Contributed by Debbie Fortier
Sponsored by: Website http://WeCare.OneSimpleCard.com
Phone 1.800.680.3101

AMA presented Jerry Ripperger of Principal Financial Group at a Current Issues Briefing devoted to a topic that’s generating a lot of buzz in HR circles today—“Is Consumer-driven Healthcare Right for Your Company?” Faced with spiraling healthcare costs and consumer demand for greater flexibility, many organizations are now considering a move into consumer-driven healthcare, which is defined as a system where consumers, not the company or insurance provider, determine how and where to spend their healthcare allotments.

The merits of various types of consumer-driven programs are being debated in trade journals, on the Internet and at boardrooms all across the country. Yet, according to a recent AMA study on the topic, more than 60% of the HR professionals surveyed don’t have the necessary information to decide whether or not these programs are appropriate for their organization. This lack of data may partially account for the small number of companies that have implemented consumer-driven plans so far. As Ripperger told the AMA audience, “The consumer-driven movement is still in its infancy. We are only about six inches into a 100-mile journey.”

Ripperger explained that consumer-driven healthcare “simultaneously creates both a consumer moment and a consumer experience.” The consumer experience combines the individual’s sense of empowerment, because he has direct input into decisions about his healthcare, with the knowledge and tools he needs to make those decisions. However, said Ripperger, the consumer must be held accountable for the financial consequences of his decisions and rewarded for appropriate behaviors. “Consumers have choice in every area of their lives, except healthcare,” he stated. “We have to make sure that when it comes to healthcare, their choices are well-informed and won’t result in catastrophic decisions.” He also emphasized that insurance companies need to concentrate more on wellness than on illness, getting involved in member care before the person becomes sick.

The main types of plans under consideration in consumer-driven healthcare are:

• Full-defined Contribution—The employee is responsible for finding and purchasing individual medical coverage. The employer provides funding through either direct compensation or a voucher.
   
• Tiered Networks—The employer offers employees a choice of medical plans, which include medical systems of varying costs.
   
• Menu-driven—Employers provide online information to help employees customize their own benefit plan by selecting co-pays, deductibles, etc.
   
• Managed Competition—The employer provides a subsidized basic medical plan with buy-up options. Plans can be from the same or multiple insurers.
   
• Health Savings Accounts—Current options include Medical Savings Accounts, Flexible Spending Accounts and Health Reimbursement Arrangements. Other options are still under Congressional consideration.

While each of the above plans has its own particular benefits and drawbacks, menu-driven plans offer consumers the most options for customization, according to Ripperger. One thing is certain: with healthcare expenditures expected to double within the next ten years to an amount equal to about 20% of GNP, it’s clear that some form of consumer-driven model is in the future of most American workers.