This week, New Hampshire Public Radio takes a look at consumer driven health care. It's a type of insurance that gives patients more of a financial stake in the health care they use and how much they pay for it.
Supporters say it is the best way to make the health care system more efficient and more affordable for everyone.
Critics say it will fail on both fronts and make health care inequalties even worse.
Yesterday, we heard about an important feature of these new insurance plans – Health Savings Accounts. These accounts have received the most attention in the media, but as New Hampshire Public Radio's Jon Greenberg reports, they are not employers' only option.
Freudenberg-NOK is one of the state’s largest manufacturers, with about 1400 employees. It has just begun a test of consumer driven health care.
Floor 1/1:33 This building we’re in right now probably has about 50,000 SF. The total facility has about 150,000
At this plant at the Manchester Airport, rows of gleaming lime green and bright blue machines produce gaskets for Ford, GM and Chrysler cars.
SFX pocketa-pocketa
This year, the company offered its workers a choice of a high deductible plan from Anthem Blue Cross Blue Shield. For a family in this plan, Freudenberg-NOK pays for the first 1400 dollars of care -- the next 1400 dollars are the responsibility of the worker. But there's something unusual about that first pot of money. It is called a Health Reimbursement Account, or HRA, and the company uses it to let workers know what health care really costs.
Leesa Smith,Vice President for Treasury and Financial Services at Freudenberg, gives the example of a worker who has the choice of going to the emergency room or waiting to go to a day-time walk-in clinic.
SMITH-3: Under the HRA plan, the person who goes to the emergency room will see the bill and they will understand that it costs multiples of how much it would cost at an urgent care facility.
The person won't just see the bill. The money will come out of their health reimbursement account. That money doesn't actually belong to them. Instead, it is a promise by the company to pay up to a set amount of each worker’s health care.
If a person goes through the HRA, the next bills will come out of their own pocket, until they reach the point where regular insurance kicks in. Smith says, the plan was set up so that in dollar terms, it would make very little difference if a person chose traditional insurance or the consumer driven option. But the goal, she says, is ultimately to curtail spending.
SMITH-5: We want the health care costs to go down because of a positive reaction, not because you're eliminating benefits or reducing benefits, but more from that consumer behavior. That people are being more thoughtful about how they're seeking their health care and [being] better consumers.
In addition to exposure to the real cost of services, the health care plan offers financial incentives for people to change the habits that underlie most illness. If they need to stop smoking, lose weight, or take better care of a chronic condition like diabetes, the company will add money to their spending account if they enroll in and complete a free program to help them change their behavior.
Smith says its too early to tell if this will make a difference. But elsewhere, this approach has had more success than other efforts to get workers to take better care of themselves.
The reimbursement account is like the more widely discussed health savings account in that it connects people to the cost of what they use but a key difference is the dollars don’t necessarily accumulate from one year to the next. Whether they do is up to the company.
Smith says Freudenberg-NOK has promised to let the amounts roll over, but just for next year.
CUT: we don't wnat them to think this is a svings account.
its somethinhg the company sets aside.
Smith says this plan is not the ultimate fix to rising health care costs, but it could help. Around the country, there are preliminary reports that people with such plans reduce their spending by 8 to 15 percent.
The concept of making patients more aware of the real costs of their health care is not something that interests only employers. Some hospital executives also see value in it.
Michael Green is president of Concord Hospital. He sees a great deal of overuse of the Emergency Room and imaging exams like MRI's.
CUT: If you sprain or strain or hurt your knee, running, bicycling or something like that, when do you decide to get the MRI? Certainly, you want to consult a physician on it but I think having a higher deductible may suggest that you do physical therapy before you get that MRI or have sugery. And I don't think that's a bad thing.
Green likes the idea so much, the hospital plans to offer its workers a high deductible option next year. Green says, if personal decisions reduce overall spending, everyone will benefit.
High deductible plans are too new for any definitive results. But it is possible to get an idea of what they might hold for the future. This type of insurance has been widely used in South Africa for over a decade.
When the Massachusetts insurance company, Tufts Health Plan, wanted to introduce a consumer directed plan five years ago, it looked to South Africa for its model. The company’s former Medical Director and Vice president is Dr. Philip Boulter.
Boulter says the biggest impact on spending was on prescription drugs. People readily switched to generic drugs and shopped for the best price. Overall, Boulter says health spending continued to rise, but high deductible plans slowed the rate of increase by one or two percent. Not a revolution, but still appreciable.
CUT: Even 1 or 2 percent compounded year in year out. ends up being real money. So if you can bend the cost trend, that's better than not bending it at all.
Boulter says the expectations of consumer driven care need to be tempered by the realities of where much of the health care money is spent.
CUT: the driver of healhth care costs, they are not affected by consumer driven products. That's where my skepticm lies. cancer chemo therapy, radiation therapy. 3% of pppl under 65 dirve 47% of cost of health care. consumerism is not going to affect that.
Whatever the impacts of consumer driven health care, there is wide agreement that as of today, it must deal with a huge Achilles heel. If people are going to shop, they must know the price and quality of their options. Right now, when it comes to health care, that information is limted at best.
For NHPR News, I’m Jon Greenberg
