Interpreting Surveys

Critics have taken another hit at consumer-directed health care with a new survey by The Commonwealth Fund and the Employee Benefit Research Institute (EBRI).

The survey reports that “individuals with more comprehensive health insurance were more satisfied with their health plan than individuals in high deductible plans” and that people with consumer-directed plans spent more out of pocket and were more likely to forgo care. Let’s take them in order:

  • To the satisfaction charge: The survey was conducted online by Harris Interactive, and people volunteered to participate. The data shows that more than half of the people in the consumer-directed and high-deductible plans did not have a choice of health plans, and therefore were most likely enrolled in a “full-replacement” plan by their employers.

    McKinsey found in an earlier study that people who didn’t have a choice of plans were less satisfied with CDHC than those who voluntarily selected this coverage option on their own.

  • Next, out of pocket spending doesn’t reflect total spending. Those with traditional insurance said they spent less out of pocket than those with CDHC through lower deductibles and office co-payments, but that’s not the full picture. Health insurance is part of an employee’s overall compensation package, and we pay the bills, one way or the other. Traditional health insurance generally has higher premiums, so those with this coverage are likely paying more through hidden costs, such as lower wage increases.

    The illusion that someone else is paying for our health care is a fiction. Consumer-directed care plans simply make the spending more visible.

  • One third of people with CDHC were likely to delay or avoid care, compared to 17% with traditional coverage. But as our colleague Joe Antos of AEI points out in a Wall Street Journal dialogue (see articles section below), “Dr. Jack Wennberg and his colleagues at Dartmouth have shown that more health spending is often associated with worse health outcomes for patients?Clearly, the financial incentives of third-party payment promote additional treatment that, on the margin, can provide very little value.”

If I were writing the summary of this report, here is the lead I would have written, based on EBRI and Commonwealth’s own data:

“A new survey shows that consumer-directed health care provides incentives for people to be more responsible for their health care and health spending. Those in consumer-directed health plans exercise more, and they are less likely than those in traditional plans to smoke and to be obese. People in consumer-directed plans also were more likely ‘to seek out information prior to receiving care and to consider costs in their decisions about their health care,’ according to the study.”

The survey concludes that the biggest need is for more and better information to help people make choices. The survey shows “that at least one factor crucial to the success of consumer-driven health plans – realistic, useful, accessible health-cost information – does not yet exist on a widespread basis.”

A point of agreement.


ABC News will air tonight the last documentary by the network’s late anchor, Peter Jennings, focusing on “America’s Health Insurance Crisis.” The previews say that “one of the factors leading to the increasing number of uninsured is the difficulty involved in buying insurance. Even people who can afford the ever-increasing prices can’t always get it. In most states, health insurance companies can turn down applicants who suffer from even the most common medical problems, like allergies and acne.” This is too often true.

ABC News says that “though Americans often blame insurance companies for the rapidly increasing cost of health insurance, Jennings finds that prices are rising because Americans are using more medical care – and more expensive care – than ever before.”

The program airs at 10 p.m. ET. Jennings, who died earlier this year of lung cancer, was a Canadian who was highly critical of the U.S. health care system, and this final documentary will be no exception.

Grace-Marie Turner


  • Ensuring access to affordable drug coverage in Medicare
  • Consumer-directed health insurance: The next generation
  • Consumer choice: Can it cure the nation’s healthcare ills?
  • Congress’s budget reconciliation package should not hinder hospital specialization
  • Trends in state mandated benefits
  • Feed the beast?

Author: Joseph R. Antos
Source: American Enterprise Institute, 12/06/05

Joe Antos of the American Enterprise Institute examines the major challenges that will determine the success or failure of the new Medicare prescription drug program, including “whether market-based approaches will be more effective than direct government intervention in limiting spending; how will beneficiaries, drug plans, employers, and States adapt to the new program; and the balance between cost containment and access to innovative new pharmaceuticals.” Antos discusses the program’s enrollment, retiree drug benefits, dually eligible beneficiaries, and price transparency and information technology, and pharmaceutical innovation. “The long-term performance of the drug benefit will depend on whether competing private plans are able to establish a reasonable degree of cost control for Part D without unduly restricting access to pharmaceuticals,” concludes Antos. “Finding and maintaining the right balance between cost and access is essential if Medicare is to meet the health needs of future generations.”
Full text:

