1. Consumer-Driven Health Care: A National Overview
Anthony T. Lo Sasso, Ph.D.
Northwestern University

2. The (Very) Big Picture of CDHC
While we are all very concerned about uninsurance and under-insurance, it’s worth stepping back and thinking about OVER-insurance for a moment
Consumer-driven health care IS sugar-coated cost-sharing, but at least there’s some sugar!

3. The Sugar Coating: Notable Aspects of CDHC
Key word in the name is “consumer”: changes patients from passive recipients to active consumers
Managed care succeeded in restraining costs because a third-party was placed in the role of saying “no” to patients
By contrast, consumer-driven health care is an effort to put patients in a position to say “no” to themselves
It does so by creating a “budget constraint” which by definition creates incentives
However, unlike simply raising copays, coinsurance, and deductibles, CDHC plans provide first-dollar coverage with spending accounts and create incentive to enrollees to use preventive services by exempting them from the spending account

4. What are Employers Thinking?
The Henry J. Kaiser Family Foundation/ Health Research and Educational Trust 2003 Survey of Employer-Sponsored Health Benefits
This supplement entailed fifteen questions about firms’ offerings, future plans, and views on consumer-driven health care

5. Yes, Cost-Sharing is For Real
Small (3-199 Workers)
Large (200+Workers)
All Firms
Deductibles, PPO Plans
In-Network
2000
$210
$157
$175
2003
$419
$209
$275
Out-of-Network
$383
$319
$340
$783
$459
$561
Employee Contribution, Family Coverage
$162
$121
$135
$248
$179
$201

6. How Familiar are Firms with CDHC Relative to Other Initiatives, 2003?

7. Use of High Deductible Plans and High Deductible/HRA Plans, 2003

8. Employers Report Mixed Feelings About CDHC, 2003
Strongly
Agree
Somewhat
agree
Somewhat disagree
Strongly disagree
HRAs will result in lower health care use and expenditures
10%
59%
21% 5%
HRAs will attract healthier employees
38%
42%
14% 4%
HRAs will lead to more intelligent medical care purchases by employees
19%
45%
24% 8%
HRAs will improve the quality of care
27%
44%
HRAs will be popular with employees 2%
23%
36%
35%

9. Likelihood that Employers Will Offer an HRA, 2003
Very likely
Somewhat likely
Somewhat unlikely
Very unlikely
Likelihood of offering an HRA in the next two years
10%
21%
30%
39%

10. Company Case Study A 2500 employee manufacturing firm
Implemented Definity HRA product in one of its two primary sites, 2002
Decision was motivated by company belief that the consumer must be engaged in the process to affect health care costs
Company viewed the benefit change as a long-term commitment to “shrinking the pie”

11. Details of the Experience
Plan featured $1000 account/$1500 deductible for single & $2000 account/$3000 deductible for family
Enrollment in 2002 in CDHC was 12% (189 employees)
39% of enrollees spent through their spending accounts during the year
Of them, ¾ also spent through their deductible

12. Further Details
Biggest challenge to implementation: educating employees
Administratively it appears to reduce the burden on staff
Company continued to offer Definity in 2003 and penetration increased to 28%
In 2003 company implemented Definity product as a total replacement in other site

13. Observations
The Definity enrollees did tend to be healthier than average
Health costs were significantly lower in the CDHC group, but haven’t controlled for selection
The size of the network matters greatly
However, when contracting expanded in 2003, enrollment increased
People do not blow through their accounts

14. Concluding Remarks
At their best, CDHC will provide a mechanism to inject incentives into non-life threatening medical care decisions
If employees respond to these incentives and use the web tools to make decisions not just regarding their plan, but to select providers based on quality, make informed treatment decisions, and manage chronic conditions, quality of care should improve

15. Concluding Remarks
At its worst, however, CDHC could destabilize risk pools and lead to a redistribution of health care services and income from the sick to the healthy
The jury is still out on these issues and clearly more research is needed