How Should We Evaluate The New Insurance Models?

Business people have to come up with new products, and in our part of the economy, the hot product is consumer-directed health care. Yet we all know that a product that is sexy and well promoted and superficially attractive is not necessarily good for us all, individually or collectively. Take the Egg McMuffin or the SUV.

I am not saying that the new plans will turn out to be bad for us, but as a number of folk who participated in the preparation of this issue point out, there are areas of concern. So while we might agree that price sensitivity will make good consumers, we need look at other effects. Some are unintended; some not.

There is even the possibility that CDHPs — consumer-directed health plans — will cost more than existing plans because of consumer fear and confusion. When my doc wants to order an MRI, I'm a lot less prepared to debate the issue than, say, a utilization review flunky who has a list of expert guidelines at her fingertips. Try telling your physician, “I found this cheaper med for peripheral arterial disease; let's try it!” In the face of such a scenario, would malpractice rates rise?

“God bless the child that's got his own” under this system. Insurance spreads risk, while these new systems may encourage those who think they have low risk to abandon the group.

Some people want you to call this “consumer-driven” health care. In truth, employers, abetted by consultants, are driving it. The consumers I know won't be eager to take on more risk, spend hours researching treatments and drugs, track their spending account balances, pay high fees directly, review the quality of provider networks and, potentially, try to negotiate prices with providers.

Who will monitor quality? In the HMO, it is the chief medical officer; under CDHP, with its many flavors and faces, will it be the uneducated patient? And like the bad old pre-managed care days, will each element of the system work only for itself? Silos, anyone?

I'm not convinced that CDHPs offer a long term dampening of health care inflation. If the effect is to constantly push patients into accepting the lowest tech care, it might. Is that what we want?

Finally, HMOS and other insurance companies could find their business shrinking dramatically. All I'm saying is, let's be careful.