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Friday, October 27th 2006

The Mystical World Of Consumer Driven Health Plans

So the trouble with high deductible plans saving us significant money is that, stunningly to some people, healthcare costs are actually being driven by a very select group of consumers.

For an overview on consumer directed health plans go to KaiserEDU’s tutorial (that website is amazing for any students interested in health care policy).

For instance the top 1% of the sickest Americans, the largest health care consumers, account for about 25% of the spending. Whenever I see that I’m stunned by it. 80% of health care spending is accounted for by 20% of patients.

The chronically ill are the consumers.

Two points to make.

The maximal effects of CDHPs going to take a generation to show their true and full savings power (obviously the current generation of very sick aren’t going to be purchasing this plans – not that anyone is, really – we’ll have to wait for a new generation to purchase these plans…then slowly get chronic disease processes and move into the top 20% of health care consumers). That might be time the American health care system doesn’t have.

And, CDHP benefits may be offset by single individual high costs. What I mean is – ask yourself in what way could spending on health care be distributed where high deductible consumer driven plans would be most beneficial in influencing patient decisions and reducing the cost and spending of the entire system?

Well, if America’s health spending was accounted for by an even distribution where every patient was spending just up to, or slightly above their CDHI deductible, these plans would probably have maximum effect.

But that’s not the way it is working. We have a “few” individuals consuming well, well above what their deductible would be. As well, these chronically/seriously ill are the one’s least likely to be able to reduce their consumption…I imagine that is what we’ll find at least in the long run study of the chronically ill and high deductible plans.

La La La La La…I Can’t Hear You

It isn’t all bad news though. I actually support CDHI, it certainly can lower costs I believe. We may just be heaping too much promise on it. It certainly won’t be for everyone.

The Health Affairs Blog has a post up on a round table discussing how consumber driven health plans might be made more enticing to the chronically ill and how they can help protect them.

This is my favorite suggestion. One I would hope everyone would fight strongly to see happen.

Defining “preventive care” broadly. Plans should consider broadly defining “preventive care” — which can be covered before the deductible is satisfied — to include not just services such as mammography and immunizations, but also maintenance drug therapy for chronic diseases. Such therapy can prevent adverse events such as hospitalizations for uncontrolled diabetes, but maintenance drugs are most often excluded from preventive care. Again, participants suggested changes in Treasury regulations that may bar considering maintenance therapy as preventive care in HSA-eligible plans.

And of course any of these suggestions can be met. It is merely a question of the premium rise. One of the promises of CDHI was that it might be more afforable to those who currently aren’t protected by insurance.