Money Magazine (New York) - This year saw the introduction of a brand-new, low-priced variation on traditional health insurance called consumer-driven plans, now being offered by providers such as Aetna, Blue Cross/Blue Shield, Cigna, HealthPartners, Humana and WellPoint.
Consumer-driven plans can work in any number of ways. Your employer may just give you a pool of money or "spending account" at the start of each year, making you responsible for getting health care on your own. But this model is expected to be rare. One study by Watson Wyatt found that just 1 percent of employers currently give their workers direct access to buying their own health insurance.
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A more likely scenario is that individuals in consumer-drive plans will receive a fixed sum from their boss - say, $1,000 - which they can spend at a variety of health plans pre-selected by their employer. The spending money will be used to pay for office visits, prescription drugs and routine medical procedures.The accounts typically range from $500 to $1,000 for an individual (double for families) and are replenished annually.
Once you deplete the account, however, you become responsible for paying medical bills out-of-pocket -- but only to a certain amount. The deductible for consumer-driven plans is fairly high, anywhere from $1,000 to $2,000. Once you've paid it, however, you're generally moved back into a traditional managed-care plan where the employer once again picks up most of the tab.
"Typcally, you can spend that money (in your account) anywhere you want. But a lot of insurers developing consumer-driven products are developing consumer networks so there's an incentive for you to use providers - doctors and hospitals - in those networks," said Alwyn Cassle, spokesperson at Center for Studying Health System Change. "But they are providing cost information through member-only Web sites so people can shop around."
Employees who don't spend all of their annual medical "allowance" can roll their unused dollars into next year's account. This potentially makes plans attractive to young, healthy employees who have the ability to save health-care funds over time until they need it. But some worry that individuals won't get care they need because they'll be too hestitant to deplete their savings.
"Essentially, you're putting more risk on the individual, particulary those who are lower income or have chronic conditions," said Casle. "They're more likely to attract a younger, healthier person."
So far, consumer-driven plans are nowhere near as prevelant as HMOs and PPOs. But given the push from corporate America to better manage health care costs, they could be coming to a workplace near you sometime soon.
Ken Linde, chairman of Consumer-Driven Health Care Association and president of Destiny Health in Bethesda, MD., estimates that a couple thousand employers nationwide have already signed on.
"It's still fairly new," he said. "But it's evolving quickly."
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