A healthy change: consumer-driven health plans' success depends on empowering participants and making them accountable for their actions.

Key Points

* The current "$20 will fix anything" health-care system needs to be replaced.

* Consumer-driven health plans encourage members to decide how to spend their money on medical care and to improve their health.

* To make consumer-driven health plans work, insurers must educate employers and their employees.

What's in a name? Everything. Names set expectations, create perceptions and influence public opinion. They are also difficult to change once established.

Success or failure of an initiative can depend on a name. Nowhere is that more true than with health care. The 1980s brought managed care to the forefront, yet participants didn't want to be managed. As a result, the term managed care is viewed negatively and has been minimized due to the perceptions it has created.

The term consumer-driven health care also creates an emotional response. Individuals want to be engaged, not driven. They want to be participants, not consumers. In addition, the name would suggest that consumerism, making wise purchasing decisions, is the central element in changing how health care is delivered. Consumerism is only one part of the equation, albeit a very important part.

Consumer-driven health-care plans are those that simultaneously empower individuals and make them accountable for their actions. Individuals are empowered when they are provided with the knowledge, tools and support to make good health and health-care decisions. But this alone is not enough. They must be given a reason to become engaged.

That is where accountability comes into play. Participants are made accountable when a financial consequence is attached to their health and health-care decisions. There are a variety of ways to create this accountability, including numerous plan design options and contribution strategies. It is the combination of these two that can change behavior--improving health and reducing costs.

To successfully make this change, advisers and employers will need to embrace three fundamental transformations. These transformations will not be simple but are essential if an employer is to achieve the promise of consumer-driven health care.

Entitlement to Engagement

The current "$20 will fix anything" health-care system is antiquated and needs to be replaced. Health-care users need to become health-care consumers, factoring in cost as one part of the decision to seek medical care. The managed care era managed to successfully insulate users of health care from the costs. After all, it was the responsibility of the primary care physician to make sure that services were being used properly. As a result, people got very good at making $20 decisions, even though the real cost was several times that amount.

Consumer-driven health-care designs encourage members to include cost as one factor when seeking health care. Whether it is a health reimbursement arrangement or a health savings account, these benefit designs directly impact the member financially. The fundamental premise is that participants will spend their own money much more carefully than they do other people's money and that they will make investments in health improvement to reduce future medical costs.

This engagement goes beyond purchasing health care; members are directly engaged in decisions regarding their health, whether selecting a provider, treatment or prevention. Improving diet, increasing activity levels, eliminating risky behaviors and seeking preventive care directly benefit the individual. It's in their best interest to become informed and active in their care decisions. As members become engaged in their health, they will see their HRA or HSA balance grow, providing them with greater flexibility, freedom and financial security now and in the future.

This focus on engagement is certainly not new. A similar transformation took place in the 1980s as employers moved from defined benefit to defined-contribution retirement plans. This retirement transformation reflected the greater mobility of the work force and the value they placed on being actively involved in making decisions regarding their benefits.

Beginning in the 1990s and continuing until today, employer-sponsored specialty benefits; life, disability, dental and vision, have been replacing employer-provided benefits for the same reasons. It's not surprising that health insurance, the most expensive employee benefit for most employers, is showing a similar transformation.

Diagnosis and Treatment To Wellness and Prevention

In the absence of prevention and wellness you have sick care, not health care. Only 5% of the $1.4 trillion dollars America spends on health care is spent on preventing disease and promoting health. The remaining 95% is spent on diagnosis and treatment, attempting to fix something that is already broken, according to the U.S. Surgeon General in October 2003.

Well-designed health programs provide first-dollar coverage for prevention and wellness, encouraging member involvement. The goal is to empower participants through education, early identification and intervention and advocacy. Innovative employers are adopting comprehensive wellness programs to complement their consumer-driven health-care benefits. These wellness benefits provide support and education to assist individuals with making lifestyle changes. In addition, employers are provided with tools to engage their entire population, supporting individual efforts.

The key is education, education and education. Resources should be provided in multiple formats: in person, written, telephonic or electronic. Proactive outreach is also critical to engage members. The variety of communication techniques encourages each member to actively participate, increasing the likelihood of success.

Education and communication should be ongoing and directly support the employer's overall health-improvement strategy. The programs should encourage employees to engage in wellness and prevention activities. Employers are looking to their benefit advisers to assist with prevention and wellness. This includes program development, communication and education.

Health Reimbursement Benefits To Health Improvement Benefits

In the past, most employers have focused on how to reimburse employees for their health-care expenses. The third transformation broadens the focus and looks at how the benefit program can help employees improve their health, building on engagement and prevention and wellness initiatives.

Resources dedicated to prevention and wellness are an investment not an expense and the return from this investment will benefit the employer and employee for years to come. This shift in focus has several potential advantages for employers:

* Reduced absenteeism, a signification expense to businesses

* Reduced presenteeism (the impact of employees coming to work when unhealthy and therefore unproductive)

* Reduced disability costs

* Reduced health-care costs

* Reduced workers' compensation costs

* Increased productivity and employee satisfaction.

The focus on health improvement is nothing short of a cultural change for most employers, a change that may determine the very future of the company. Many employers have found that the health of their business is directly related to the health of their employees. Simply stated, healthy employees produce healthy revenues and profits.

Unlike life, disability and retirement programs, employees anticipate using their health benefits in any given year. As a result, employees are concerned about changes. Benefit advisers will be central to this transition, just as they were with the transition from defined benefit plans to defined-contribution plans and employer-provided to employer-sponsored specialty benefits. Advisers will be actively engaged developing strategy, communication and education.

What's in a name? Everything. Consumer-driven health care would be more appropriately named prevention-driven health care or wellness-driven health care. In addition to being more acceptable to participants, these names more properly reflect the focus on engaging participants, encouraging preventive care and focusing on health improvement.

Contributor Jerry L. Ripperger is the director of consumer health at The Principal Financial Group, Des Moines, Iowa. He can be reached at [e-mail]