Not since TV's "Dallas" asked, "Who killed JR?" has our nation faced such an important mystery: Who killed consumer-directed health care? After all, a few years ago, many of us thought that the long struggle to control health care cost inflation was about to end happily.

After watching the system mismanaged, first by the health care community and then by the insurance carriers, we were confident we had finally hit on the right solution: Let consumers direct their own health care and, by extension, direct the health care system as a whole.

After all, it was the consumer who drove all of the great technological revolutions of the past century. From automobiles to televisions, from transistor radios to personal computers, our economy had always risen to the challenge of delivering a continually improving product for a continually declining price (at least in real dollar terms). Each of these revolutions had been led by consumer demand, and now, at last, the same thing was about to happen to health care.

Wrong! After a promising start, the consumer revolution in health care has produced neither a better product nor lower costs. And while commentators continue to talk about consumer-directed care and Americans continue to join so-called consumer-directed health plans, quality is stagnant and costs are skyrocketing. In fact, health care costs have more than doubled for some American families over the past nine years and show few signs of leveling off as hospital inpatient and outpatient costs continue to rise, according to the Millman Medical Index.


Suspect lineup

So what went wrong? Who did kill consumer-directed health care? In her 1934 novel, "Murder on the Orient Express," Agatha Christie presents us with a dead body and a train full of suspects. As her hero, the great detective Poirot, follows the evidence, he is led to an unmistakable conclusion: He is not looking for one killer among the gaggle of suspects; it is the gaggle that has committed the murder.

So it is today. Our train is filled with representatives of the health care community, insurance industry and, of course, government. As we follow the clues, it becomes clear that they have worked together, perhaps unwittingly, toward a common goal: the disempowerment of the American consumer.

Take the health care community - it has stymied the consumer revolution by refusing to make quality and cost data readily available to patients. Instead, many practices discriminate against patients who use non-traditional means of paying their bills (e.g., health reimbursement arrangements, health savings accounts, wrap plans and gap plans). Doctors like getting big checks from insurance companies and government agencies, even if reimbursement rates are low. More decentralized payment systems make them nervous.

State (and now federal) governments are consistently working at cross-purposes with the goals of CDHC. Instead of empowering individuals and companies to create plans tailored to their specific needs, governments have mandated dozens of costly benefits and imposed severe limitations on the creative design of benefit programs.

But the health care and political communities are merely accessories to our murder. The insurance industry has delivered "the unkindest cut of all." Not content to work with individuals and employers to provide the financial protection they need to meet their health care objectives, insurance companies have insisted on monopolizing the private payment system.

Consider an example: a typical high-deductible health plan today might have a deductible of $2,000, followed by 30% coinsurance with a maximum out-of-pocket exposure of $5,000 per member, $10,000 for a family. Employers find such designs attractive because they have a lower fixed cost than old-style, first-dollar benefit plans.

But for a number of reasons, many of those employers would prefer not to push a $5,000 or $10,000 liability onto their employees. They'd like to supplement the insured benefit with an HRA, HSA, wrap plan or gap plan. However, the insurance carriers have worked systematically to frustrate such efforts.

Some carriers refuse to sell policies to employers who provide any supplement whatsoever. Others offer only a special set of higher-priced contracts to employers who supplement. Most other insurers mandate that employers limit any supplement to 50 percent of the base plan deductible.

In our example, this means that the employer may pick-up only $1,000 of the member's $5,000 liability, $2,000 of the family's $10,000 exposure; the subscriber must be responsible for $4,000, or $8,000 for a family.

The promise of CDHC was a promise of partnership - employers and employees sharing exposure to health care cost and sharing a commitment to better health and quality of care. Instead, thanks in large part to the practices of the insurance industry, so-called consumerism has become a smoke screen for one of the greatest cost-shifting schemes in modern memory.


Employers have Hobson's choice

It is fashionable to blame the poor economy or the greedy employer or even the employment-based benefit system itself for the demise of CDHPs. But these are red herrings. Most employers understand that their interests are aligned with those of their employees. They recognize that when employees have affordable and anxiety-free access to quality health care, morale improves and productivity soars.

However, these employers have been handed a Hobson's choice: Either pay an exorbitantly high premium for first-dollar benefits or push unaffordable costs onto plan members. But when plan members can no longer afford the health care they need, that is not consumerism; that is the breakdown of the benefit system with dire consequences for the future of quality health care in the United States.

Can CDHC still be resuscitated? Not in its old form and not without radical surgery.

The medical community must begin working with the employer community to support alternative payment models, increase cost/quality transparency and improve outcomes. Government must roll back excessive benefit mandates and eliminate restrictions on employers' creative benefit designs. And finally, insurers must accept their proper role as providers of risk relief and stop interfering with employers' legitimate efforts to make access to quality care affordable for their plan members.


David Cowles is the founder and senior vice president of Benemax, a benefits management firm in Medfield, Mass.

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