Looks like health savings plans, which are aimed at putting health care consumption decisions in the hands of consumers, have joined the ranks of the over-hyped. Consider the following from Deloitte’s “Financial Foresight” report in January:
Much as individual retirement accounts changed the way many Americans save for their golden years, health savings accounts (HSAs) have the potential to establish a new paradigm for how Americans make and pay for health care decisions…
In less than a year, the number of active HSA accounts has tripled to more than 1 million. We expect that number to grow to more than 10 million by 2010. It could climb even further, to more that [sic] 15 million, if proposals in Washington to expand HSAs are enacted. HSA assets could increase at even greater rates. Under current policies, HSA assets could grow from $1 billion today to more than $24 billion in 2010. If the Washington proposals are adopted, that ceiling could approach $64 billion in five years.
“A new paradigm.” I sure hope so, but the Wall Street Journal’s Vanessa Fuhrmans tells a different story. Her recent piece (June 12) entitled, “Health Savings Plans Start to Falter” (subscription required), highlights statistics that indicate consumer-directed health plan (CDHP) adoption is undergoing much more meager growth. Enrollment in employer-sponsored plans in the category (mind you for all CDHP plans, not just HSAs) grew only 12.5% from 2005 to 2006 according to the Kaiser Family Foundation. Given the choice of CDHP or a ”traditional” plan, despite significant financial incentives in many cases attached to the CDHP option, consumers seem to be holding traditional.
I can sympathize. Some interesting startups’ and progressive payors’ efforts notwithstanding, there’s little available in the way of healthcare service pricing information and quality transparency to say nothing of the complexity of enrollment options and post-enrollment administration. Frankly, I’m not surprised by Fuhrmans’ choice quote:
“If I were a product manager in any other industry and saw scores this low in customer satisfaction and understanding, I’d be thinking of pulling that product from the shelves or retooling it,” says David Guilmette, managing director of Towers Perrin’s health-care consulting practice.
Pull, no; retool, yes. It seems CDHP impact has been overestimated in the near-term, but the move to quantify/qualify system processes and outcomes and create an optimal incentive structure for efficiency, which is really what CDHP is about, will continue, I’d argue, an inexorable march. I’m interested in hearing about any punctuative event prophesies (the Medicare Modernization Act may still prove to be the seminal catalyst) or companies addressing this space.
Photo credit: Clear Vision, originally uploaded by C.P.Storm.
High Deductible Health Plans with Health Savings Accounts (HDHPs/HSAs) are very confusing for the patient and the provider. We provide preventive care services and many HDHP have a significant preventive benefit (allowed by the IRS). HSA account holders do not understand this and believe any “doctor” visit will cost them significant out of pocket costs.
In addition, most HDHPs allow the policyholder to pay the payors contracted rates for services. The problem with that is no one really knows this and training a front desk person to understand this process with the multitude of other tasks they are responsible for is daunting. I would love a product that would give us a direct view into the patients benefits down to the amount of wellness benefit remaining and cost of services.
We have attempted to market to HDHP holders with very little success to explain the options available to them. I would love to see a great high tech solution to this.
Gregg Smith
CFO
Lifesigns
http://www.lifesignsmd.com
That’s all fine, but the Kaiser Family Foundation report was simply wrong. They conducted a survey and concluded there were 2.5 million employees in Consumer Directed plans in 2005 and 2.6 million in 2006 (these may not be the exact numbers they reported, but close. I’m relying on memory here) They were probably about right in 2006, but way off in 2005. Plus, they were counting employees only, not dependents or people with individual coverage.
AHIP has been tracking enrollment in HSA-qualified plans alone and counted 4.5 million in January, 2007 — triple the enrollment just two years earlier. Add another 5 - 6 million in HRA plans, and you get some 10 million in account-based plans at the start of this year.
This is the fatest adoption rate of any benefits innovation of my lifetime. Faster than IRAs, HMOs, or 401-Ks.
Greg Scandlen
[...] It is probably too early to make any decisions here around Consumer Driven Healthcare (CDHC), but I enjoyed an entry on Matt Winn’s blog Punctuative about this (see entry). A quote I especially like is: [...]