Continued Growth for Consumer-Directed Health Care

Published November 1, 2008

United Benefit Advisors has published the results of an employer survey, “Consumer-Driven Health Plans Continue to Grow.” This is a massive national survey, conducted annually, of nearly 13,000 employers sponsoring 18,000 benefit plans.

According to the survey, the number of “Consumer Driven Health Plans, or CDHPs, increased by 43 percent from last year, and [they] now comprise nearly 13 percent of all plans offered by employers. The percentage of employees enrolled in these plans nearly doubled, from six percent in 2007 to 11.2 percent this year.”

The study also found CDHPs are gaining on HMOs in market penetration: “Health maintenance organization (HMO) participation continues to slip, and now represents just 21.3 percent of plans offered, with only 13.3 percent of employees enrolled.”

“Across the board, we’re seeing a trend toward employee empowerment and participation when it comes to health care,” said Bill Stafford, a spokesman for United Benefit Advisors, in a press release about the study. “They’re taking more control over health care expenditures, by increasing participation in CDHPs, and they are also realizing that there are financial benefits—in addition to health benefits—of participating in wellness programs.”

Robert Samuelson on Health Care

Robert Samuelson wrote an important op-ed in both Newsweek and the Washington Post in mid-September. In it he says the current obsession with universal coverage is “utterly wrong. The central problem is not improving coverage. It’s controlling costs.”

Samuelson points out that we all have a lot of important things to do with our money and “greater health spending should not have the first moral claim on our wealth.”

Health care spending in the United States is already amazingly egalitarian, Samuelson says. “Probably in no other area is spending so equal—not in housing, clothes, transportation or anything.” Specifically, “annual health spending per person is nearly identical for the richest and poorest Americans.”

Poorest Fifth — $4,477
Second Poorest — $4,426
Middle Fifth — $4,388
Second Richest — $4,941
Richest Fifth — $4,451

Samuelson adds that, because so much of health care is of marginal benefit, it is doubtful that the uninsured are greatly disadvantaged in their care. “One study compared the insured and uninsured after the onset of a chronic illness—say, heart disease or diabetes. Outcomes differed little. Here are the results. After about six months, 20.4 percent of the insured and 20.9 percent of the uninsured judged themselves ‘better’; 32.2 percent of the insured and 35.2 percent of the uninsured rated themselves ‘worse.’ The rest saw no change.”

Samuelson concludes, “We need more realism on health care. Access to unlimited care paid for by someone else may be ruinous for us as a society. Sensible limits must somehow be imposed.”

Unfortunately, Samuelson’s suggestions for what should be done are a laundry list of platitudes—electronic record keeping, better case management, fewer dubious tests, etc.

Pay for Performance no Panacea

Not mentioned by Samuelson, but usually on any list of painless remedies, is “Pay for Performance (P4P).” But like most platitudes, the reality of P4P may be worse than the problem it is trying to solve, according to Dr. Sandeep Jauhar in The New York Times.

Jauhar writes, “On the surface, (P4P) seems like a good idea: reward doctors and hospitals for quality, not just quantity. But even as it gains momentum, the initiative may be having untoward consequences.” He cites an earlier example of “quality improvement”—surgical report cards.

“In the early 1990s, report cards were issued on surgeons performing coronary bypasses,” Jauhar notes. “The idea was to improve the quality of cardiac surgery by pointing out deficiencies in hospitals and surgeons; those who did not measure up would be forced to improve. But studies showed a very different result. In a survey in New York State, 63 percent of cardiac surgeons acknowledged that because of report cards, they were accepting only relatively healthy patients for heart bypass surgery.”

In the case of P4P, Jauhar writes, “Consider the requirement from Medicare that antibiotics be administered to a pneumonia patient within six hours of arriving at the hospital. The trouble is that doctors often cannot diagnose pneumonia that quickly. Under P4P, there is pressure to treat even when the diagnosis isn’t firm. So more and more antibiotics are being used in emergency rooms today, despite all-too-evident dangers like antibiotic-resistant bacteria and antibiotic-associated infections.”

Jauhar concludes, “Whenever you try to legislate professional behavior, there are bound to be unintended consequences.”

Sarah Palin on Health Care

There hasn’t been a lot published about vice presidential candidate Sarah Palin’s position on health care, even though with her emphasis on domestic affairs and running mate Sen. John McCain’s historic ambivalence on health care, she is likely to be the point person on the issue if McCain wins the election.

The one major article was published in the Washington Post and revealed a lot about both Palin and the Washington Post. The article by Matthew Mosk was headlined, “Palin’s Efforts to Reform Health Care Are Complicated.”

Complicated? Well, no. The article focused on her belief that more competition would “reduce costs and lead to better care,” so she “pushed forcefully” to get rid of Certificate of Need. The effort was killed by the legislature, according to the article.

But Mosk wasn’t content to simply report the story. He suggests Palin’s position was influenced by $34,000 in campaign contributions and the influence of “an industry lobbyist who served as a top political advisor.” Of course, the article makes no mention of how much the supporters of CON spent to lobby and donate money to kill the proposal.

The article also quotes the CEO of a Juneau hospital who supports CON as saying the governor listened to all sides and simply disagreed with his position, and did it “in a respectful way.”

Greg Scandlen ([email protected]) is director of Consumers for Health Care Choices at The Heartland Institute.

For more information …

“Consumer-Driven Health Plans Continue To Grow: More Employers Offer Wellness Programs to Cut Health Care Costs,” United Benefit Advisors, August 18, 2008:

“Getting Real About Health Care,” by Robert Samuelson, Newsweek, September 6, 2008:

“The Pitfalls of Linking Doctors’ Pay to Performance,” by Sandeep Jauhar, M.D., The New York Times, September 8, 2008:

“Palin’s Efforts to Reform Health Care Are Complicated,” by Matthew Mosk, Washington Post, September 5, 2008: