Consumer-Directed Care

Featured Story December 5, 2007

Enthoven Versus Scandlen: Will Consumer-Directed Health Care Change Enrollee Behavior, or Is It Merely a Cost Shifting Plan?

Reprinted fromINSIDE CONSUMER-DIRECTED CARE, a biweekly newsletter with timely news and insightful analysis of benefit design, contracts, market strategies and financial results.

Consumer-directed health (CDH) plans are little more than a cost-shifting strategy for employers, according to Alain Enthoven, Ph.D., professor of public and private management at Stanford University Graduate School of Business. But CDH guru Greg Scandlen, president and CEO of Consumers for Health Care Choice, argues that account-based health plans are doing exactly what they are supposed to be doing — changing behaviors of enrollees.

Scandlen and Enthoven debated the CDH concept, and its merits at a Nov. 8 session of the World Congress's Consumer-Centric Healthcare Congress in Washington, D.C.

Enthoven told attendees that people who are enrolled in a CDH plan "have no financial stake in their [health care] decisions..People are locked into fee-for-service plans, and now cost growth is unsustainable."

Scandlen countered by telling the audience that Enthoven was "misdiagnosing the problem." Third-party payers, he said, not fee-for-service plans, are to blame for the cost growth in health care. "Only in health care is a third-party payer involved. That's what is inflationary [in health care]. It would be under any circumstances. As long as someone else is paying the bill, people will not be concerned about the price," he tells ICDC.

Few Stanford Employees Choose CDH

Enthoven often cites his own employer, Stanford University, as an example of an employer that offers several health coverage choices to employees. Stanford made an HSA-based option available for the 2008 plan year, according to the school's Web site. The plan, administered by Blue Shield of California, is offered alongside three HMOs and another PPO. Enthoven said the HSA option was made available to appeal to upper-income employees who wanted a tax break. Only about 2% of Stanford's eligible employees enrolled in the new option, according to Enthoven, reflecting the fact that employees don't see much value in HSAs.

"The problem for consumers is.most employees don't have the opportunity to choose the low-cost plans and keep the savings," he said.

CDH plans "do not help consumers at all," he argued.

In a post-conference interview with ICDC, Enthoven said that "healthy consumers can take CDH plans and get a lower premium if the employer allows them to keep the savings. Employees with chronic conditions will have to pay the below-deductible costs themselves and, therefore, bear more costs than will the healthy.

CDH is a way of shifting costs to the sick, calling into question the fairness," he asserted. But HSAs, he added, might not survive the possible election of a Democratic president and a Democrat-led Congress next year. "They are likely to want to undo the tax break for HSAs," he said.

CDH Outlook 'Could Not Be Better'

The outlook for CDH plans "could not be better," Scandlen responded. "It is what we predicted and hoped would happen. People are changing their behavior — they're doing more for their chronic conditions, using treatment programs, reducing the use of unnecessary services. All of this is reducing costs industrywide. Individuals are just eating these things up."

The obstacles for consumers outside of the CDH environment "are massive," Scandlen said in an interview with ICDC. "The services are overpriced and inefficient.…CDH plans are beginning to reveal to consumers the magnitude of the problems. [Enrollees] are often shocked when they find out just how messed up the system is. Now they are given the tools, which means money, but also information," he said.

CDH enrollees who find it difficult to afford the high deductibles of their plans would likely have an equally difficult time paying the high premiums for more traditional plans, Scandlen said at the conference. The people who have to pay more out of pocket are those with annual health spending of between $2,500 and $5,000 a year, he said. "The people in that range spend enough to make a difference and are well enough to make a difference" by making better decisions about their care," he told ICDC.

Advertise With AIS

Privacy

Site Map