Health Care and Consumer Directed Options

America--land of the free and home of the brave. At least that is what our nation has been historically known for throughout the world. Come to America and realize your dream, including the right to work hard and be compensated fairly for your efforts. The Statue of Liberty, long a beacon welcoming immigrants to our shores, even states that anyone who is seeking freedom can come to America. The quote: “Give me your tired, your poor, Your huddled masses yearning to breathe free, The wretched refuse of your teeming shore. Send these, the homeless, tempest-tost to me, I lift my lamp beside the golden door!”, is emblazened on her as a stirring statement of the American ethos, as described by LegalLanguage.com.

Among the fundamental advantages that Americans have is the freedom to choose. Individuals and families can choose vocations, lifestyle, residency, and much more. As part of that freedom, the right to choose your own health care options makes perfect fiscal and common sense. And the market place has been moving toward consumer centric health care slowly but surely to take advantage of this type of buyer. Consumerism in health care is a trend that has become more and more popular in recent years. According to Aetna.com:
--Consumerism in health care is based on the idea that individuals should have greater control over decisions affecting their health care.
--A number of innovative products and plans are advancing the consumerism trend. Health Savings Accounts (HSAs) and Health Reimbursement Arrangements (HRAs) are savings vehicles generally paired with High-Deductible Health Plans (HDHPs).
--Consumer-directed health care is a common-sense approach for addressing two of the most vexing challenges in our health care system: controlling costs and improving access to affordable, high-quality care.

Consumer-directed health plans, according to Aetna, typically consist of three major components: a health fund or health savings account, a high-deductible plan that includes preventive care not charged against the deductible, and access to information and tools that help consumers make better health care decisions. Monthly premiums are lower in these plans and, once the deductible is met, consumer-directed plans pay benefits like traditional health plans. Individuals typically use funds from an HSA or HRA to cover all or a portion of the plan's deductible. HSAs are personal savings vehicles - similar to IRAs or 401(k) plans - that allow individuals and, in some cases, their employers to invest tax-free dollars in an account to pay for routine health care or to save for future health care expenses. Funds put into an HSA belong to the consumer, regardless of changes in employment or insurance status, and they can be carried over year to year. HRAs are entirely employer-funded accounts that employees can draw upon to pay qualified medical expenses and they too can be rolled over year to year.

According to Aetna, these new consumer-directed products have four critical attributes:
1.) They give individuals better access to information and more control over their own health care, allowing them to make informed decisions about treatment and provider options.
2.) They increase consumer involvement and raise awareness about the real cost of health care, which research has shown to reduce total health care spending.
3.) Featuring lower monthly premiums, these products make it more affordable for employers to offer coverage and for individuals to purchase it.
4.) Finally, consumer-directed products encourage healthy behavior. Enrollees do not pay out of pocket for routine physicals, child immunizations, obesity weight-loss programs, routine prenatal care, etc.

According to HealthAffairs.org, there is a struggle between Consumerism and Managed Competition. Consumerism and managed competition share the market paradigm that social resources, including medical care, should be allocated based on individual rather than collective decisions. Informed and price-conscious individual choices represent the values and preferences of the patient better than the choices of even the most benevolent third party. The performance of the delivery system is enhanced by consumer and provider incentives that align the pursuit of individual self-interest with the social interest in promoting a high-quality, cost-effective system of care. Collective-choice mechanisms such as regulatory agencies, professional associations, and corporate organizations find their utility in supporting, and their disutility in displacing, individual choices. The core of medical care, the clinical encounter between patient and physician, is beset by the uncertainties of illness and therapy, the social imperative to subsidize care for those unable to pay, and the proclivity of patients to demand more services if someone else is paying and for physicians to adjust their supply depending on how they are paid. Choice and competition in the clinical context therefore need to be embedded in a larger institutional framework, similar to that for insurance coverage, where benefit and network designs specify the consumer’s and the collectivity’s financial responsibilities and create incentives for balancing cost, quality, and other service characteristics.

As for genuine consumer-directed health care, according to Workforce.com, the rise of consumerism requires more effort, energy and involvement by all stakeholders to successfully launch and sustain. For plan sponsors, that means such commitments as adopting a documented multi-year health strategy; adding account-based or consumerist health plans as significant––if not the only––options over time; and making meaningful contributions to any health account so that most of the participants can reasonably expect to manage their health with the funds provided. It also demands a concerted effort to provide support, tools and information to help employees become more involved and informed health care consumers. And all of this needs to be wrapped in a compelling communication package with ongoing educational elements that continue long after implementation. But with consumer-driven health care done right, positive behavior changes, improved companywide health status and cost savings can often be seen over time. And even then, employers need to monitor the program, adjust elements as necessary and guard against unintended consequences such as care avoidance or a disproportionate impact on lower-paid or ill workers.

According to Deloitte.com, Consumerism is a fact of life and way of business in many sectors: companies consciously adapt how they package, deliver and price their products and services to match consumers’ needs and preferences. But the health care sector has been slow to adopt this approach. In fact, many employers, health plans and health care providers are faced with a business model that views individuals as traditional “patients” who are generally uninformed about their options and unable to distinguish between systems with varying levels of service, prices and quality. Employers, health plans and providers who fail to recognize and respond to this new reality may miss critical business opportunities generated by consumerism’s transformational force. To better align the system with their true level of need and prevent unnecessary care, individuals must become more accountable for their own health status, more engaged in the selection of the products and services they use, and more knowledgeable about the prices associated with their choices. This fundamental behavior shift must work in conjunction with system improvements designed to better deliver care and ensure alignment of financial incentives. A broader overview is available online at this site: http://www.deloitte.com/view/en_US/us/Insights/Browse-by-Content-Type/deloitte-review/article/46fba7d2770fb110VgnVCM100000ba42f00aRCRD.htm

Consumerism, according to Workforce.com, is fought not only in the trenches of innovative programs to create involved and informed consumers, but also on the battlefields of good benefit and health-plan management basics, vendor negotiations, network discounts and access, disease management programs, and health assessment and improvement efforts. But amid all the uncertainties and complexities that define the health care landscape in today’s increasingly global, fiscally fragile corporate universe, the advent of consumerism sounds a note of sense and sustainability. Its success calls for a commitment to consumer-driven health care––with no illusions.

As individuals assume greater responsibility for their health-related decisions, employers, health plans and providers not making the shift will find it increasingly difficult to attract and retain employees, enrollees and patients, according to Deloitte. Savvy, forward-thinking organizations already recognize the consumer variation and untapped opportunities that exist in the health care market. They are responding by seeking to offer new approaches to care and financing, modifying incentives, and building support systems to encourage both consumers and providers to shift their behaviors and attitudes in ways that will enable consumerism to gain momentum. Health plans, providers, employers, government agencies, associations and other players are making some progress in developing the products, information, online services and other tools that consumers need. The opportunity to fill this gap with new, innovative products and services is open to all. Companies tailoring their products and services to meet the needs of the new health care market will gain a tremendous advantage as the system continues its transformation toward a consumer-centric model.

Consumerism, not public option or government run health care, is one of the best models for Americans. The market place can support it, and both individuals and families can benefit from it. Americans enjoy and deserve liberty, not tyranny, when it comes to managing their health care. There is no need to mandate coverage with a single payer system overseen by bureaucratic fiat.

Until next time. Let me know what you think.