Feature

There's no shortage of signs that health care needs help: 59 percent of employers say health-care costs and spending are higher than ever. The number of people disenfranchised by the current employment-sponsored health insurance system--mainly the uninsured and retirees--is swelling. Many experts believe that managed care, with its gatekeepers and formulas for treatment, isn't working. And increasing lawsuits and advocacy movements seem to show that consumers have grown tired of their lack of control in their own care decisions.

But what system can succeed where managed care has failed? The 2004 presidential hopefuls have been offering up some answers as they begin to roll out their health-care proposals. Some suggest a totally new system for universal coverage. Others back the idea of revamping the Medicare system.

Another option that hatched approximately three years ago--long before 2004 candidacies were being announced or even considered--has been taking hold in some quarters, and could begin turning legislators' heads as well. Consumer-driven health care, also known as consumer-centric health care--created to give consumers more control of their health-care dollars and decisions--has been building a small but strong presence in the business community, perhaps in the wake of failed managed-care plans. Some employers, through companies such as Definity, Luminos and Aetna, now offer this type of health plan to employees.

"In theory, this system would take managed care out of the picture, cut administrative costs and provide incentives for employers, health-care consumers and professionals to participate," says Russ Newman, PhD, JD, APA's executive director for professional practice.

The basics

So what exactly are consumer-driven health plans and how did they come about?

According to Newman, a few factors contributed to their rise. Employers have long lamented the high costs associated with the third-party payer system, he says, and have begun to search for new options for health coverage for employees. That search, in conjunction with a rise in consumerism, has created an environment ripe for change, health-care observers say.

A consumer-driven plan--in its simplest incarnation--could be defined as "insurance and a savings account in an integrated package," says Ronald E. Bachman, a principal and health economics analyst at PriceWaterhouseCoopers. In general, employers who offer it give their employees funding to use for health-care services, rather than charging all employees a fixed amount for one shared insurance plan. Actual plans vary, but typically the employer contributes to a personal health account, a health insurance plan or both. The consumer can then choose how to spend the money in the account--paying for services, plan deductibles or co-payments, medical expenses, or even other health insurance coverage for long-term care, for example.

Unused funds can be rolled over into future years. Last June, the IRS approved Health Reimbursement Arrangements (HRAs) that allow consumers to carry over money from year to year, in fact.

"In theory, with funds and sufficient information about health-care services, people will make good health-care decisions in ways that weren't happening before, when the purchaser of services was not the consumer of services," says Newman.

The idea eliminates the need for a primary gatekeeper, says Bachman. Consumers are in charge of how they spend their health-care dollars. If, for example, notes Bachman, a patient has high cholesterol and a family history of heart disease, he may opt for a heart CT scan. With this type of health plan, his decision doesn't need to be reviewed by an insurance plan to determine the medical necessity of the procedure because he can choose to spend some of his "savings" fund on the procedure and bypass health insurers entirely.

The overall idea of consumer-centric care has merit, says Newman. But there are caveats, he notes. "Do we really know people will make good decisions with available health information?" he asks. "Will they collect all the information they need? The jury is still out on that. But psychology is in a good position to inform that debate."

Critics of consumer-driven plans also point out that people with significant health-care costs might end up paying more out of pocket because they would go through their funds faster, while the beneficiaries of these plans would be "healthy" people who don't typically need a lot of medical care.

How about mental health care?

The same pro Bachman mentions of not needing gatekeepers would ideally apply to mental health benefits under a consumer-driven plan. Consumers could receive care for depression, for example, without facing issues of coverage denial or stigma.

Bachman says that in surveys he has done with approximately 16 companies that have adopted a consumer-driven plan, most that used a mental health carve-out company said they "dropped that vendor and allowed any mental health benefits to swing in under this program." However, some companies had not considered mental health benefits when making the change, he notes, so mental health advocates have to keep working to get companies to recognize the value of including mental health benefits in any type of plan.

One facet of consumer-driven health care in which psychologists could play a large role is prevention and wellness. Part of the design of HRAs or consumer-driven health care includes "good health" incentives for consumers and employers.

"Wellness services are looked on favorably, maybe even paid for entirely by employers," says Newman. "Psychological components [in these areas] are significant and there is work that supports the effectiveness of that." And, Newman points out, money spent by employers on certain preventive or wellness services should result in less money spent on other services.

Also, some services included under disease management protocols could be discounted for patients. So, for example, a patient who sees a psychologist to help with behavioral changes associated with improving her heart disease might get that service at a reduced rate, subsidized by the employer.

Both Newman and Bachman note, however, that consumers--and employers--need to understand psychological services and how to access them. "It's important for mental health to be totally integrated into medical protocols," says Bachman. So if mental health is an accepted part of disease management, that can be an incentive, he adds.

"There's still a great need for public education about psychological care," says Newman.

Bachman adds, "You can't give an individual this kind of responsibility and shift the risk to them without information. Information is the key to educated choices."

Indeed, experts say informed consumers will drive health-care changes. With the rise of technology, especially on the Internet, consumers will be able to get needed health information with the click of a mouse.

"We'll be able to use virtual consultation services and ask questions that will revolutionize health care," says Patrick DeLeon, PhD, JD, past-president of APA and legislative assistant to Sen. Daniel Inouye (D-Hawaii). And as consumers get more educated, he says, they will begin to make more demands. Some type of consumer-based health care is "clearly going to be the health care of the 21st century," says DeLeon.

Newman predicts that some combination of public sector and private market ideas will emerge. "These experiments now are worth watching," he says.

Right now, Bachman, Newman and DeLeon agree that a transformation of health care is under way. "I would say it's a five-year period and we're about a year and a half into the serious part of it," says Bachman.

Regardless of what system comes out on top, psychology has to continue to educate consumers about its value through public education and outreach. As for consumer-driven care, adds DeLeon, "It bodes well for psychologists--as long as they don't put their heads in the sand."

This is the second article in a running series on health-care reform.