New Research From EBRI: New Consumer-Driven Health Plans May Contain Fatal Flaw

WASHINGTON, Jan. 15 /PRNewswire-USNewswire/ -- A relatively new health plan
model that its advocates hope will control rising health spending could fail
if key consumer education initiatives prove ineffective, according to a study
published today by the nonpartisan Employee Benefit Research Institute (EBRI).

The study, in the January 2008EBRI Issue Brief, examines the model generally
known as consumer-driven health plans and concludes: "Should health education
initiatives prove ineffective, the 'consumer-driven health movement' could
well be doomed, especially if it relies upon fully educated health consumers
taking self-initiated actions."

The Issue Brief reports that consumers' knowledge of health insurance issues
and active involvement in their own care is essential to achieving quality
health care that is safe and affordable. But it adds that consumers have
"little or no input" into the consumer-driven plans that policymakers and
employers are currently discussing. "Nor are consumers receiving health
education that takes both their psycho-social and income-security concerns
into account," the study says.

What's more, the Issue Brief notes, the goals of the consumer-driven model
appear little different from the goals of managed care a quarter century ago.
"Although costs moderated for a few years, over the longer term the managed
care experiment failed," the Issue Brief says. "It did so, in part, because it
violated the personal and social values of American consumers -- for autonomy
and control of their own health care, among other things."

Now consumer-driven plans, while gaining several million members, appear to be
adopting a "top down" approach that ignores these values and is structured in
ways that omit an understanding of what consumers need to know and what they
value, the Issue Brief adds.

In general, consumer-driven plans are health benefit plans that have high
deductibles combined with one of two types of tax-preferred accounts: health
savings accounts or health reimbursements arrangements. Those who have
consumer-driven plans are expected to pay out-of-pocket costs from personal
funds or one of the tax-preferred accounts, giving them an incentive to become
more engaged in the cost of their care. But the Issue Brief reports there is
no consensus among health benefits planners and policymakers that
consumer-driven plans will help contain health care costs.

The Issue Brief was written by Lois A. Vitt, founding director of the
Institute for Socio-Financial Studies in Middleburg, VA, and Ray Werntz, an
EBRI Fellow, and is available online at www.ebri.org

EBRI is a private, nonprofit research institute based in Washington, DC, that
focuses on health, savings, retirement, and economic security issues. EBRI
does not lobby and does not take policy positions.

SOURCE Employee Benefit Research Institute

John MacDonald of the Employee Benefit Research Institute, +1-202-775-6349,
macdonald@ebri.org; or Lois Vitt of the Institute for Socio-Financial Studies,
+1-540-687-6080, lvitt@isfs.org