Consumer-Driven Healthcare is Doomed?

A new report from the Employee Benefit Research Institute (EBRI) claims that the consumer-driven healthcare model is doomed.  The report states that ”should health education initiatives prove ineffective, the ‘consumer-driven health movement’ could well be doomed, especially if it relies upon fully educated health consumers taking self-initiated actions.”   The report goes on to say that consumers lack the education to fully understand their plan. “They have not been taught to speak up to health care providers, to be partners in their own health coverage and care,” states the report. Nor do they know what to expect in connection with the finances of health benefits or healthcare.”

While I am sure everyone agrees that communication is key to the success of consumer-driven plans, I disagree with the statement that they are doomed.  Consumer-driven plans using HSAs can easily be compared to investments and savings in the early 80s.  Up until the early 80′s most people required a stock broker to buy and sell stock on their behalf.  Mutual Funds existed, but few people understood how they worked or how to participate.  Many people had a defined-benefit pension, but nobody understood how the money was managed and invested.  Consumer access to information was scarce and the ability to enhance personal wealth through investing was limited to the few.  However, over time the market access expanded, information became more readily available, and consumers became more savvy.  It did not happen overnight and it took several product failures before the investment industry found the right products and tools to turn personal wealth and investing into a consumer-driven product.  But it still happened. 

Today, very few people would have difficulty identifying and explaining the features of an RRSP, a Mutual Fund, or a GIC.  Likewise, they would probably have one already in place and be making regular contributions.  A growing number may even self-manage their portfolio on-line and access information and resources from a variety of Web sites and cable channels such as BNN or CNBC.  Now, don’t get me wrong,  I am not saying that everyone should rely on CNBC for their investment advice.  What I am trying to explain is that the investment industry shifted from being a consumer-excluding to a consumer-driven one over the past two-three decades and I think consumers would agree that it worked out for the better.  The same holds true for health benefit programs.

One could argue that the health benefits industry is behind other industries due to the relationship plan sponsors have played over the past few years in doing the work for their employees.  When consumers are not forced to make decisions and find information, the support tools for the industry never evolve.  Nobody would have envisioned twenty years ago that consumers could access real-time stock quotes and perform on-line stock trading without a broker.  We never would have imagined self-directed RRSPs or “day-trading”.  Why should it be so difficult for the health benefits industry to evolve as well?  Plan Sponsors accepted defined-contribution plans, and turned their employees into consumers.  Perhaps we need to step back and let the industry evolve?  Who knows…20 years from now a Health Spending Account could be as basic a savings vehicle as a chequing account. 

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