1. American Medical Costs and the Consumer-Driven Health Plan Benjamin Hansen UW-Superior

2. Today’s Situation Medical expenses outpacing incomes 1960’s – desire for overhaul of system Market failure due to information asymmetry 1996 – HIPAA provided for MSA’s 2003 – MMA created HSA

3. The Consumer-Driven Health Plan Differences from traditional plans: Low premiums High deductible Owner/renter analogy Traditional plan: renter CDHP: owner Additional HRA or HSA

4. Additional CDHP features Incentive programs Health risk appraisals Disease-management/coaching Increased choice in care facilities Proven effectiveness CDHP’s cover chronic illness prescriptions

5. The CDHP and Information Asymmetry One party knows more than the other party High degree of information asymmetry in healthcare industry Possible abuse of patient ignorance CDHP’s are complimented with information technology Internet-based account management Information asymmetry appears to be waning Doctor-visits take on different role

6. Criticisms of the CDHP Too much information! Change in doctor-patient relationship Consumer bias due to pain, fear, time pressures Lack of standardized rating scheme CDHP’s demand more time & effort than traditional health plans

7. The Mobility of Medical Consumer Information Increased choices of CDHP’s means increased need for information-sharing EHR – Electronic Health Record Standardized industry-wide Adoption is slow due to cost issues 2014 goal of complete adoption

8. Can the CDHP really accomplish its purpose? Fad? Lower prices? Better care? – maintained or improved chronic care and preventive care, increased consumer engagement 25% new enrollees were previously uninsured

9. The Problem of Adverse Selection Healthy consumers adopt CDHP’s, leaving chronically sick consumers in traditional plans Concern for higher premiums for the sick Health condition not a determining factor Wealth and education level determines the selection of a CDHP Quality increase & savings could spill over

10. Closing remarks CDHP’s in the hands of Congress CDHP’s have already fulfilled some promises