this new health insurance model goes back to the philosophy of consumer-directed health care.
"They feel that people will be better medical consumers if they have a little more skin in the game themselves," Billet explained.
More information
For more on consumer-directed health care, visit the Kaiser Family Foundation. Click here to read the first article in this series.
