Whither ConsumerDriven Health Care

1

• Whither Consumer-Driven Health Care?
• UST-NIHP Health Policy SeminarWashington, DCMay
  9, 2006

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A new strategy

• Ownership
• Consumer empowerment
• Personal responsibility
• System transparency
• Managed care backlash led to CDHC

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Moral hazard

• Insurance lowers the out-of-pocket payment for
  health care
• Lower OOP induces greater use
• Total cost of extra service gt Value (Wennberg)
• FFS incentive for providers exacerbates moral
  hazard

4
Benefit design for CDHC
Health Spending
Insurance
Out of pocket
Deductible
Account
5
Features of health accounts
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Proponents say

• Empowered consumers make better decisions
• Consumer pressure ? lower prices, better service
• Savings for retirement health needs
• Attractive to uninsured, sicker people
• Affordable coverage for low-income

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Opponents say

• Uninformed consumers make worse decisions
• Most health spending immune to consumerism
• Savings will be spent
• Employer risk pools will be disrupted
• People lose coverage
• Higher cost for sicker people
• Tax break for the healthy, wealthy

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What are the facts?

• Little data, much guesswork
• Surveys no better than opinion polls or marketing
• Market performance will provide answers
• Who enrolls?
• Crowd out and adverse selection
• Does locus of decision-making shift to consumers?
• How many consumerists make a competitive market?
• Will efficiency improve? Will cost growth slow?
• Will CDHC create real competition among
  providers?
• Much work remains
• Information on price, quality, service
• Cultural change