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Panel: Consumer-Driven Health Plans So Far Not the Answer to Fixing Health Care

By Whitney Blair Wyckoff, CQ Staff

June 24, 2008 -- Consumer-driven health plans and wellness programs may not be the solution to the health care crisis, said panelists from consulting firm Milliman Inc. at a briefing Tuesday.

Sponsored by The Heritage Foundation, a conservative think tank, and the nonpartisan Employee Benefits Research Institute (EBRI), the panel considered health insurance overhaul elements.

"I don't know if health reform is inevitable," said event co-host Paul Fronstin, director of the Health Research and Education Program at EBRI. He added that there have been more failed attempts at overhauling health care than there have been successes. "Some would even argue that some of our current laws are failed attempts at health reform."

Fronstin recalled hearing one lawmaker say during the Senate Finance Committee's recent bipartisan health summit that he was surprised that 20 percent of the population accounts for 80 percent of health care costs. "I'm thinking to myself, we've got a long ways to go with just some basic education of members of Congress before we can have sound public policy," Fronstin said.

Employers using consumer-driven health plans have reported a 50-percent savings in paid claims, said panelist Catherine Murphy-Barron, a principal and consulting actuary for Milliman. However, that figure only shows part of the equation, she said. After taking plan design, favorable selection, and benefit richness into consideration, the savings are actually much lower, she said, citing a Milliman study that looked into whether consumer-driven health care plans are the solution to the health care cost crisis.

"What we found in our study was that the real savings from the consumer-driven part of the plans was 1.5 percent," she said.

Murphy-Barron added that the 1.5 percent did not necessarily mean that consumer-driven plans are more cost effective. It could mean, for example, that induced utilization as a result of a higher deductible might be higher than the study assumed.

Consumer-driven health plans are "not yet" the solution to the health care crisis, she said. For such plans to be more effective, more price and quality information needs to be available.

Panelist Kathryn Fitch, principal and health care consultant for Milliman, said that while wellness and care management initiatives, like smoking cessation and flu shots, are "the right thing to do," people should be cautious about the expectations. Fitch said 85 percent of employers have implemented some sort of wellness program.

"The verdict is out on whether or not these really work and whether they save money," Fitch said. "I think we're all pretty well convinced now that disease management does not save money."

In addition, both presidential candidates John McCain, R-Ariz., and Barack Obama, D-Ill., have a wellness program in their plans, she said. Any wellness initiatives that are proposed should have a strong evidence base and should consider how to get people involved in the programs, she said.

"Wellness is really in its infancy and there's a lot of naivete out there in terms of what we should be expecting from wellness and prevention," Fitch said.

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