Consumer experiences in a consumer-driven health plan

Health Services Research, August, 2004 by Jon B. Christianson, Stephen T. Parente, Roger Feldman

The label "consumer-driven health plan" (CDHP) has been used to describe a wide variety of different health benefit designs that shift more health care costs to consumers at the point of service, on the presumption that it is desirable to give consumers incentives to pay greater attention to the cost and quality consequences of their health care choices (Shaller et al. 2003). Recently, however, the most common use of the term has been in reference to benefit plans with three core features: a personal care account; insurance coverage designed to create a "gap" between the dollars in the account and the level at which a deductible is reached; and various Internet support tools intended to facilitate more extensive, better-informed consumer involvement in health care decisions (Christianson, Parente, and Taylor 2002). These features distinguish CDHPs from other benefit designs, such as tiered hospital networks, that also are intended to provide incentives for consumers to consider cost and quality in selecting providers.

Consumer-driven health plans with these core features are offered now by a relatively small number of employers, but they seem to be gaining momentum, with several large national firms recently adding them as benefit options and established insurers expanding their product lines to include CDHPs (Davis 2003a). Consumer-driven health plans generally are not marketed to employers as an immediate "solution" to their rising health care costs, but rather as a constructive employer response to employee demands for more choice, fewer restrictions, and less involvement on the part of employers and health plans in health care decisions. Employer advocates of CDHPs believe the plans have the potential to moderate employer cost increases in the long run, as employees become more involved in their health care decisions, more conscious of prices and better equipped to make price-quality trade-offs (Gabel, Lo Sasso, and Rice 2002).

From a broader perspective, some analysts forecast a "consumer revolution" in health care with CDHPs and similar insurance arrangements in the vanguard. They expect this revolution to eventually change traditional relationships between consumers and health care providers resulting in a more efficient, more responsive health care system (Davis 2003c). In contrast, skeptics see CDHPs as simply being vehicles for shifting a greater share of health care costs to consumers, especially consumers with high medical care needs (Swartz 2001/2002), and doubt the ability of a diffuse, consumer-driven market to create change in an increasingly concentrated provider system (Devers et al. 2003). They also point to the complexity of the CDHP benefit design as potentially impeding the ability of enrollees to act as aggressive, informed health care consumers, and they question whether consumers actually want to play this role (Gabel, Lo Sasso, and Rice 2002).

Clearly, assumptions about consumers and their behaviors are central to how one views CDHPs and their potential impact on America's health care system. However, at this time, little data are available that relate directly to the experience of enrollees in CDHPs. How satisfied are they with these plans? How do they use the plan features touted by CDHPs, and how satisfied are they with these features? How does the experience of CDHP enrollees vary by individual characteristics? In this article, we begin to address these issues using data collected through a survey of employees at the University of Minnesota.

Because our analysis is based on employees from one employed group enrolled in a single CDHP in one health care market at a specific point in time, it should be viewed as a first, limited attempt to shed light on the important consumer issues raised by CDHPs. In the concluding discussion, we suggest directions for future research, based on the results of our analysis.

BACKGROUND

As indicated above, CDHPs attempt to distinguish themselves from competitors in part through innovative product features directed at consumers (Christianson, Parente, and Taylor 2002; Gabel, Lo Sasso, and Rice 2002). Perhaps the CDHP feature that deviates the most from features offered by other health plans is the personal care account (PCA) (sometimes called a personal spending account, health spending account, or health care reimbursement account). The amount of money in the account varies by type of contract (e.g., individual versus family). The employee uses the account to pay for health care expenses. Money left in the account at the end of the contract year is carried forward into the next year, if the employee continues in the plan. If the employee retires, leaves the company, or stays with the company, but switches health plans, employers have different rules regarding disposition of any dollars left in the account.

A second important feature of CDHPs is their flexibility with respect to benefit design (Davis 2003b). The personal care account (PCA) is paired with rather traditional high-deductible health care coverage, typically featuring coinsurance for expenses above the deductible and an "out-of-pocket" limit on expenses to protect the enrollee against the financial consequences of a catastrophic health care event. The plan deductible is set at a level greater than the amount of dollars put in the PCA by the employer. If the enrollee exhausts the PCA during the contract year, he or she must bear the entire cost of any further services used, until the deductible is reached, and the coinsurance feature takes hold. Typically, however, CDHPs provide "first-dollar" reimbursement for preventive services, so that enrollees do not need to use PCA dollars to pay for these services. Clearly, benefit coverage under CDHPs can be "customized" along a number of dimensions (size of PCA and deductible, level of coinsurance, out-of-pocket maximum, PCA rollover rules, and reimbursement for preventive services) in order to achieve the combination of employee premium and point-of-service cost sharing desired by the employer.