Consumer-driven health plans may not be the worst way to moderate escalating health-care costs, since they bring a strong measure of free-market principles to an arena largely removed from market forces.
It works like this: employees receive coverage for catastrophic events (after paying a high deductible) and have access to a health-care spending account for less dire medical needs. In theory, this structure motivates people to make good judgments about whether a sore throat really merits a visit to the doctor, and to patronize doctors and hospitals that offer good services at a good price.
But making informed choices about medical care requires the ability to gain data on everything from the merits of specific generic drugs to physician performance records and nurse-to-patient ratios. And that’s the catch with consumer-driven health plans. “There is less information on the health-care system than on any other industry,” says Helen Darling, president of the National Business Group on Health, in Washington, D.C. Although the situation is improving, people still get most of their medical information from the Internet or, if they have friends or relatives in the medical profession, by word-of-mouth.
Moreover, the price of a service isn’t a proxy for quality. Per-capita spending on Medicare by state varies from $5,230 to $8,280, according to research by Dr. Elliott S. Fisher, professor of medicine at Dartmouth Medical School. But, he writes, “there is [actually] a weak negative association between spending and state-level average performance.”
Nonetheless, consumer-driven plans are gaining in popularity in the United States. About 6 million people are now covered by one of these plans, and enrollment has doubled each year for the past several years, says C. William Sharon, senior vice president with Aon Corp. Even if growth slows to 50 percent, about 46 million people could be covered through a consumer-driven plan by 2011. Christopher Calvert, a vice president at The Segal Co., says the current growth rate may slow considerably because “employers are concerned about the availability of good-quality data. Wide acceptance of these plans by employees is unlikely until they become simpler to navigate.”
Outcome data is complicated by the fact that some of the best hospitals see the most complicated cases, says Richard Gundling, vice president of the Healthcare Financial Management Association, in Washington, D.C. Although published rankings of “top hospitals” are widely available, information becomes harder to find further down the food chain.
Some organizations, including Hospital Compare, rank process rather than outcome, but this too is problematic, suggests Regina Herzlinger, author of Consumer-Driven Health Care: Implications for Providers, Payers, and Policymakers. Although adherence to appropriate medical procedures should lead to favorable outcomes, paying for process versus outcome will suppress innovation, she explains. The emphasis should be on results, such as the rates of complications, Herzlinger says.
Even with the aid of health-care Websites (see “Where to Get Information” at the end of this article), accurate price information is difficult to obtain. Most hospitals negotiate different fee schedules with each of their health-insurance carriers, so price depends on the carrier. Worse, few hospitals have the computer systems needed to automatically track this information. Instead, hospital employees pore over stacks of reports and manually enter the information into a database, says Mike Leavitt, Secretary of Health and Human Services at the U.S. Department of Health and Human Services (HHS).