More Choice For Consumers Is Always Healthy

It is remarkable in the debate over health care reform how policymakers are ignoring the one thing that has been proven to work: consumer-driven health care.

President Barack Obama keeps repeating that we must lower health care costs, and budget director Peter Orszag argues we can save $700 billion a year by cutting out unnecessary care.

But the methods suggested in Washington are at best unproven. They include:
Paying doctors only for outcomes over which they have little or no control. How is my doctor going to force me to eat better?
Moving the entire health care system into new accountable care organizations, which sound like the HMOs many have already rejected.

Wiring everybody up with personal health records and information technology, which are as likely to increase costs and medical errors as to reduce them.

Meanwhile there is an approach that has proven to work after six years of testing by millions of people nationwide. Consumer-driven health (CDH) plans empower individuals by taking money away from third-party payers and putting it in the hands of consumers to spend as they wish.

Now that one out of five Americans under age 65 is paying some of his or her own bills through health savings accounts (HSA), high deductible plans and similar consumer-driven plans, policymakers are beginning to see a profound effect on the service side of the ledger. Consumer-driven health (CDH) plans cost 25 percent to 40 percent less than preferred provider organizations (PPO) and health maintenance organizations (HMO), and their rate of annual cost increases is one-third of that of the two other plans.
It isn’t just vendors with a vested interest that are capturing these results. Last fall the Kaiser Family Foundation found the average family premium for an HMO totaled $13,100 while an HSA cost only $9,100. The premiums for CDHs at WellPoint and Cigna actually fell over a two-year period, while premiums for their HMOs and PPOs rose about 10 percent.

Costs for CDH plans are falling because people are becoming more invested in their own health - something policymakers have long been trying to achieve without success. Consumers with a CDH participate in wellness/prevention programs at a higher rate than others, and they choose generic drugs over name brands, avoid using emergency rooms in favor of retail clinics or their own doctor, and comply better with recommended treatment programs.

By any measure, CDH is a success, confirmed last year by the Centers for Disease Control and Prevention. It found 20 percent of the under-65 population is now in some version of a CDH.

So, why isn’t Orszag jumping for joy? His hope for a more efficient, better quality health care system that actually lowers costs is being realized right before his eyes. He either is not paying attention or he prefers to hope for complicated, government remedies that may never work.

And you wonder why Washington so often fails to accomplish much.

Greg Scandlen is director of Consumers for Health Care Choices at The Heartland Institute.