Transcript American Medical Costs and the Consumer-Driven Health Plan

American Medical Costs
and the
Consumer-Driven Health Plan
Benjamin Hansen
UW-Superior
Today’s Situation
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Medical expenses outpacing incomes
1960’s – desire for overhaul of system
Market failure due to information asymmetry
1996 – HIPAA provided for MSA’s
2003 – MMA created HSA
The Consumer-Driven Health Plan
Differences from traditional plans:
• Low premiums
• High deductible
Owner/renter analogy
• Traditional plan: renter
• CDHP: owner
• Additional HRA or HSA
Additional CDHP features
Incentive programs
• Health risk appraisals
• Disease-management/coaching
• Increased choice in care facilities
• Proven effectiveness
• CDHP’s cover chronic illness prescriptions
The CDHP and Information Asymmetry
• One party knows more than the other party
• High degree of information asymmetry in
healthcare industry
• Possible abuse of patient ignorance
• CDHP’s are complimented with information
technology
• Internet-based account management
• Information asymmetry appears to be waning
• Doctor-visits take on different role
Criticisms of the CDHP
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Too much information!
Change in doctor-patient relationship
Consumer bias due to pain, fear, time pressures
Lack of standardized rating scheme
CDHP’s demand more time & effort than
traditional health plans
The Mobility of Medical Consumer
Information
• Increased choices of CDHP’s means increased
need for information-sharing
• EHR – Electronic Health Record
• Standardized industry-wide
• Adoption is slow due to cost issues
• 2014 goal of complete adoption
Can the CDHP really accomplish its
purpose?
• Fad?
• Lower prices?
• Better care? – maintained or improved chronic
care and preventive care, increased consumer
engagement
• 25% new enrollees were previously uninsured
The Problem of Adverse Selection
• Healthy consumers adopt CDHP’s, leaving
chronically sick consumers in traditional plans
• Concern for higher premiums for the sick
Health condition not a determining factor
Wealth and education level determines the
selection of a CDHP
Quality increase & savings could spill over
Closing remarks
• CDHP’s in the hands of Congress
• CDHP’s have already fulfilled some promises