The latest outpouring of studies about consumerism in the health sector comes this week from Health Affairs and EBRI (the Employee Benefit Research Institute). The problem this time is not so much with the studies, but with the media spin.
The Washington Post, for example, led its report on the Health Affairs study saying, ?A new kind of health plan being offered by a growing number of employers appears to save on costs but may lead some patients to forgo needed care, a study by Rand Corp. economists has found.?
But that is not what the study says. It says that basically, the jury is still out. The RAND authors, led by economist Melinda Buntin, say ??in no cases are the findings able to cover much more than the plans’ initial implementation periods.?
But this question of whether or not people will forgo care is central to the debate over consumer directed care.
RAND’s Health Insurance Experiment study from the 1970s still provides the most solid evidence that higher out-of-pocket costs decrease utilization of health services but with no adverse health outcomes. And it shows the corollary: If something is free or nearly so, people will use more of it even if it doesn’t produce a commensurate health benefit.
Dartmouth researcher Jack Wennberg has demonstrated this more recently with his work studying utilization of services by Medicare patients in different regions: Seniors in Florida use many more health services than those in Minnesota, but Floridians are not more healthy and the extra medical interventions can even be harmful to them.
Here is the key phrase from the Buntin study that the Washington Post and papers around the country used as the basis for their articles: ??several studies find that those in consumer-directed plans are significantly more likely to adopt cost-saving behavior that might have adverse consequences.? And it says there ?may be? some modest selection of CDHC plans by healthier people ?that warrants monitoring.?
That’s it. But there is a wealth of positive information in this comprehensive and well-done survey of existing studies on CDHC that largely goes unreported, such as:
- ?Estimates of at least 10 percent savings relative to expected trends for employers introducing high-deductible plans are typical, with some reporting 20-25 percent savings.?
- ?Several studies report increased use of preventive care in consumer-directed plans and increased compliance with prescribed treatment regimens.?
- ?Many consumer-directed plans include financial incentives to encourage participation in programs such as health risk appraisals, disease management programs to develop self-management skills for chronic diseases, and wellness initiatives.?
- Consumers in CDHC plans make greater use of information resources and are ?more likely to check plan coverage before seeking care, discuss costs and options with physicians, ask for less costly drugs, check quality ratings, and ask about service prices.?
Isn’t that what we want?
So why are these negative spins important? Because employers and others hear the reports and are often deterred from considering new health care financing options. Human resource managers do not want to take risks, and if study after study reports on negative consequences, you can bet they will be less than enthusiastic.
I do believe, however, that the cost savings from CDHC plans can tip the balance. CEOs look at the potential cost savings and can’t help but pay attention.
Nonetheless, paternalism prevails: In one of six papers accompanying the Health Affairs lead study, California researcher Marjorie Ginsburg concludes that ?consumer-directed care reflects health care providers’ failure to deliver value and unrealistically assumes that consumers can make sound, cost-effective medical decisions.?
But that’s not supported by the evidence. Buntin et al interviewed a number of health sector leaders: ?The experts with whom we spoke were unanimous in agreeing that increased consumer engagement is important to improved decision making, adherence, and outcomes and that financial incentives could be important in bringing about this engagement.?
In its annual ?Health Confidence Survey,? EBRI found that people are very dissatisfied with the U.S. health system as a whole but quite happy with their own care, thank you.
And here’s the clincher: ?Most Americans are fairly confident that they have enough knowledge to make decisions about their health care?[and] one-third indicate that quality would improve if they knew the full price of health care services they receive, not just what they pay.?
So the bottom line is that people believe they can be more engaged in their health care decisions and want more information, especially about prices. Reporters and political leaders who are still looking backward, take note.
RECENT NEWS ARTICLES AND STUDIES:
- The dangers of undermining patient choice: Lessons from Europe and Canada
- Seniors in Vermont are finding they can go home again
- Building on the successes of health savings accounts
- Medicaid third-party liability: Federal guidance needed to help states address continuing problems
- Healthcare investment strategy
- A living donor let me live on
THE DANGERS OF UNDERMINING PATIENT CHOICE: LESSONS FROM EUROPE AND CANADA
Source: Institute for Policy Innovation, Galen Institute, and International Policy Network, 10/06
Health care in Europe is in a state of transition and can provide some valuable lessons for the U.S., according to a new report jointly published by the Galen Institute, the Institute for Policy Innovation, and the International Policy Network. The report provides a collection of nine essays by top European and Canadian economists and health policy experts offering first-hand reports on their national health systems. ?What these experts expose are governments often obsessed with micromanaging the health care system?And the result is millions of patients facing long waiting lines, going untreated, or treated with old and outdated technologies,? according to the report. Authors include Stephen Pollard and Wilfried Prewo of the Centre for the New Europe, Helen Disney of the Stockholm Network, and Brian Lee Crowley of the Atlantic Institute for Market Studies.
