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Do Chronically Ill Patients Benefit From Consumer-Driven Care?

Research suggests that people with chronic illness are both more and less likely to allow potential money saving of high-deductibility policies to limit their use of needed medical care.

Whether increasingly popular programs to encourage so-called consumer-driven health care will hurt the health of those with chronic illnesses—such as mental illness—is not yet evident, but some steps may prevent such negative consequences.

Recent research published in the October Health Affairs by Jill Yegian, director of the Health Insurance Program at the California Health Care Foundation, found mixed evidence regarding the likely response from the cost sharing imposed on beneficiaries in high-deductible insurance policies.

The limited research conducted on chronic-illness patients has not conclusively determined whether they would respond to the financial incentives at the heart of patient-driven health care by reducing their use of needed care, thus potentially worsening their conditions or leading to adverse events, such as hospitalization.

Understanding the impact of consumer-driven health care on patients with chronic illness is increasingly important because the desire for the cost savings it promises is likely to drive its adoption in coming years. Health insurers are expanding their offering of products that feature "demand-side" incentives for consumers to become cost-conscious. The proportion of employers offering a high-deductible health plan quadrupled between 2003 and 2005, from 5 percent to 20 percent. About 4 percent also offered "consumer-directed" health plans with health reimbursement arrangements or health savings accounts. With health savings accounts beneficiaries can carry over from year to year unused funds in their accounts.

"Many observers believe that the next few years will see significant growth in both high-deductible plans and spending accounts," but they are expected to be offered as an option and not mandated, according to the report.

The impact of such plans, especially the increased out-of-pocket costs they carry, on the generally healthy segment of Americans, who only require care for acute episodic illness, is expected to be less serious—particularly because preventive services are most often exempt from the deductible in consumer-directed products. Also these increased costs will arise only during isolated bouts with illness.

For the chronically ill, however, the costs will require regular decisions on continued compliance with drug therapy and other treatment over years or a lifetime. Chronic illness care is generally not considered to be preventive because it is associated with an existing diagnosis, Yegian said.

Among the earliest research on the impact of such policies was the RAND Health Insurance Experiment, carried out more than two decades ago. The results showed that increased patient cost sharing reduced the use of both necessary and unnecessary services by the same degree. Among the patients in the study, however, the reduced use had little adverse health effect. The one exception was subjects with hypertension, which the study found was less well controlled among poor and more seriously ill patients and was associated with a 10 percent higher risk of death.

More recent research, including a study in the May 19, 2004, Journal of the American Medical Association titled "Pharmacy Benefits and the Use of Drugs by the Chronically Ill," found that increased cost sharing for prescription drugs resulted in reduced use, including for maintenance drugs for chronically ill patients such as diabetics.

Data on high-deductible insurance usage from the Strategic Health Perspectives initiative conducted by Harris Interactive found that chronically ill respondents enrolled in high-deductible health plans forgo maintenance prescription-drug therapy because of cost at a much higher rate than do enrollees in traditional insurance plans.

However, a June 2005 report by the research firm McKinsey and Company found that chronically ill respondents who are offered only consumer-directed insurance plans are more likely than those in other plans to be compliant with treatment regimens.

Yegian concluded that differences in the health of beneficiaries with chronic illnesses in the various studies may at least partially lie in whether medical savings accounts funded by employers were available to employees enrolled in high-deductible plans to help cover out-of-pocket costs.

An October report in the journal Health Affairs by Melinda Buntin, an economist at RAND Corporation, and colleagues concluded that such accounts would reduce employees' own spending on plan deductibles and shift a greater financial burden to employers.

Without a clear indication of whether consumer-driven health care policies will negatively affect the health of people with chronic illness, Yegian highlighted several options that have the potential to reduce the likelihood of negative outcomes developing.

Such health plans could, for example, adjust cost sharing and contributions to patient accounts by health status, especially for low-income beneficiaries. Current Treasury Department restrictions do not allow employers' contributions to health savings accounts to vary based on health status or income.

Additionally, insurers could define "preventive care" broadly; for example, it could include maintenance drug therapy for chronic conditions to prevent adverse events, such as hospitalization for uncontrolled diabetes. This would make such care eligible for at least partial reimbursement. Great variation already exists among interpretations of "preventive care," although maintenance drugs for chronic conditions are usually excluded.

Another option would substitute coinsurance for deductibles. Health plans could replace the deductible with coinsurance and a higher out-of-pocket maximum. This approach aims to remove the financial incentives to spend frivolously below the deductible and to encourage medically necessary spending above the deductible, according to Yegian's report.

"Coordinated Care in a `Consumer-Driven' Health System" is posted at <http://content.healthaffairs.org/cgi/content/full/hlthaff.25.w531v1/DC1>.

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