CONSUMER HEALTH CARE

Consumer-driven health care would improve quality, lower costs
and increase patient satisfaction, says health expert Regina H.
Herzlinger.  Under traditional employer-sponsored health plans,
consumers are given little choice or control over their medical
purchases, and they are given little information on which to base
their choices.  For instance, about 40 percent of all employers
and 92 percent of small ones only offer employees a single health
insurance plan.

The consumer-driven approach can offer employees a wide range of
plans they can purchase with the employer's contribution
(adjusted for the individual employee's health status), their own
money or both.
 
In contrast to traditional managed care plans, consumer-driven
health care would:

   o   Enable employees to customize their health benefits -- for
       example, by allowing them to trade lower premiums for
       higher out-of-pocket maximums. 

   o   Charge employees the actual cost of insurance -- a 2000
       study by the Kaiser Foundation found that for more than 60
       percent of employees, the prices they saw were not the
       actual costs of premiums paid by the company. 

   o   Let providers, instead of insurers, set prices for their
       services and reap the benefits of innovation. 

   o   Offer employees comparative quality and cost information
       about both insurers and health care providers.

A few companies already have consumer-choice plans.  For example,
Medtronic credits $2,000 to the personal care account of each
employee and pays 100 percent of his or her preventative care. 
Employees can use the personal care accounts to cover out-of-
pocket expenses for products and services, instead of unwanted
insurance.  One option with a $3,000 deductible is only $71 per
month, saving nearly $1,000 annually over most traditional
managed-care options the company offers. 

Source:  Regina E. Herzlinger, "Big Picture:  Let's Put Consumers
in Charge of Health Care," Harvard Business Review, July 2002. 

For more on Problems and Solutions of Managed Health Care
http://www.ncpa.org/iss/hea