Friday, September 24, 2004
Wharton professors like the sound of consumer-directed plans
["Why Bush and Kerry are Wrong on Health Care," Knowledge@Wharton, 22 September 2004.]
While they remain skeptical about top-down political solutions, professors at The Wharton School believe that the answer to many of America's health care problems may be found by empowering consumers:
[Mark V. Pauly and and Lawton R. Burns, professors of health care systems at Wharton] believe that one of the most promising approaches is "consumer-directed health care." At its heart, it means consumers pay more out of their own pockets. Although many people resist this, the only other proven way to restrain growth in costs is managed care such as health maintenance organizations, and people don't like this much, either, Pauly says. "If we're going to control spending, we're going to have to go to one or the other of those. At the moment, the winds are blowing in the direction of patient cost-sharing."
Consumer-directed plans are "as good as any idea out there," adds Burns, who is writing a book on four such plans. Essentially, he says, the idea is "to empower, engage and enlighten the consumer ... to make the consumer a more active chooser of these products and providers." Plan participants are given extensive information on prices for drugs, procedures and other services. They get training so they can assess what kind of care they are likely to need. And they get the information required to compare one provider with another.
Humana, a health insurer in Louisville, Ky., has had good results experimenting with such a plan on its own employees, Burns says, adding that this model looks more like auto insurance than health insurance. Employees choose which elements of coverage they want from a wide-ranging menu, based on their willingness to pay out of pocket expenses and their assessment of likely need. "You let people customize how they use health benefits."
In such a plan, employees typically have the first $500 of annual health care expenses covered, as well as anything above $2,000 a year. Thus they can spend as much as $1,500 a year on their own. Humana has found that this approach does cut health care spending, Burns says, noting that "people become much better consumers."
["Why Bush and Kerry are Wrong on Health Care," Knowledge@Wharton, 22 September 2004.]
While they remain skeptical about top-down political solutions, professors at The Wharton School believe that the answer to many of America's health care problems may be found by empowering consumers:
[Mark V. Pauly and and Lawton R. Burns, professors of health care systems at Wharton] believe that one of the most promising approaches is "consumer-directed health care." At its heart, it means consumers pay more out of their own pockets. Although many people resist this, the only other proven way to restrain growth in costs is managed care such as health maintenance organizations, and people don't like this much, either, Pauly says. "If we're going to control spending, we're going to have to go to one or the other of those. At the moment, the winds are blowing in the direction of patient cost-sharing."
Consumer-directed plans are "as good as any idea out there," adds Burns, who is writing a book on four such plans. Essentially, he says, the idea is "to empower, engage and enlighten the consumer ... to make the consumer a more active chooser of these products and providers." Plan participants are given extensive information on prices for drugs, procedures and other services. They get training so they can assess what kind of care they are likely to need. And they get the information required to compare one provider with another.
Humana, a health insurer in Louisville, Ky., has had good results experimenting with such a plan on its own employees, Burns says, adding that this model looks more like auto insurance than health insurance. Employees choose which elements of coverage they want from a wide-ranging menu, based on their willingness to pay out of pocket expenses and their assessment of likely need. "You let people customize how they use health benefits."
In such a plan, employees typically have the first $500 of annual health care expenses covered, as well as anything above $2,000 a year. Thus they can spend as much as $1,500 a year on their own. Humana has found that this approach does cut health care spending, Burns says, noting that "people become much better consumers."
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