Meeting Summary: Consumer-Driven Health Care: Evidence from the Field

Co-Sponsored by The Robert Wood Johnson Foundation's Changes in Health Care Financing and Organization (HCFO) initiative and The Commonwealth Fund.
Conducted by AcademyHealth.
September 15, 2003 - Wyndham City Center, Washington, D.C.

Meeting Summary

“Consumer-Driven Health Care: Evidence from the Field,” explored early study findings and offered a useful forecast on the future of consumer-driven health care. The take-home message seemed to be that the jury is still out on the effects of consumer-driven health plans, but this phenomenon bears careful watching. While efforts to advance this type of insurance product continue, the health services research community should continue its efforts to evaluate the product’s pros and cons. Whether these plans thrive or go the way of managed care is yet to be determined.

Employers’ Adoption of Consumer-Driven Health Plans

Jon Gabel (HRET), Meredith Rosenthal (Harvard University), Roger Chizek (Medtronic Inc.), and Peter Hayes (Hannaford Brothers Company) presented research findings outlining a landscape of consumer-driven health plans today. In a session moderated by Jennifer Edwards (The Commonwealth Fund), they provided evidence on perceptions of and openness to consumer-driven health plans, both through research findings and real world experiences.

The sentiment by many who participated in the conference was probably best summed up by Gabel, who said, “I believe there [will be] an irreversible trend towards consumer-driven health care in the next few years, but that, too, can change.” In his analysis of various sizes of employers, Gabel noted that while employers are fairly familiar with consumer-driven plans, they do not appear to be wholeheartedly embracing them; they question whether improved quality of care and cost control will truly be the hallmark of these plans. According to Rosenthal, early projections from a survey of health plans suggest increasing enrollment in consumer-driven plans over the next year. She added, however, that there is not a clear indication that consumer-driven health plans will spur value driven competition in the health care market.

Offering an employer’s perspective, Chizek touted consumer-driven health care as a product that made sense for Medtronic. Chizek pointed out that their goal in offering a consumer-driven plan was not to reduce the company’s health care costs, but rather to offer an alternative product designed to inform consumers, create awareness, change behavior, and increase access. Hayes expressed a similar sentiment, noting that at Hannaford Brothers Company, consumer-driven health care is viewed as “partnership-fostering”— a partnership among physicians, hospitals, and employees. The challenge, said Hayes, has been to get employees interested in gathering information to make the right health care decisions and get the right care.

Risk Selection: Who Chooses Consumer-Directed Health Care?

Roger Feldman (University of Minnesota), Laura Tollen (Kaiser Permanente), Stephen Bandeian (MAMSI), and Terry Jayne (Group Health Cooperative), moderated by Anne Gauthier (AcademyHealth), explored the potential for favorable and adverse selection into consumer-driven plans, as compared with other offerings to the same employee population. Results here were mixed. Feldman’s early findings suggest that consumer-driven plans may not lead to the undesirable consequence of segmenting the risk pool into healthier and less healthy groups, at least among the University of Minnesota employees. In Tollen’s examination of Humana’s consumer-driven plan, she noted that preliminary results suggest possible risk segmentation. She emphasized that a number of unanswered questions remain relative to the consequences of such segmentation, and that an important factor is how employee choices are designed.

Bandeian pointed out that the occurrence of risk selection is highly situational and suggested that more research is needed to truly understand the how, when, and why surrounding this issue. He further noted that while adverse selection is extremely hard to detect in practice, the failure to detect and monitor such a trend, whether in a consumer-driven plan or traditional plan, could lead to unfortunate consequences.

Jayne highlighted the issue of consumer takeup and noted that while consumer-driven plans may be the “new kid on the block,” there are many consumers who are not interested in something “new.” They would rather have something “familiar.” Out-of-pocket costs, plan complexity, network restrictions, and deductible size are just some of the factors that employees consider when evaluating a consumer-driven plan.

Consumers’ Experience

Jon Christianson (University of Minnesota), Jinnet Fowles (Park Nicollet Institute), Judy Hibbard (University of Oregon), and David Lansky (FACCT), with moderator Katie Martin (AcademyHealth), highlighted employees’ experience with consumer-driven products, including the rationale for their choice, their satisfaction with the choice, and how well they were able to navigate plans. Christianson described the actions of the hypothetical “savvy consumer” versus the “naïve consumer”— the two extremes of individuals who make relative choices in consumer-driven plans. In Christianson’s study of individuals enrolled in Definity Health, a consumer-driven plan, and other health plans, early findings suggest that Definity enrollees were neither savvy nor naïve. There did not appear to be deliberate differentiation among plans. Rather, choices were made simply on the availability of options that work best for the consumer.

