Tuesday, February 14, 2006

Consumer Driven or Managed Consumers?

“Bottom line it for me.”
“Put it on the backburner.”
“Think outside the box.”
Every industry has its own jargon, its own clichés. And of course, insurance is no different. The health insurance biz is especially fond of acronyms (ERISA, COBRA, HSA, etc) and buzzwords like “empowerment.” Most recently, Consumer Driven Health Care (CDHC) has been the term du jour (literally: “repeated endlessly”). The idea is that, by increasing the patient’s share of health care costs, one can also increase their “ownership” of their overall health. The primary way this is done is through higher deductibles and fewer “frills.”
But does it work?
Well, it seems to: a recent study by Cigna found that folks in these type of plans “generated an eight percent reduction in medical costs and made positive changes in health behavior, such as increasing their use of medications to treat chronic health care conditions.” Not too hateful.
Interestingly, CDHC-users showed that, while there was a significant increase in their use of medications to control diabetes, asthma and high cholesterol, the cost per day for these meds decreased. This suggests that CDHC-users made more cost-effective decisions, but did not skip medications.
So what’s my point, you ask?
Well, just as the VCR gave way to the DVD, and the ubiquitous LP to the CD (and now MP3), it looks like CDHC is ceding ground to MC. [ed: okay, enough already with the cutesy jargon!]
MC, or Managed Consumerism, “combines the best of CDH with the best of managed care principles,” says University of California Professor James Robinson, who coined the term. Consumers must become more cost conscious, and medical services more tightly integrated and efficiently delivered. Why is that? Well, because both "movements" (CDHC and managed care) tried to apply one strategy of cost control or quality improvement to all forms of medical care. "One size fits all" rarely leads to a happy ending.
A big part of the problem is the old 80/20 rule: in business, 20% of your customers create 80% of the problems (there are other interpretations, as well). In this case, CDHC focuses on patient-initiated, acute types of care. That covers about 80% of the (insured) population, but accounts for only 20% of total health care spending. What about the other 20%, with chronic conditions that account for 80% balance of spending?
That’s where Managed Consumerism comes in:
"The mistake of managed care - the political mistake and the cultural mistake - was that they said yes' and then no.'" The managed care plans promised universal access for a paltry co-pay. But once inside the system, prior authorization, capitation, and narrow networks all said "no."
Consumerism can fix that by saying "no" then "yes," Robinson says. "No," health care is not free; but, "yes," you can save money by making the right choices.
blog comments powered by Disqus