Author: James C. Robinson
Source: Health Affairs Web Exclusive, 12/13/05

UC Berkeley Professor James Robinson interviews Dr. Jack Rowe, the chairman and CEO of Aetna, to learn about Aetna’s initiatives on a wide range of issues involving the company’s move into the consumer-directed health care space. Dr. Rowe says Aetna currently has 400,000 – 500,000 customers enrolled in HSAs and HRA products, “with a substantial increase in the numbers of plan sponsors offering these products to their employees” in January. Rowe outlines the range of new products and services that Aetna has introduced to support CDHC products, including information on quality and price such as the Cincinnati pricing pilot, Aetna’s Aexcel network of specialists, and more active medical management of those with chronic diseases through ActiveHealth.
Full text:

Source: The Wall Street Journal Online, 12/13/05

Joseph Antos of the American Enterprise Institute, Robert Reischauer of the Urban Institute, and John Goodman of the National Center for Policy Analysis participated in an online debate this week to explore whether consumer-directed health care is the solution — or part of it — to rising health care costs. In the debate moderated by Laurie McGinley of The Wall Street Journal, Antos said that the market can be reshaped by “10% to 20% of empowered consumers [who] could change the direction of the private health system.” He said that CDHC doesn’t raise overall costs to employees: “Directly or indirectly, workers pay for their own health insurance. Benefits are simply one part of compensation, and higher insurance costs mean that wage increases will be lower. Shifting to a high deductible plan does not shift costs to employees as a group, but it does make those costs more apparent.” Reischauer said that a better approach to curbing rising costs is reference pricing. “Under this system, basic insurance would cover (with some modest co-insurance) the cost an efficiently provided service that met acceptable quality standards,” said Reischauer, and consumers could pay more to get more. But Antos disagreed, saying: “Reference pricing allows the consumer to buy yesterday’s technology at yesterday’s prices.”
Full text:

Author: Robert E. Moffit, Ph.D.
Source: The Heritage Foundation, 12/14/05

A provision in the Senate budget reconciliation bill that would place a permanent moratorium on specialty hospitals “would take aim directly at high-quality medical treatment, to the detriment of millions of Americans,” writes Bob Moffit of The Heritage Foundation. A recent analysis conducted by the Department of Health and Human Services found “that the quality of care at cardiac specialty hospitals was as good as or better than that provided by general hospitals; that patient satisfaction was very high; and that specialty hospitals?dedicated a significant proportion of their revenues to uncompensated care.” Instead of “stifling innovation and competition,” Congress should instead “require physician disclosure of financial interests in a facility to a patient before the physician refers that patient to a specialized hospital or other facility,” concludes Moffit. “Congress should make sure that its health care policy is grounded in the values of market competition and consumer choice, improving the prospects for innovation and imagination in the delivery of quality medical care to millions of Americans.”
Full text:

Author: Victoria Craig Bunce
Source: Council for Affordable Health Insurance, 12/05

The Council for Affordable Health Insurance (CAHI) has issued a short report tracking recent trends in state mandated benefits and finds that “[a]t a time when the number of people without health coverage is growing, it is important to recognize that mandates make health insurance more expensive and that some employers or individuals will not be able to afford it.” Some of the mandates that are growing in popularity among the states include coverage for dental anesthesia, diabetes self-management coverage, cervical cancer screenings, and coverage of contraceptives. CAHI “has estimated that, depending on where one lives, mandates can boost the cost of a policy between 20 and 45 percent.” Before passing a new mandate, CAHI recommends that state legislatures “require a comprehensive cost analysis to assess the mandate’s likely impact on health insurance premiums. And before imposing it on the whole population, the state should include the mandated coverage in state workers’ policies.”
Full text (pdf):

Author: Merrill Matthews
Source: Institute for Policy Innovation, 12/13/05

Medicaid is “a monster that is draining state budgets,” writes Merrill Matthews of IPI on the Medicaid reform proposals currently before the House and Senate. House Energy and Commerce Committee Chairman Joe Barton “is trying to make Medicaid more efficient and less costly,” but Senate Finance Committee Chairman Charles Grassley “would make Medicaid more costly and less efficient.” The Senate proposes an increase from 15.1% to 18.1% in the payment rebate that drug manufacturers must pay to states for their drugs to be made available to Medicaid patients. “We suppose that Sen. Grassley reasons that forcing the drug companies to pay higher rebates would provide more money for the states to spend on health care for the poor,” writes Matthews. “But — and here is the irony — there is no federal requirement that rebate money?be used on health care. The state could use it for roads, buildings or to buy the governor an airplane.”
Full text:


The Medical Malpractice Myth?
American Enterprise Institute Event
Monday, December 19, 2005, 2:00-4:00 p.m.
Washington, D.C. 20036

For additional details and registration information, go to:

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