By Ronald E. Bachman
A great frustration for many Americans during the debate on ObamaCare was tone-deaf politicians. No one seemed willing to listen to their concerns. Federal deficits, pork-barrel spending and cost got lost in the push to pass partisan legislation. Moving into the regulatory phase of writing the critical implementation rules, the concern is that bureaucrats will also ignore the people.
Bureaucrats are empowered to define “essential” benefits, structure plan designs, establish rate structures, set rules for cost-sharing, make decisions on allowable rewards and incentives and so much more. With so much Washington opposition to health care consumerism and the use of insurance with personal care accounts, the fear is that the new rules will inhibit or prohibit the adoption of the fastest-growing concept since the 401(k) retirement savings plan.
Health care consumerism is about health plans that put purchasing power and decision-making in the hands of participants. It’s about supplying the information and decision support tools they need, along with financial incentives, rewards and other benefits that encourage personal involvement in altering health and health care purchasing behaviors.
A Mercer study for the American Association of Preferred Provider Organizations (AAPPO) showed 23 million lives are covered by insurance with health care consumerism, which includes insurance plans with personal care accounts attached to the insurance coverage. These account-based insurance plans give choice, options for care and key health decisions to patients. All types of personal care accounts are growing rapidly. Plans with Health Savings Accounts (HSAs) and Health Reimbursement Arrangements (HRAs) grew 27 percent from 2008 to 2009, up from 18 million lives to 23 million.
For the first time in history, people are choosing plans that empower individuals and reduce premiums without shifting costs to patients. Karen Greenrose, president and CEO of AAPPO, said, “At a time when employers are faced with the difficult choice of limiting benefits or raising health care costs to their employees, they are turning to CDHPs (consumer-driven health plans) given the cost savings inherent in these plans.”
Health care consumerism encourages good health and health-care purchasing behaviors with support for higher use of prevention, more adherences to medical treatments, greater personal responsibility, and an emphasis on health and health care education.
This inclusive concept for engaging plan members is good for both the healthy and those with chronic conditions. It is voluntary, not coercive. No one is forced to be compliant. HSA-eligible plans, insurance with HRAs and other consumer-driven options have been proven to lower overall health costs and improve care. A 2009 study of health care consumerism by the American Academy of Actuaries (AAA) found, “The total savings generated could be as much as 12 percent to 20 percent in the first year. After the first year, studies indicate trend rates lower than traditional PPO plans by approximately 3 percent to 5 percent.”
Most importantly, the AAA concludes that in these plans “recommended care for chronic conditions (are) at the same or higher level than traditional plan participants” and the “studies reported a higher incidence of physicians following evidence-based care protocols.”
Health care consumerism has been tested in the employer and personal insurance market for nearly a decade, and the AAA and the AAPPO reports reflect the amazing results. The AAPPO report shows 43 percent of large employers now offer a health care consumerism plan. And in 2009, small employers were largely responsible for health care consumerism enrollment rising from 9 percent to 15 percent, a 66 percent increase.
There are elements of health care consumerism in ObamaCare that could be expanded on during the regulatory process. The emphasis on prevention and the allowance of increased rewards and incentives is a good provision. The use of bio-metrics (blood pressure, cholesterol levels, nicotine use and body mass index) to reward healthy behaviors has real potential. Catastrophic coverages for those under age 30 can work if regulatory rules allow them to be HSA-eligible. These are aspects of the new law that are consistent with the movement to health care consumerism.
The administration did not listen to the polls, the elections or large segments of citizens during the health legislation debate. Now, unelected bureaucrats can define what the legislation means. Americans are speaking loudly by embracing health care consumerism, which can lower health care costs and premiums. The regulatory process needs to support this movement, not try to suppress
Ronald E. Bachman FSA, MAAA, is a Senior Fellow at the Georgia Public Policy Foundation, an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. He is also a Senior Fellow at the Center for Health Transformation, an organization founded by former U.S. House Speaker Newt Gingrich. Mr. Bachman worked as an outside expert with members of Congress and the Clinton administration during the 1993-94 health reform. Nothing written here is to be construed as necessarily reflecting the views of the Foundation or the Center for Health Transformation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.
© Georgia Public Policy Foundation (July 23, 2010). Permission to reprint in whole or in part is hereby granted, provided the author and his affiliations are cited.