America's Best Health Plans
Deciding on health coverage isn't getting easier-or cheaper
Putting consumers in the saddle is a smart idea that gives them a stake in spending healthcare dollars wisely-or it is a thinly disguised ploy to offload these costs onto individuals, many of whom, as demonstrated by the 46.6 million (and counting) uninsured, can ill afford to pay them. How this trend is read depends on the reader.
Some experts suggest that the new focus on consumers is unsurprising. Health plans, employers, and providers have all tried-and largely failed-to control costs. "The last constituent standing in this mix is the consumer," says Mark Bertolini, executive vice president and head of regional businesses for the insurer Aetna.
It's too soon to know whether consumerism will actually help reduce overall healthcare costs, but chances are you're going to be hearing about it when you shop for health insurance. Here's what to look for.
Healthcare consumerism is thick with acronyms, nowhere more than around pairings of high-deductible health plans (HDHPs), also called consumer-driven health plans (CDHPs), with HSAs or a similar financial account called a health reimbursement arrangement (HRA). President Bush has made HSAs a key element of his healthcare policy, and Forrester Research predicts that nearly 1 in 4 consumers will be in some kind of consumer-driven plan by 2010.
Federal law requires a qualified HSA plan to have a deductible of at least $1,050 for individuals and $2,100 for families in 2006. The amounts are indexed to rise every year. Participants are responsible for virtually all medical costs up to that amount. Individuals can set aside money tax free in an interest-earning HSA linked to the plan to cover their medical bills until they reach the deductible. Employers can contribute money to the account as well, and about two thirds that offer HSAs do.
Once the deductible is met, a health plan with catastrophic coverage kicks in. This is often a preferred-provider organization (PPO) plan with copayments or coinsurance for doctor visits, drugs, and the like.
Ho-hum. But consumer-driven plans have been slow to catch on. Only about 4 percent of covered workers are enrolled in a high-deductible plan with a linked savings account, according to the Kaiser Family Foundation's annual employer health benefits survey released in September.
Employers aren't especially enthusiastic-about 8 percent of companies that offer other insurance say they're very likely to include a consumer-driven plan next year. One reason, says Gary Claxton, vice president of the Kaiser Family Foundation and the study's coauthor, is that once company contributions to HSAs are factored in, "it's not clear how much employers actually save with these plans."
Nor have employees been particularly gung-ho. Fewer than a third of those enrolled in HSA-compatible plans said they understood and were satisfied with them, according to a survey of more than 18,000 employees released in September by human resources consultant Hewitt Associates. Nearly half said they wouldn't pick the plan again if they had a choice. People selected this option primarily for its lower premium, the study found, instead of seeing it as a vehicle to save for healthcare costs in retirement-which was cited by advocates as one of the major reasons for establishing HSA plans. As of July, the average balance in these accounts, including employer contributions, was just $1,260, according to Inside Consumer-Driven Care, a Washington, D.C.-based newsletter.
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