St. Paul, Minn. — Consumer-driven health care has a simple goal: to reign in high health-care costs by giving employees more control over their health insurance dollars. These types of plans give workers more choices on how to spend their health-care money. And along with those choices, employees have a bigger financial responsibility for their medical bills. The theory presumes that with more of their own money on the line, employees will be more likely to think twice about going to the emergency room for a sore throat or purchasing expensive brand name drugs when cheaper generics are available.
Joel Albers, a pharmacist who works at a small, corner drug store near the University of Minnesota in downtown Minneapolis, says he meets customers every day who are very interested in saving money on their prescriptions. But he bristles at that notion that these patients can bring down high health-care prices by being savvier consumers.
"The rhetoric of this is to make people think that it's all gonna be in the hands of consumers now and consumers really control this. But the reality is that you're really dividing people even further," Albers says.
Albers is talking about health insurance pooling, the practice of spreading risk among a diverse group of people from the young to the elderly, the healthy to the sick.
Take a lunchtime basketball game, for example. Ten guys are on the floor, jostling each other as they jog back and forth at a fitness center gym in downtown St. Paul. Some of the guys are young, some are middle age, some are in shape, a few others are not. If these men all belonged to the same insurance pool and one of them got hurt during this game, the other nine would share in paying his doctor's bill. Insurance pooling gets a bit more complicated than that, but in its most basic form it's simply sharing risk.
But some people are worried that consumer-driven health plans will dismantle that basic premise behind health insurance. This team wouldn't share risk. Instead each basketball player would save for his own care without contributing as much money to the care of his team members. His tax-free contributions would go into a personal health savings account.
Pharmacist Joel Albers doesn't like that possibility. He's a member of the Universal Health Care Action Network, a group that lobbies for government-sponsored health insurance coverage.
"If you're extracting out individuals from your insurance pools, you know this could end health insurance as we know it. And we don't want to end the big pools. We want to expand the pools," Albers says.
GOOD FOR THE HEALTHY
Early research shows that consumer-driven health care plans tend to appeal most to healthy people, the very people that help lower traditional insurance costs for everyone else. Albers says without these people in the insurance pool, traditional insurance rates will rise rapidly.
In fact proponents don't dispute that consumer-driven health care plans will have this effect.
"The cost of these policies that the sick choose are going to go sky high. That's true. But the employer has been paying for both the sick and the well all along, so their total costs are not going to change. In fact, if the sick go into policies that are very good for sick people, that's great. That's exactly what we would like. We'd like them to be in health plans that are very focused on their treatment," says Regina Herzlinger, a Harvard Business School professor and author of the book, "Consumer-Driven Health Care."
If sick patients are put into insurance plans specifically tailored to their health needs, Herzlinger says, their overall health care costs should go down significantly. She says that's because these patients are likely to endure fewer expensive medical emergencies. Some would argue that those potential savings would be eaten up by the additional administrative cost of managing patients in lots of different insurance groups.
But Herzlinger disagrees. She predicts the approach will save money and she says that will encourage insurance companies to offer plans that make healthy lifestyles pay off.
Whether it's basketball or bench pressing, some insurance plans already give employees incentives to take care of themselves. Things like discounts on gym memberships. But Herzlinger predicts insurance will evolve to a point where people can actually reduce their premiums by making healthy choices.
"For example, there is already one in the United States that gives people rewards for maintaining their health, for going to the gym, for stopping smoking, if they're morbidly obese, for losing weight," she points out.
And there's a plan Herzlinger hopes to see in the U.S. soon. It's offered in Switzerland, where consumer-driven plans have been available for decades. The insurance plan actually returns money to consumers who have improved their health over a five-year period.
"If at the end of five years you're as healthy or healthier than would have been predicted for you in the beginning of five years, you get about 45 percent of your money back. So I think we're going to see a lot more variations in health insurance," according to Herzlinger.
But others aren't convinced that consumer-driven health plans will add up to much in the end.
IS IT ENOUGH TO JUST BE HEALTHY?
"Being healthier is great. I mean that's a good thing. But whether it's going to solve the issue of the high health care costs in the United States, I can't imagine it doing that," says John Nyman, a University of Minnesota economist and author of the book, "The Theory of the Demand for Health Insurance."
"People are still going to have heart attacks, they're going to need bypass operations, they're going to get cancer. There could be a decrease in those, but it'll be small," he says.
Nyman says when it comes down to it, most people use their health insurance for legitimate medical conditions. However he says most solutions to the health care cost problem assume otherwise and try to get people to use less insurance. Nyman says consumer-driven health plans are simply the latest variation and he says it's clear that this market-oriented approach won't work.
"This is hard for an economist who's trained in the value of competition to talk about, but I think that the government has to step in. I mean I don't see any other choice," he says.
Nyman says only the U.S. government has the power to bring down high health care prices by setting limits on what it will pay. Some would describe this approach as universal health care -- using public money to pay for medical services. In some scenarios the government provides and pays for care. In other situations private clinics and hospitals provide the it and the government pays for it. Nyman says it's an approach that has worked well in many other countries including Great Britain, where health care spending is about 8 percent of the country's gross domestic product, compared to 15 percent in the U.S.
Nyman says it's misguided for the U.S. to waste any more time on trends like consumer-driven health care that won't make insurance affordable for everyone.
"I think the harm is that you know there's 15 percent of the people in this country who are uninsured. You haven't really solved that problem at all with this. I think the other problem is that you know you have a few more years now where the system is going to be the same old system as we have had in the past and it just doesn't change anything I don't think," Nyman says.
NO POLITICAL WILL FOR SOME SOLUTIONS
There hasn't been a lot of political appetite in the U.S. for solutions like universal health care. Critics worry that drug companies won't have the same financial incentives to search for new cures. They also worry that patients will have to wait months for certain types of procedures. But Nyman says those arguments are losing some of their luster, especially as more American companies lose their competitive edge over high health care costs.
For the time being, consumer-driven health care plans are really the only new alternative to traditional health insurance. And the plans are catching on. About 4 million people have enrolled so far. It's projected that within six years, these types of plans will make up between 20 to 40 percent of the health insurance market.
If those projections proves true, consumer-driven health care is sure to have an effect on the U.S. health care system. It's just not clear yet if that effect will be a real health care solution or another problem.