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American Medical Costs and the Consumer-Driven Health Plan

American Medical Costs and the Consumer-Driven Health Plan. Benjamin Hansen UW-Superior. Today’s Situation. Medical expenses outpacing incomes 1960’s – desire for overhaul of system Market failure due to information asymmetry 1996 – HIPAA provided for MSA’s 2003 – MMA created HSA.

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American Medical Costs and the Consumer-Driven Health Plan

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  1. American Medical Costsand theConsumer-Driven Health Plan Benjamin Hansen UW-Superior

  2. Today’s Situation • Medical expenses outpacing incomes • 1960’s – desire for overhaul of system • Market failure due to information asymmetry • 1996 – HIPAA provided for MSA’s • 2003 – MMA created HSA

  3. The Consumer-Driven Health Plan Differences from traditional plans: • Low premiums • High deductible Owner/renter analogy • Traditional plan: renter • CDHP: owner • Additional HRA or HSA

  4. Additional CDHP features Incentive programs • Health risk appraisals • Disease-management/coaching • Increased choice in care facilities • Proven effectiveness • CDHP’s cover chronic illness prescriptions

  5. The CDHP and Information Asymmetry • One party knows more than the other party • High degree of information asymmetry in healthcare industry • Possible abuse of patient ignorance • CDHP’s are complimented with information technology • Internet-based account management • Information asymmetry appears to be waning • Doctor-visits take on different role

  6. Criticisms of the CDHP • Too much information! • Change in doctor-patient relationship • Consumer bias due to pain, fear, time pressures • Lack of standardized rating scheme CDHP’s demand more time & effort than traditional health plans

  7. The Mobility of Medical Consumer Information • Increased choices of CDHP’s means increased need for information-sharing • EHR – Electronic Health Record • Standardized industry-wide • Adoption is slow due to cost issues • 2014 goal of complete adoption

  8. Can the CDHP really accomplish its purpose? • Fad? • Lower prices? • Better care? – maintained or improved chronic care and preventive care, increased consumer engagement • 25% new enrollees were previously uninsured

  9. The Problem of Adverse Selection • Healthy consumers adopt CDHP’s, leaving chronically sick consumers in traditional plans • Concern for higher premiums for the sick Health condition not a determining factor Wealth and education level determines the selection of a CDHP Quality increase & savings could spill over

  10. Closing remarks • CDHP’s in the hands of Congress • CDHP’s have already fulfilled some promises

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