(This column first appeared in Employee Benefit News in April 2007)
As much as I’ve enjoy watching Sanjaya on American Idol, my favorite program remains one that aired 40 years ago.
In The Prisoner, a former British espionage agent is held captive in an elaborate camp made to look like an 18th-century village. Confronting the "warden," our prisoner engages in the following dialogue:
"Where am I?"
In the Village.
"What do you want?"
Information.
"You won't get it. Who are you?"
Number Two.
"Who is Number One?"
You are Number Six.
"I am not a number. I am a free man!"
At this point, Number Two breaks into extended peals of mocking laughter.
It's a scene that would seem eerily familiar – to many early adopters of consumer-directed health care (CDHC) plans.
The Solution Is a Trap
Over 20% of U.S. employers now offer CDHCs – high-deductible, low-premium plans, usually coupled with a tax-advantaged savings account.
The allure of CDHC is threefold. Since employees have a spending or savings account, benefit dollars would be their “own” money, and participants would spend it more wisely. Second, they would have an array of new resources for managing their health, such as Web-based informational tools, health coaches, and nurse-advocate phone lines. And, with access to detailed metrics, like provider costs and outcomes, participants would make better-informed treatment decisions, using lower-cost medications and more efficient health care settings. In the end, we'd all come out ahead, with healthier lifestyles and more affordable coverage.
The problem is that each of these promises is flawed.
For starters, the resources intended to fuel employee engagement have fallen far short of expectations. A recent Conference Board report notes that many CDHC sites are still embryonic, and "lack [even] basic information on quality and cost of care for individual physicians." As a result, "There is little evidence . . . as to whether CDHC makes employees better consumers, . . . if the percentage of medically appropriate care improves, . . . or if employees are more likely to select high-quality, low-cost providers."
What we do know is discouraging. Harvard Researchers has just released a CDHC study subtitled Except for the Healthy and Wealthy, It's Unwise, which ought to tell you something right there. Among other things, we learn that, under CDHC:
- The median out-of-pocket cost for women is about $1,000 more than for it is for men – that women must spend approximately $1,800 per year "for routine Pap smears, birth control pills, obstetrical care, breast exams, and mammographies." The gender discrepancies are enough to earn CDHC the distinction of being termed “discriminatory against women.”
- Costs for middle-aged participants are significantly higher — with annual medians of $2,900 for women and $1,800 for men.
- Those with chronic conditions also can expect to pay more out of pocket. Median expenditures for participants with high blood pressure were $3,200, arthritis, $5,400, and diabetes, $5,800.
The report suggests that CDHC's central premise — that employees will "spend their own money" more wisely — may be misguided. In fact, CDHC may unintentionally encourage avoidance of such important, though relatively low-cost, services as primary and preventive care. "Even one day in a hospital would push a patient past the deductible threshold," the report says, "eliminating any cost-saving incentives for the small group of patients who account for the vast majority of health costs."
And the researchers raise a particularly troublesome concern for employers who offer multiple medical options. "As healthy, low-cost patients flee to [CDHC]," the study notes, "premiums for the sick who remain in [other] coverage [options] will skyrocket."
In essence, CDHC, sold as a way to escape spiraling benefit costs, is looking a lot more like a way to keep us stuck in the "Village" — controlled by unseen masters out to control our (fiscal) well-being.
Information: Critical and Inaccessible
We all know that information is power. When it comes to health care, it’s what turns "passive users" of benefits into informed "consumers." Still, as in The Prisoner, we may want information – but we won't get it.
The first obstacle is that health plans don’t pool medical data. The entire industry would first have to agree on standards for defining cost components and measuring the quality of medical outcomes. And then there’s infrastructure – such things as electronic medical records, communication networks, and recordkeeping and data-sharing processes. All of these components must be installed across the spectrum of doctors, hospitals, clinics, pharmacies, and other providers that make up our health care delivery system.
For the most part, these parties have been resistant to any of these initiatives. But such changes are vital if we're to get employees engaged in managing their care, let alone "directing" it. Until that day arrives, we'll remain prisoners of the health care industry.
Our TV protagonist eventually unravels his challenges. He discovers Number One's identity (it's who, ultimately, controls us all). Then he destroys the Village and escapes confinement. Unfortunately, though, in the end, he finds that the way out – is merely just another way back in.
Sound familiar? It’s time to drop our prisoner mentality — and attack health care costs like they were a business problem, not merely an out-of-control “fringe benefit.”
