Author: Sander Domaszewicz

We’ve come a long way in terms of providing more and better health care information to employees. As health care deductibles and co-payments have risen for the U.S. workforce, so have efforts to promote more enlightened health care choices and consumerist options—from incentive programs to health savings and reimbursement accounts and a growing range of resources for more cost-efficient health. At the same time, pressure has mounted on health care providers to make their cost data more transparent in the marketplace.

    But health care will always be more than a commodity to be purchased and consumed on a best-price basis. Instead, it will remain a complicated value proposition in which cost and quality factors must be weighed carefully. And that’s still not very easy for most people to do, despite rising consumer demand for transparency from payers, providers and pharmacy benefit managers. The fact that they are sharing more information on the cost of tests, treatments and drugs only underscores the need to make that information more meaningful to the consumer.

    Fortunately, the forces for meaningful health care transparency have been gathering positive momentum in recent years. An executive order from President Bush directed U.S. government agencies responsible for health care programs to release price and quality-of-care information. And Department of Health and Human Services Secretary Mike Leavitt has asked major employers, state governments and other large health care purchasers to embrace health information technology, share their health plan quality and cost information, and insist that providers adopt quality and cost measurement standards.

    Meanwhile, the federal Center for Medicare and Medicaid Services, the nation’s single largest health purchaser, and the U.S. Department of Health & Human Services have been releasing cost and provider-quality data, which can be accessed online at CMS’ Consumer Initiatives section and HHS’ Hospital Compare site State government initiatives, such as New Hampshire’s mandate that health insurers provide data on health care costs by facility and procedure and then post that data online, are swelling the tide. Indeed, the traditional provider’s argument—that health services quality in relation to cost can’t really be measured—is eroding under the weight of available data. This is enhanced by the efforts of lobbying groups such as the National Business Group on Health, and the emergence of organizations such as the Leapfrog Group, whose membership comprises some of the largest health care purchasers in the nation and which encourages health providers to publicly report on quality outcomes to advance the cause of informed health care consumerism.

    Importantly, the private sector is stepping up to the plate. Mercer’s original 2004 initiative, called Care Focused Purchasing, has led more than 50 large employers to pool their data and develop a scorecard system that rates health care providers on quality and cost efficiency, with a goal of developing a rating system based on treatment standards and consumer experiences. Mercer’s U.S. health care thought leader, Arnold Milstein, M.D., a Leapfrog Group co-founder and the medical director of the Pacific Business Group on Health, the largest employer health care purchasing coalition in the U.S., has called for the use of Medicare and Medicaid data as a public asset to help raise the efficiency bar for all providers.

    If there’s a disconnect, though, it may well be that awareness and usage of the information remain low, largely because it’s still problematic for consumers to marshal all of the cost and quality data that is becoming available. Comparative health information is not a “build it and they will come” endeavor. It requires significant marketing to get out the word on ease of use and value of the information to the public. It also requires data consistency that standardizes quality and efficiency measurement, avoiding confusion by relying only on nationally recognized and vetted measures that can be understood by the average consumer.

    People not only have to be aware information is available, but also must clearly see “what’s in it for me” and for their loved ones. The consumerist trend encourages everyday folks, not just M.D.s and Ph.D.s, to consider all dimensions of health care value more carefully—and, fortunately, more of them are searching out, demanding and finding the best quality and health outcomes at a reasonable cost and with acceptable levels of service.

    Yet as far as health care transparency has come, it still has a long way to go. And if the polls of health information users and consumer plan enrollees hold true, the more information people get, the more they’ll want and demand. Faster, easier to use, more accurate, more reliable and timely, and so on. We may never be done in this regard, and that’s fine. Greater demand will open up the capital required to create truly intuitive solutions. The foundation technology—led by the near-universal accessibility of the Internet—is certainly in place, but at this point, the various points of contact remain scattered. How many health care consumers, for example, know that the Leapfrog Group providesquick online information on hospital quality and patient safety:  by city, state or ZIP code?

    And that will remain the larger challenge: making consumers aware that such information is being codified and is out there for them, that it’s easy to find and important for them to use. An obvious analogy relates to the price of oil. Knowing the cost per barrel at any given time doesn’t really help the consumer, but the emergence of Internet sites listing comparative gasoline prices at local stations has made it easier for us to make better choices at the pump.

    Health care cost and quality information is much more complicated, of course, and so much raw data is entering the pipeline from different sources we must not overlook the ultimate purpose of that data—to serve us, for we are all health care consumers, and to make our choices clearer and our lives better.

