Consumerism Could Be Private Health Insurers' Waterloo

Les Masterson, for HealthLeaders Media, February 11, 2009

Consumer-directed healthcare (CDH) remains a potentially cost-saving, patient-empowering movement, but member buy-in is still not there yet—and the success or failure of these plans may decide whether private health insurers survive.

It's been six years since health insurers started offering health reimbursement arrangements, but the question remains: Are consumer-directed plans merely a way for employers and health plans to shift more costs onto members?

CDH advocates bristle at the question, but not everyone is convinced that CDH plans are the way to go—even those in health plans.

Consider these two facts:

More than 42% of those who took the health plan portion of the HealthLeaders Media Industry Survey 2009 said that CDH is the best hope for healthcare. That result easily outdistanced employer-sponsored healthcare, government-funded universal healthcare, and universal health insurance. However, when looking at that figure another way, more than 50% of health plan respondents in the survey do not believe CDH is the best hope for healthcare.

Those same health plan/managed care folks are not sure that CDH plans actually empower members either. Nearly half of health plan respondents in our survey do not think CDH plans empower consumers and almost 20% don't think they either save money or empower consumers.

One reason for the lingering question is that many see consumer-directed plans as a way to shift costs to members under the guise of patient empowerment.

That cost shift is evident in rising PPO deductibles. Mercer recently reported that the median PPO deductible in 2008 doubled to nearly $1,000. High-deductible PPOs, without consumer products like health savings accounts and patient education, are a cost shift—plain and simple.

High deductibles are the downside to greater consumerism, but there are also pluses to putting members in control of their healthcare. Take, for instance, CIGNA, which recently reported successes associated with its consumer-directed plan, called CIGNA Choice Fund. The consumer plan costs less than PPOs and HMOs, and members in the consumer plan use preventive care, comply with medication, and utilize the best medical practices at the same rate or better than traditional plan members, according to CIGNA.

Despite these positive results, people are still not interested in consumer-directed plans. Studies show the percentage of health plans members enrolled in a CDH plan is in the single digits.

Health plan members are not interested in consumer-directed plans because they are satisfied with their current health plans and/or fear change, and employers are offering traditional plans that are too similar to consumer-directed plans and/or not educating employees about consumerism. Employers have to offer real alternatives if they want change.

In its purest form, consumer-directed healthcare is about patient empowerment and providing credible health information that is easy to access and understandable. Health plans have started that process by offering cost and quality information for doctors and hospitals, but there is still a long way to go.

For their own survival, it is vital for insurers to improve consumerism. All you have to do is look at Washington. There is a new president who doesn't think much of health insurers and has already laid the groundwork for a public insurance option to compete against private insurers.

If healthcare consumerism fails, not only could it bankrupt health plans members but it may signal the demise of private insurers.

Les Masterson is senior editor of Health Plan Insider. He can be reached at
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