E-health tools--new internet-based products that some employers and employees are now using to manage health benefits--offer some advantages but may contain potential pitfalls such as increased costs and reduced access to coverage for older and sicker employees, according to a new report from The Commonwealth Fund. Although e-health tools have the potential to provide greater control to consumers and lower overall costs for administering benefits, users should be wary of long- and short-term effects that could offset these benefits. Increased financial burdens for employees as health care costs rise faster than employer contributions, and adverse risk selection that could increase costs and limit choice for some employees, are some possible negative effects, specifically from e-health defined contribution plans. The authors encourage employers to be cautious in making the transition from traditional ways of administering health plans to e-health systems.
The report, E-health Options for Business: Evaluating the Choices, by Sharon Silow-Carroll of the Economic and Social Research Institute and Lisa Duchon, currently at SUNY Downstate Medical Center and formerly of The Commonwealth Fund, synthesizes the content of a June 2001 New York Business Group on Health conference that focused on e-health tools for consumer decision-making. The authors suggest that employers, employees, and policymakers need more research into the effects of new e-health systems before they rush into unexplored territory.
Silow-Carroll and Duchon say that employers, policymakers, health care providers, and consumers should be careful of a whole-sale switch to e-health systems, which are untested in the health care marketplace. More research is needed to know the long-term implications for cost, quality, and access. Hidden Costs of E-health
Employers who move to e-health systems could save on administrative costs and limited contributions to health benefits, but should be careful that savings are not offset by new costs such as purchasing and ongoing ""maintenance"" of e-health tools, training workers in using the new tools, and lost employee productivity as workers spend more time managing benefits. Savings and costs must be compared to get an accurate picture of the long-term effect of costs to employers and employees. In addition, e-health tools do not address underlying factors that raise health care costs such as new technologies and the aging population. The Limits of Choice
Proponents point out that e-health defined contribution plans give employees more choice in selecting health plans, benefits, and providers. However, information about the quality and performance of health plans and providers that would allow consumers to make truly informed choices is limited and not standardized. Employers need to know the source of per-formance information and ensure that it is reliable and user-friendly before employees take more responsibility for their health plan choices. Noting that previous studies have shown that the majority of employees think their employers already do a good job of choosing health plans, Silow-Carroll and Duchon question whether e-health tools will provide employees with better choices than they have now--and whether employees want more decision-making responsibility.Danger of Adverse Risk Selection
E-health products are marketed as a way to help employers contain costs and improve employee satisfaction. Along with information to guide decision-making, financial incentives are expected to make employees better health care consumers. One e-health model provides a capped ""health savings"" or ""personal care"" account for employees to spend at their discretion, along with a high deductible plan if they use up their account. An option to roll over unspent account funds may enhance portability of benefits so workers can carry coverage from job to job. But the authors warn that the flexibility of e-health tools, which may make them attractive to many individuals, could disturb the natural risk-pooling of employer-sponsored coverage, where healthier workers subsidize sicker workers. Older workers and families with above-average medical risks would face higher out-of-pocket costs, and may face limited access to health care coverage. Efforts to adjust employer contributions according to an individual's risk are one solution to that problem, but are often difficult to implement. Middle Ground Proposed
The authors suggest ways for employers to save on health care costs and promote better consumer decision-making without passing more financial risk on to employees. Employers might retain their role in managing health benefits for employees--a role that employees approve of--and use e-health products to improve administrative efficiencies and increase employees' access to information about provider quality and treatment options.