The great frustration for many Americans during the debate on ObamaCare was tone-deaf politicians. No one seemed willing to listen to their concerns. Federal deficits, pork-barrel spending, and the cost of health care got lost in the push to pass partisan legislation. As we move into the regulatory phase of writing the critical implementation rules, the concern is that Obama-bureaucrats will also ignore the people.
The power is now with the bureaucrats to define “essential benefits”, structure plan designs, establish rate structures, set rules for cost-sharing, make decisions on allowable rewards and incentives, and so much more. Many of those in Congress and in the Obama administration have previously voted against health care consumerism and the use of insurance with personal care accounts. The fear is that they will write rules to inhibit or prohibit the adoption of the fastest growing concept since 401(k)s.
Released April 14, 2010, a Mercer study for the American Association of Preferred Provider Organizations (AAPPO) showed that insurance with health care consumerism now covers an estimated 23 million lives. health care consumerism includes insurance plans with personal care accounts attached to the insurance coverage.
Health care consumerism is about health plans that put economic purchasing power—and decision-making—in the hands of participants. It’s about supplying the information and decision support tools they need, along with financial incentives, rewards, and other benefits that encourage personal involvement in altering health and health care purchasing behaviors.
These account-based insurance plans give choice, options for care, and key health decisions to patients. There are several types of personal care accounts, but all are growing rapidly. Plans with health savings accounts (HSAs) and Health Reimbursement Arrangements (HRAs) grew 27 percent from 2008 to 2009, up from 18 million to 23 million lives.
For the first time in our history, people are choosing plans that empower individuals and lower premiums without shifting costs to patients. Karen Greenrose, president and CEO of AAPPO said, “At a time when employers are faced with the difficult choice of limiting benefits or raising health care costs to their employees, they are turning to CDHPs given the cost savings inherent in these plans.”
Health care consumerism encourages good health and health care purchasing behaviors with support for higher use of prevention, more adherences to medical treatments, greater personal responsibility, and an emphasis on health and health care education.
Health care consumerism is an inclusive concept for engaging plan members. It is good for both the healthy and those suffering from chronic conditions. Health care consumerism is a voluntary system rather than a coercive process. No one is forced to be compliant. Individuals have free choice. The success of this approach is no longer theory. HSA eligible plans, insurance with HRAs, and other consumer-driven options have been proven to lower overall health costs and improve care. These plans work for young and old, male and female, rich and poor, republicans and democrats, progressives and conservatives.
According to a 2009 study of health care consumerism by the American Academy of Actuaries (AAA), “The total savings generated could be as much as 12 percent to 20 percent in the first year. After the first year, studies indicate trend rates lower than traditional PPO plans by approximately 3 percent to 5 percent.” The basis for these remarkable results is the use of health care consumerism.
Most importantly, the AAA concludes that in these plans “recommended care for chronic conditions (are) at the same or higher level than traditional plan participants” and the “studies reported a higher incidence of physicians following evidence-based care protocols.”
Health care consumerism has been tested in the employer and personal insurance market for nearly a decade. The AAA and the AAPPO reports are unbiased views that show amazing results. New generation plans are being developed and implemented by employers and purchased by individuals that show even higher levels of savings.
The AAPPO report shows forty-three percent (43 percent) of large employers now offer a health care consumerism plan. The benefits of account based plans are now reaching small employers. In 2009, small employers were the major source of increase in health care consumerism enrollment rising from 9 percent to 15 percent, a sixty-six percent (66 percent) increase.
There are elements of health care consumerism in ObamaCare that could be expanded on during the regulatory process. The emphasis on prevention and the allowance of increased rewards and incentives is a good provision. The use of bio-metrics (blood pressure, cholesterol levels, nicotine use, and body mass index) to reward healthy behaviors has real potential. Catastrophic coverages for those under age thirty can work, if regulatory rules allow them to be HSA eligible. These are aspects of the new law that are consistent with the movement to health care consumerism.
Mr. President, you didn’t listen to the polls, the elections, or large segments of citizens during the health reform debate. The legislation passed. It is law. You won. Now, unelected bureaucrats have enormous power to define what the legislation means. Again, the people are speaking loudly by embracing health care consumerism. Health care costs and insurance premiums can be lowered by promoting health care consumerism. The regulatory process can support this movement or it can try to suppress it. You will win again if your administration hears the voice of Americans and lets health care consumerism flourish.
Ronald E. Bachman FSA, MAAA, is a Senior Fellow at the Center for Health Transformation, an organization founded by former U.S. House Speaker Newt Gingrich. Nothing written here is to be construed as necessarily reflecting the views of the Foundation or the Center for Health Transformation or as an attempt to aid or hinder regulations or the passage of any bill before the U.S. Congress.