Employee health care in America has been a something of a study in false panaceas. In the post-World War II age of prosperity, our original model––indemnity plans paid by employers––prevailed for three decades, until cost creep and utilization began to redden company ledgers. Then came the rise of the HMOs, posting steady cost-control success until savings were eroded by double-digit health-premium inflation. It proved that the HMO solution, despite its advantages, was all too vulnerable to market forces.

    The recent era of cost-shifting—which was initially, though begrudgingly, tolerated by employers and employees who conceded that the burden of health care inflation must be shared—is proving an unsustainable solution. Indeed, neither side of the cost-shifting transaction ever viewed it as the ultimate answer. Now, at the start of a new century, there’s hope that health care consumerism and account-based consumer-directed health plans will generate a wave of personal responsibility on the part of employees for benefits, controlling costs and helping preserve the fraying health care covenant.

    It’s no panacea, of course––not yet. And it’s hard to say how it will evolve in the current environment, as presidential hopefuls and Congress debate the ideas of universal health care and single-payer solutions. But we know this consumerist trend is at least real. A survey conducted annually by Mercer Health & Benefits (including nearly 3,000 employer participants in 2006, statistically projectable to all employers with 10 or more employees) showed that the percentage of all surveyed employers offering a consumer-directed health plan based on either a health reimbursement account or a health savings account tripled in 2006, from 2 percent to 6 percent, as small employers began adapting the new plan type in significant numbers for the first time.

    Meanwhile, growth was strong among large employers, with consumer-directed health plan offerings rising from 5 percent in 2005 to 11 percent among employers with 500 or more employees, and from 22 percent to 37 percent among jumbo employers (20,000 or more employees). Foreshadowing the rising consumerism tide, when asked what types of plans they expected to offer five years from now, 61 percent of employers with 500 or more employees indicated that they’d be offering one or more consumer-directed health plans.

    More important, perhaps, the increased consumerism efforts and consumer-directed health plan adoption may point the way to greater cost sustainability. Consumer-directed health plans delivered substantially lower cost per employee than either preferred provider organizations or HMOs in 2006. But like any hopeful trend in the early stages of success, the rise of consumerism in health care demands a reality check, and already it’s evident that a parallel trend is threatening to slow the momentum of positive change––for now, let’s call it “CDH vs. CDH.”

    As observed in the above-cited annual research and in extensive client experience, there’s CDH (cost-driven health care), and then there’s CDH (true consumer-directed health care). Cost-driven health care is actually a cost-shifting effort masquerading as consumerism, and this less than sustainable solution may begin with a benefits manager under pressure from executives to “do consumer-directed health care” for the purpose of immediate cost savings.

    As a result, an HSA-compliant plan typically is added to the benefits menu along with current plan offerings, but with little or no company contribution to the HSA, little or no investment in tools, information or support for participants in the HSA, and no long-term education or communication strategy for the program.

    Predictable results can include very low adoption by workers or, if the offering is forced, significant employee relations issues. Cost-driven health may also foster poor choices or unintended health consequences for those in the program. There may be a short-term dip in company costs achieved through cost shifting to workers, followed by a longer-term cost-increase trend driven by poor health and lagging productivity issues.

    As for genuine consumer-directed health care, it’s precisely the CDH we mean when we talk about the rise of consumerism. But it requires more effort, energy and involvement by all stakeholders to successfully launch and sustain. For plan sponsors, that means such commitments as adopting a documented multi-year health strategy; adding account-based or consumerist health plans as significant––if not the only––options over time; and making meaningful contributions to any health account so that most of the participants can reasonably expect to manage their health with the funds provided.

    It also demands a concerted effort to provide support, tools and information to help employees become more involved and informed health care consumers. And all of this needs to be wrapped in a compelling communication package with ongoing educational elements that continue long after implementation.

    That’s a tall order, requiring a level of discipline from all stakeholders that was never required under the indemnity or HMO models, and which employees have struggled with in the cost-shifting era. But with consumer-driven health care done right, positive behavior changes, improved companywide health status and cost savings can often be seen over time. And even then, employers need to monitor the program, adjust elements as necessary and guard against unintended consequences such as care avoidance or a disproportionate impact on lower-paid or ill workers.

    No, a consumerist panacea will be a hard-won victory, fought not only in the trenches of innovative programs to create involved and informed consumers, but also on the battlefields of good benefit and health-plan management basics, vendor negotiations, network discounts and access, disease management programs, and health assessment and improvement efforts. But amid all the uncertainties and complexities that define the health care landscape in today’s increasingly global, fiscally fragile corporate universe, the advent of consumerism sounds a note of sense and sustainability. Its success calls for a commitment to consumer-driven health care––with no illusions.