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CDHPs: Stand and Deliver

January 1, 2007 — 8:01pm ET
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hsa
Commonwealth Fund
preventative care
health plans
Consumer-driven health plans (CDHP)
patient health

While a tiny 1 percent of U.S. workers are enrolled in CDHPs, lots of people are suggesting that they have an extremely rosy future, notably the health insurance industry, the employers who see big cost savings, and the banks slavering over the profits from the be made a billion-dollar inflow of health savings account funding. Still, those without financial skin in the game, such as The Commonwealth Fund and the Employee Benefits Research Institute, are highly critical of CDHP models.

But this tension can't last forever. This year, I'd submit, will be the year in which forces pro- and against the CDHP model will have a knock-down, drag out over the benefits of this model. I believe that 2007 will be the last chance CDHP backers have, for the foreseeable future, to prove that their model makes sense--that it doesn't compromise patient health while attempting to lower premiums.

To be fair, the term "CDHP" doesn't cover every model, so it's probably unreasonable to suggest that all CDHPs are on trial for their life this year. After all, CDHP benefit designs are beginning to shift, with some health plans doing a better job of including low-cost preventative care than others. Also, some interesting efforts are already underway to provide individually tailored coverage for CDHP users, charging them little or nothing for preventive care that meets their precise personal needs. (Eye screenings might be free for a given diabetic patient, for example.)

Still, it's not clear that CDHP enrollees won't skip necessary preventative care due to an empty HSA or simple desire to postpone expenses. If the insurance industry and insurers can't jump this hurdle, CDHPs may be a dead issue by 2008.

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Comments

By Joshua Murphy | Posted 4:33pm | January 2, 2007

Anne -
First off, great predictions! The "Moral- Hazard Myth" is a great piece by Malcolm Gladwell that delves into the issue of CDHPs and their pros and cons. I particularly like the argument made against CDHPs concerning golf towards the end of the piece.

I have attached a link to for the article. I think you will enjoy it.
http://www.newyorker.com/fact/content/articles/050829fa_fact

Happy New Year!

Joshua Murphy

By Doug Andrews | Posted 10:53am | January 3, 2007

Anne,
Regarding the inclusion of preventative care in CDHP's or in more traditional plans for that matter, is an issue which needs futher light.
As I see things, this country needs an educational reform more then an insurance reform. This educational reform is simple and anyone who successfully navigated grade school can grasp this concept.
1.Insurance is priced based on usage
2. Insurance has an overhead cost
3. Insurance companies must charge you the cost of services PLUS the overhead cost.
4. There is no risk in preventaive care test/procedures, this is simply a low dollar cost which is passed thru (plus the overhead)
5. Because this is passed thru with the overhead applied, the consumer is paying 20%-25% MORE for preventaive care then they need to if they just paid for this out of pocket and it was not covered by the insurance plan.
The nay-sayers shout that no one would get preventative medicine done! Well who's fault is that? If the American public needs to be "tricked" into having a pap smear or a PSA test, then shame on them. If the public debate centered on "how insurance rates are formed" then people would begin to understand that there is no money tree out back that they pick. They tally up utilazation add in their expenses and charge you the consumer. The real need of understanding is in high frequesncy stuff (office visits et al) vs. Major stuff (open heart/cancer et al). The low cost high frequency stuff is very predicictable and therefore is purely a additive cost plus expenses (no real risk here). The major stuff requires pooling of resources from the many to pay for the few (what insurance is really intended to do).
So change the debate in this country and start to educate people, as this is the real silver bullet...education.

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