Fowles observed some potentially troubling trends in her analysis of Humana employees enrolled in a consumer-driven plan, such as the potential for increased costs, increased confusion, and increased risk segmentation. The success of a consumer-driven approach, according to Hibbard, rests on the assumption that if consumers are given financial incentives and cost and quality information, they will make cost-effective choices. She noted that there are challenges in making such choices, including a steep learning curve for consumers as they sort through the many new features of consumer-driven plans. Early choices and behaviors may change over time. Accordingly, said Hibbard, a longer window of opportunity to observe consumer experience with these plans will provide a richer understanding of how the plans are fairing. For consumers to realize the many potential advantages of these plans, appropriate educational and informational support is required.

In focusing on what it is that consumers really want, Lansky remarked that consumers make health care decisions based on relationships. Consumers will pay more and make choices based on their ability to interact with a provider, rather than on objective information about providers’ qualifications and experience. Given this fact, the information on which those decisions are made is inadequate, whether the information is coming from consumer-driven plans or other plans. Lansky noted that his research shows that health care consumers want four things: (1) help choosing treatments and providers; (2) good communication with providers; (3) information about which of the “best practices” apply to them; and (4) their providers’ economic incentives. Consumer-driven plans may not yet be giving consumers the tools to get this information.

Evidence about Utilization, Spending, and Cost

Steve Parente (University of Minnesota), Tomas Valdivia (Definity Health), and John Bertko (Humana Inc.) highlighted the experience of employers and employees with respect to utilization patterns, spending, and costs associated with consumer-driven plans, as compared with more traditional plans. Thomas Rice (UCLA), who moderated the panel, noted that it is critically important to determine through research whether consumer-driven care leads to more or less squandered resources. Parente cautioned that his research involving employers who offer Definity Health is at its early stages, and while evidence on costs and utilization was mixed, more work will be needed to verify and fully understand his results.

Valdivia noted that currently, Definity Health’s membership total is greater than all other consumer-driven plans across the country (more than 75 employers offer Definity Health). He suggested that increasingly, consumers are driving provider behavior and influencing outcomes measures. This, he believes, will ultimately lead to improved care, lower costs, and greater satisfaction.

Bertko discussed some of the experiences of Humana employees who selected a consumer-driven plan. He noted that employers who offer consumer-driven plans are most interested in what it will cost them, and how much of the cost savings should be shared with employees.

Implications: Good News? Bad News?

In the final panel discussion, Karen Davis (The Commonwealth Fund), Paul Ginsburg (Center for Studying Health System Change), Mark Pauly (University of Pennsylvania), Gerald Shea (AFL-CIO), and Robert Stevens (Ridgeview Medical Center) discussed the strengths and weaknesses of consumer-driven health plans in light of the research findings described earlier in the day. The panel was moderated by Susan Dentzer (News Hour with Jim Lehrer).

Davis noted that it is really too early in the life of consumer-driven plans to know whether they will serve as a major strategy for reforming the U.S. health care system. While there is modest interest in the plans right now, there is also serious concern about the potential for risk segmentation and heavy financial burdens for low-wage workers. Davis noted that more systematic data collection on costs and quality is needed at the individual and provider level.

Ginsburg pointed out that the core of the consumer-driven plan is the health reimbursement account (HRA) — an account from which consumers draw to make health care purchases. He questioned whether an HRA is an efficient way of providing health benefits, noting that in the process, employer dollars are given to healthy employees who would not otherwise have those dollars. Ginsburg suggested that the role for government in these plans could be to gather and supply quality information about providers.

Pauly concluded that sorting through consumer-driven plans ought to be left to the market, not federal policymakers. Pauly also noted that consumer-driven plans were not likely to control health care costs and improve quality—that there is no way “to have more for less.”

Shea noted that the jury is still out on consumer-driven plans and it is clear that the system will not work for everyone. He pointed out that the current health care system would benefit from standard performance measures, a more efficient way of gathering performance information, an alignment of payment with quality care physicians, wide public reporting, and a different approach to educating physicians on how best to partner with consumers.

Stevens echoed Shea’s sentiment and noted that the government should take a more direct role in the distribution of quality information about hospitals and physicians. Stevens, who works as a physician in a physician/hospital organization that offers its employees a consumer-driven plan, further noted that much more needs to be invested in the development of the electronic medical record and other information systems that can provide real time information to employees.

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