davis_cdhc hsr_ib_773

davis_cdhc hsr_ib_773 - AUGUST 2004 Issue Brief Will...

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Issue Brief Additional copies of this (#773) and other Commonwealth Fund publications are available online at www.cmwf.org To learn about new Fund publications when they appear, visit the Fund’s website and register to receive e-mail alerts. Will Consumer-Directed Health Care Improve System Performance? Karen Davis ABSTRACT: Consumer-directed health care plans have attracted attention as a method for managing rising health care spending by giving consumers greater financial control over their health care. However, increased cost-sharing—the prin- cipal tool used by these plans to achieve lower spending—may also cause patients to consume less care, even when that care is essential. Research studies have found that lower-income individuals and those with serious health concerns will particu- larly be at risk, as these consumers bear the burden of higher out-of-pocket costs. Instead of focusing solely on financial incentives, the real goal should be to encour- age quality and efficiency among health systems, physicians, and hospitals. * * * * * Although consumer-directed health care plans have yet to generate broad con- sumer interest and enrollment, they have garnered much recent attention for their potential to lower health spending by reducing utilization of health ser- vices. However, patient cost-sharing—the principal tool used by these plans to achieve lower spending—may also discourage consumers from getting neces- sary medical care. While it is still too early to reach any definitive conclusions, current evidence raises significant concerns about relying on consumer-directed health care to address high costs, quality-of-care issues, and other fundamental prob- lems in the health care system. The consumer-directed approach is based on the notion that health care services are over-utilized; that giving financial incentives to consumers will reduce the use of marginal services; and that exposure to greater financial risk will motivate patients to seek lower-cost providers.There are various products available, but most of the discussion has centered on combining a high-deductible health insurance plan (e.g., $1,500) with a health reimburse- ment account (HRA) to cover part of out-of-pocket expenses (e.g., $500). What has been largely left out of the debate is that if patients pay more health care bills directly, they consume less care—even when it is needed. Increasing patient cost-sharing can increase the net price for patients; reduce
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davis_cdhc hsr_ib_773 - AUGUST 2004 Issue Brief Will...

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