Full text: www.galen.org
SENIORS IN VERMONT ARE FINDING THEY CAN GO HOME AGAIN
Author: Lucette Lagnado
Source: The Wall Street Journal, 10/23/06
?In an effort being watched around the nation, Vermont is trying to give elderly people a choice of where they want to be cared for: in an institution or at home,? according to The Wall Street Journal. Vermont’s ?Choices for Care? program uses a combination of federal and state money to reimburse family members approximately $10 an hour to care for aging relatives. ?According to a 2002 Vermont study, it cost the state $122 a day for a senior to be institutionalized versus $80 a day to receive care at home,? reports the Journal. Vermont is also supporting other alternatives to nursing homes including assisted-living facilities, day-care centers for seniors, and privately run boarding homes. Full text (subscription required): online.wsj.com
BUILDING ON THE SUCCESSES OF HEALTH SAVINGS ACCOUNTS
Authors: Greg D’Angelo and Robert E. Moffit, Ph.D.
Source: The Heritage Foundation, 10/20/06
Health savings accounts are becoming increasingly popular, but several provisions included in the Health Opportunity and Patient Empowerment Act of 2006 could further improve HSAs, according to Greg D’Angelo and Bob Moffit of The Heritage Foundation. ?Congress should build on the success of HSAs by clearing away several problems with their management and administration: (1) authorize individuals to fund HSAs with a one-time transfer from other health accounts; (2) allow individuals opening an HSA mid-year to contribute up to the yearly limit; (3) give employers the leverage to make higher contributions for low-wage workers; and (4) simplify compliance with contribution limits by indexing and adjusting amounts annually,? write the authors. In addition to these improvements, the authors urge Congress to level the playing field for all health coverage options by fixing the federal tax code that favors employment-based health insurance.
Full text: www.heritage.org
MEDICAID THIRD-PARTY LIABILITY: FEDERAL GUIDANCE NEEDED TO HELP STATES ADDRESS CONTINUING PROBLEMS
Source: Government Accountability Office, 09/06
GAO examines the problems states face in paying Medicaid claims for recipients who also have private insurance that should pay first. ?With an estimated 13 percent of Medicaid beneficiaries having private health coverage available to them, significant savings can accrue to both the federal government and the states when states are able to avoid costs and recover payments from liable third parties,? the report states. The two main problems states face in ensuring that Medicaid is the payer of last resort are verifying that recipients do have private health coverage and collecting payments from their insurance companies. The Deficit Reduction Act has new provisions that give states more authority to collect these third-party claims, and GAO says the federal government could help the states by providing guidance about changes they need to make to state law to comply.
Full text: www.gao.gov
HEALTHCARE INVESTMENT STRATEGY
Source: Goldman Sachs, 09/20/06
Goldman Sachs says that consumerism ?represents an emerging ‘disruptive technology’ in the healthcare market. As such, it has the potential to recalibrate the US healthcare market and shift permanently the basis for competitive advantage in many healthcare product and service sectors.? The analysis observes that ?misaligned economic incentives and tax policies have impaired market efficiency and increased costs. In light of demographic patterns, we expect corporations and governments will be inclined to address imbalances in healthcare spending by restructuring health benefits and provider payment terms.? The report covers topics including why consumerism should matter to healthcare investors, the basics of consumer-directed healthcare, how consumerism is affecting healthcare spending, and adoption trends. It concludes: ?it may be that the market has passed the ‘tipping point’ in terms of the consumer’s role in the health care economy.?
Full text: www.gs.com
A LIVING DONOR LET ME LIVE ON
Author: Sally Satel, M.D.
Source: USA Today, 10/25/06
AEI’s Sally Satel, who received a kidney transplant this Spring, writes about the ?misplaced faith in the power of altruism? in the organ transplant process. ?The current system expects people – living donors and the loved ones of the deceased – to give a body part and receive nothing in return,? writes Satel. But current laws make it illegal to receive any payment in exchange for an organ. ?It is time to change the law and permit imaginative pilot projects to increase the number of organs from donors – living and deceased,? writes Satel. ?One of the most promising ideas focuses on the large potential pool of living donors.? Medicare is a prime candidate to pay for such a project, but private insurers and charities could also serve as payers.
Full text: www.aei.org
Consumer-Directed Health Care: What Does It Mean? Where Are We Headed?
Center of the American Experiment Luncheon Forum
Wednesday, November 1, 2006, Noon - 1:30 p.m.
Grace-Marie Turner will speak about current trends and the future of consumer-directed health care. For additional details and registration information, go to: www.americanexperiment.org.
Improving Health Care Quality: Is Medicare a Good Candidate for Pay-for-Performance?
Cato Institute Policy Forum
Thursday, November 2, 2006, 4:00 p.m. (Reception to follow)
For additional details and registration information, go to: www.cato.org.
Health Policy Matters is a weekly newsletter containing summaries of timely and informative studies and articles on free-market health reform. It features research and writings by participants in the Health Policy Consensus Group, articles of interest from the health policy world, and announcements of coming events. Health Policy Matters is published by the Galen Institute, a not-for-profit public policy organization specializing in information and education on health policy. For more information about the newsletter and our organization, please visit our website at www.galen.org.
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