Insurers turning to 'consumer-driven' care to curb health costs

The view from California

The future of health coverage may look more like the Home Shopping Network than "E.R." A fast-growing trend known as consumer-driven health care aims to curb the soaring cost of health insurance by offering tailor-made coverage and increasing deductibles to make patients choosier about doctors, drugs and hospitals. Among other things, patients who don't intend to get pregnant can eliminate maternity coverage. Families can cut premiums by taking on a $2,000 annual deductible then shopping around for the most affordable care. "All the big insurers are now offering consumer-directed products," said Caroline Steinberg, vice president of trends analysis for the American Hospital Association in Washington, D.C. "It's a bit of an experiment," she said. "At this point, I don't think we know whether it's going to work or not."

Critics insist the high deductibles are merely a way for insurers to shift more costs to workers. They also point out that the plans don't require insurers to cut either their profits or prices. California Insurance Commissioner John Garamendi, a supporter of government-mandated coverage, has called the trend a "death spiral" for health care. He argued that it will cherry-pick the youngest, healthiest and richest people while forcing traditional managed care plans to charge more to cover the sickest patients. The result will be more uninsured people, he said. "It's not consumer-driven at all," Garamendi said. "What it is is market-driven by insurance companies ... segmenting the population into high-cost, high-risk segments and low-cost, low-risk segments."

Of the 186 million Americans who have health insurance, only about 3 million people are enrolled in consumer-driven plans. However, that number is expected to increase as politicians, insurers and employers struggle to hold down health care costs that have outpaced inflation for years. With the annual cost of insuring a family now about $10,000, many employers no longer offer health coverage. Only 66 percent of full-time workers at private firms have employer-sponsored plans, compared to 80 percent in 1989, according to the U.S. Bureau of Labor Statistics.

Garamendi specifically targeted a plan unveiled last year by Blue Cross. Marketed as Tonik, it's geared to people under 30 who are just starting out in their careers. By design, it does not include maternity benefits but does offer catastrophic coverage along with limited dental and vision care. Blue Cross said its research showed the target market didn't want maternity coverage. Eliminating it made the plan more affordable, said Robert Alaniz, a spokesman for Wellpoint Inc., parent company of Blue Cross. "It's not what government thinks you need, it's not what we, the plan, think you need, but it's what you, the consumer, told us," he said.....

Consumer-driven plans are based on the theory that people who must pay more upfront in deductibles will shop around for the most affordable health care. For some patients that could mean using generic rather than brand-name drugs or taking an aspirin before rushing to an emergency room after a sports injury. Tax-exempt health savings accounts recently permitted by Congress allow people to bank their own money toward the deductibles.

Giant health care provider UnitedHealth Group Inc. is betting the consumer-driven approach will help remedy the ailing system. The Minnetonka, Minn.-based firm has applied the philosophy to its own products and paid more than $800 million to buy two companies with pioneering experience in consumer-driven plans, UnitedHealth spokesman Mark Lindsay said. "The single best agent to control health care costs is the individual," he said. "Unfortunately, today they are disconnected from that reality."

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For greatest efficiency, lowest cost and maximum choice, ALL hospitals and health insurance schemes should be privately owned and run -- with government-paid vouchers for the very poor and minimal regulation. Both Australia and Sweden have large private sector health systems with government reimbursement for privately-provided services so can a purely private system with some level of government reimbursement or insurance for the poor be so hard to do?

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