The Bright New Stars of Consumer Directed Health Care

Health Savings Accounts are a bright new star in the field of consumer-directed health care. HSAs were created as part of the Medicare Modernization Act and became available January 1, 2004. They allow individuals, employers, or employees to invest tax-free dollars in health accounts to pay for routine health care. The accounts are accompanied by insurance policies to cover larger medical bills.

America's Health Insurance Plans surveyed its members and found that 438,000 people had purchased HSAs in the first nine months of last year. The study also found that 30 percent of them were previously uninsured. Other studies have shown that 40 percent of HSA purchasers make less than $50,000 a year, about one-third of purchasers are families with children, and half are over age 40, showing they have broad appeal.

But HSAs are just one example of a constellation of offerings that give consumers more power and control over health care decisions. Other consumer-directed products, such as Health Reimbursement Arrangements, are helping companies to lower their health costs while providing incentives for employees to be more engaged in managing costs and care. Employers and health plans are smoothing the way by providing access to existing networks and on-line information tools. They also are instituting new programs to provide better coordinated care for those with chronic conditions, such as diabetes, heart disease, and asthma.

Some companies that have replaced their traditional health insurance with a consumer-directed plan have seen their health costs fall by more than 10 percent, even as the use of preventive services by workers increased by as much as 23 percent.

Consumers are taking steps into this new world, but many changes still are needed for larger uptake in the marketplace. The Internet allows consumers easy access to a wealth of medical information that was available only to professionals as recently as a few years ago. But they still need more -- and more easily accessible -- information about prices, quality, and outcomes to help make them smarter consumers.

Some say that consumer-directed health care means shifting more of the cost burden onto consumers. However, it really is a way of making the costs that consumers already are paying more visible so that they can be involved in decisions about how they want to allocate their health care dollars.

Consumer-directed health care means many things to many people. But its genius is in putting the American consumer to work to reshape the health care marketplace to provide more affordable health insurance, better and more affordable health care, and new incentives for people to take responsibility not only for their health care spending but also for their health.