Benefits August 19, 2004

CDHC May Not Lower Costs, Commonwealth Fund States

August 19, 2004 (PLANSPONSOR.com) - Consumer-directed health care (CDHC) - high-deductible plans which have recently generated much enthusiasm in Washington and elsewhere - may not actually lower costs, and may in fact reduce the amount of essential treatment some people receive, The Commonwealth Fund stated in a news release today.
Reported by

Although the primary goal of CDHC is to reduce unnecessary care, says Karen Davies, the Fund’s President, it may also have the adverse effect of reducing essential care as well, which could worsen the health-care crisis inAmerica .

Davis instead insists that a closer look at what she views as the root cause of spiraling health-care costs – a lack of high-quality care and efficiency – is long overdue. “Longer-term solutions aimed directly at the root causes of higher costs are needed to improve health system performance and to achieve better quality, safety, and efficiency of care provision,” stated Davis in the release.

Since there are relatively few CDHC plans compared to regular employer-sponsored plans, Davis and The Commonwealth Fund, a private foundation supporting independent research on health and social issues, had to turn to research from the RAND Health Insurance Experiment. This research, Davis states, linked high out-of-pocket spending with a decrease in patients’ consumption of effective health care for both high and low income patients.

An issue brief can be found at: http://www.cmwf.org/programs/insurance/davis_cdhc-hsr_ib_773.pdf

– Kip McDaniel

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