More Employers Consider New Health Plans Options that Shift Costs to Employees
New "consumer-driven" health insurance policies designed to shift costs to employees and get patients to "act more like shoppers" are gaining interest among employers and may be the first "big shift" from traditional managed care, USA Today reports (Appleby, USA Today, 1/8). According to the Wall Street Journal, these plans remove the barriers of managed care but make patients responsible for "spending their own health care dollars wisely" (Martinez, Wall Street Journal, 1/8). Three main types of these policies are being sold to employers:
- High-deductible plans with spending accounts. Under this plan, employers pay into a savings account to cover a year's worth of medical care, premiums and deductibles. If employees spend more than the account, they make up the difference out-of-pocket, up to a certain amount (they are not responsible for catastrophic care).
- Defined contribution plans: Employers offer a defined amount of money to be spent toward a variety of insurance products. Employees choose which product they want and pay the difference between the employer's defined amount and the actual cost of the plan.
- After-tax savings accounts: This model "couples a traditional insurance plan for major medical expenses with a savings account" to be used for routine care. Money contributed by both the employer and employee is paid after taxes so the employee may take money left in the account after he or she leaves the company.
USA Today reports that employers will likely see savings with these health policies in the long term if employees "spend less" on health care. Advocates of the plans say they will "spur a free market in health care." According to Ryan Levin of Destiny Health Inc., a company which is marketing some of the new plans, "People think a doctor's office visit costs less than a haircut, which is frightening." Ron Williams, an executive vice president with Aetna, said, "The simple notion we're trying to get across is that when the consumer fills a basket and goes to the check-out, they watch the cash register and have a sense of the true financial cost of health care services." However, critics of such plans say they "discourage" patients from seeking medical care and "punish" the ill by requiring them to pay more for care (USA Today, 1/8). Although many plans include "safeguards," such as spending caps, to protect patients from catastrophic health care costs, the Journal reports that it is not yet known if patients will "short-change" their care to save money (Wall Street Journal, 1/8). The Consumers Union's Gail Shearer, said, "There are winners and losers with these plans. The losers are those who are sicker and have higher expenses." Paul Ginsburg, an economist with the Center for Studying Health System Change, said, "Certainly, health care isn't like a typical consumer good. Consumers are not going to enjoy these choices the way they enjoy choosing which car to buy. These will be wrenching choices: I think Dr. Jones is best, but Dr. Smith costs less" (USA Today, 1/8).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.