Consumer-driven health plans face some resistance due to complexity.

Health savings accounts, the new insurance vehicles that were created in last year's Medicare reform act, have been marketed as a way for employers and employees to save money while retaining health coverage.

But the people who are charged with selling the policies--brokers like Bill Bryant--aren't convinced.

"We are not seeing that much of a savings," said Bryant, owner of Group Health Bid, a Los Alamitos health insurance brokerage. "The insurance companies keep coming out with these products: 'This will be better for you.' But they will not spend all that money on marketing and promotion if it's not good for them."

Health savings accounts allow money to be stashed away, tax free, for health care expenses. They are controlled by employees who are supposed to spend more carefully on doctors' visits and drugs than if they only had to cough up a co-payment.

They are also the cornerstone of the Bush Administration's attempts to hold down health care costs; just last week the nation's largest health insurer, UnitedHealth Group, paid $300 million to buy Definity Health, a pioneer in consumer-driven care founded in 1998.

But in a California market that's dominated by low-cost HMO plans, health savings accounts and other similar "'consumer-driven" health products are off to a slow start.

Doug Shea, owner of a Long Beach commercial real estate company, is interested in health savings accounts because he thinks it might cut costs, but he doesn't have the time required to understand all the details.

"When you are talking about a small business or medium-sized business how much can you really educate yourself?" Shea said. "I have to rely on someone to put it in front of me and say, 'Here are your best choices.'"

Cutting costs

In general, consumer-driven plans seek to control costs without HMO-type restrictions by giving employees control over their own health care spending. However, many questions have been raised about the plans--ranging from their true savings to concern that patients with chronic illnesses might get stuck with big bills.

"I don't think we will ever see (them) as a replacement for regular insurance," said Karen Albanese, vice president of Aon Consulting, a unit of Aon Corp. "You need some financially savvy employees, and you need a company that wants to take time to do it."

Consumer-driven care got a jumpstart three years ago when the Pacific Business Group on Health, a San Francisco-based consortium of 50 large corporate health insurance purchasers, announced it would offer a plan by Definity Health in an effort to cut skyrocketing costs.

The plan, similar to ones offered today by many larger insurers, coupled a personal sayings account for everyday medical expenses with a high-deductible PPO that protected workers against catastrophic illness or accident.

Typically these plans give employees $500 or $1,000 tax-free to spend on health care each year, but once that amount is used up, they are then responsible for 100 percent of the costs, until traditional PPO coverage kicks in. If the funds are not totally drawn down, they then roll over to the following year, with some restrictions.

The plans also offer financial incentives for people to quit smoking or lose weight, and are generally combined with Web-based tools that allow them to compare doctors and hospitals for costs and quality.

Over the last three years, California insurers such as WellPoint Health Networks Inc., PacifiCare Health Systems Inc. and Blue Shield of California have jumped in with a variety of consumer-driven products.

This year, there are an estimated I million enrollees in such plans nationwide, up from 500,000 in 2003. Still, that's a tiny fraction of the 178 million people under the age of 65 covered by private insurance, according to HealthLeaders Research, a Nashville-based health care information firm.

"There has been slow uptake," said Sheri Sellmyer, HealthLeaders' director of market analysis. "Right now they are more attractive to people who are better educated and more professional and understand them better."

Indeed, the plans can be complicated and vary a lot, depending on how they are set up and which type of employee health spending account they accompany.

Personal savings accounts, for example, limit how much money can be rolled over. Health reimbursement arrangements are only funded by employers, while the new health savings accounts allow employee contributions and leftover funds to be taken to a new job.

In addition, the plans generally involve a substantial employer contribution that, when coupled with the annual premium, can exceed what an employer might pay for traditional HMO coverage.

"A lot of employers have found that a fully insured HMO is still a lot cheaper than a consumer-driven plan," said Albanese, who noted only a handful of Aon's more than 300 Los Angeles area clients have the plans.

Then there, are the employees: Some might put off seeing a doctor in order to save dollars, something that wouldn't happen under a conventional health plan. (Checkups and other preventative care are often covered outside the spending account to avoid bigger expenses down the line.)

Providers, meanwhile, have not wanted to publicize their reimbursement rates--a key piece of information that consumers are supposed to have when making a choice of doctors or hospitals. That has limited the scope of consumer-driven PPO networks.

Still, there is general agreement that consumer-driven health care is here to stay, even if the plans will be mostly offered by larger companies as one of several offerings, alongside traditional HMOs and PPOs.

About half a dozen Pacific Business Group members now offer consumer-driven plans, with enrollment ranging from less than 10 percent to about a quarter of employees. And companies such as Blue Shield keep rolling out new consumer driven products, convinced that they will eventually find a substantial niche.

"We have a very positive outlook. Consumers just aren't familiar with the concept get," said Gina Stassi, Blue Shield's senior director for products and marketing.

Drawing particular interest are the rollover and so-called portability features that allow employees to keep leftover money in some accounts to fund retiree benefits.

Peter Lee, chief executive of the Pacific Business Group, said critics of consumer-driven care look at it too narrowly, noting that many employers are cutting back on employee choices already by switching to high-deductible PPOs. He said critics also forget that a core component of consumer-driven care is the effort to give employees more health care information.

"Compared to three years ago, every single health plan has made huge investments in providing tools to consumers to inform their choice of drugs and hospitals," he said.

New Market

Leading vendors of consumer-driven health plans.

Insurer               Covered

Aetna Inc.            175,000
Definity Health       320,000
Destiny Health         29,000
Health Market Inc.     40,000
Humana Inc.           225,000
Lumenos               200,000
United Health Group   100,000

Source: Health Leaders Inc.