03.09.2016

New Analysis Urges Shift to Patient-Centered Benefit Designs to Cut Costs and Help Consumers Get Care

Lessons Learned in California Can Help Avert a Collision Between Conflicting Reform Initiatives

SACRAMENTO, Calif. — A new analysis urges state-based marketplaces, the employer-sponsored insurance market and health insurance plans to take action and move toward plan benefit designs that put consumers first, and remove existing barriers to getting needed health care.

In an article written in the New England Journal of Medicine by Dr. Elliott Fisher, Director of The Dartmouth Institute for Health Policy and Clinical Practice, and Covered California Executive Director Peter V. Lee, both stress the importance of patient-centered benefit designs to reach the next level of health care reform.

“Health plans, states and employers should take to heart the lesson that offering a lot of different designs does not serve consumers well,” Fisher said. “Too many health plans, in exchanges and the employer sector, offer confusing benefit designs with out-of-pocket costs that prevent people from seeing their doctor.”

Lee said Covered California has a model that has worked for its consumers since the agency opened its door in 2014.

“Covered California has led the way in the fight for consumers by shaping benefit designs that help consumers make apples-to-apples comparisons and to get the health care they need,” Lee said. “A good patient-centered benefit design is critical to making sure consumers get the right care at the right time.”

Fisher and Lee noted that the current health care system seeks to improve care and cut costs through provider-focused and consumer-focused reform initiatives that directly conflict with one another.

For example, provider-focused initiatives encourage physicians, hospitals and other providers to coordinate and improve care to lower costs. However, the consumer-focused approach discourages people from seeing their provider because of increased cost-sharing. 

Studies show the proportion of Americans with employer-sponsored coverage involving deductibles of more than $1,000 has increased from 10 percent to 46 percent since 2006, with many plans requiring people to fully meet their deductible before receiving any coverage for primary care. A 2015 National Bureau of Economic Research study showed the adoption of a high-deductible health plan in a relatively high-income population led to a 10 percent reduction in the use of preventative services and an 18 percent drop in physician visits, with the greatest reductions occurring in the sickest patients.

“We want consumers to be able to see their doctor when necessary, so their health care needs can be met in the most effective and efficient way possible,” Fisher said.

The authors cite California’s approach as an example of how it might be possible to avoid this collision between provider- and consumer-focused efforts. Covered California, the state’s insurance exchange, requires plans to adopt patient-centered benefit designs that allows consumers at every metal tier (cost-sharing split between insurer and enrollee) to visit their primary care physician without the cost being subject to a deductible. “When a consumer is able to get the right care at the right time, it cuts down health care costs for everyone,” Lee said.

The Centers for Medicare and Medicaid Services recently announced it would allow health insurance companies to offer patient-centered benefit designs on the federal exchange.

“This is a good step for consumers,” Lee said. “However, more needs to be done if we are going to reach the next level in health care reform.”

The article, “Toward Lower Costs and Better Care – Averting a Collision between Consumer- and Provider-Focused Reforms,” is available at www.nejm.org/doi/full/10.1056/NEJMp1514921.

About The Dartmouth Institute

Since 1988, The Dartmouth Institute for Health Policy and Clinical Practice has been working to find solutions to some of the most challenging problems in health care delivery. Our goal is to help create an affordable, high-performing health system for everyone.

About Covered California

Covered California is the state’s marketplace for the federal Patient Protection and Affordable Care Act. Covered California, in partnership with the California Department of Health Care Services, was charged with creating a new health insurance marketplace in which individuals and small businesses can get access to affordable health insurance plans. Covered California helps individuals determine whether they are eligible for premium assistance that is available on a sliding-scale basis to reduce insurance costs or whether they are eligible for low-cost or no-cost Medi-Cal. Consumers can then compare health insurance plans and choose the plan that works best for their health needs and budget. Small businesses can purchase competitively priced health insurance plans and offer their employees the ability to choose from an array of plans and may qualify for federal tax credits.

Covered California is an independent part of the state government whose job is to make the new market work for California’s consumers. It is overseen by a five-member board appointed by the governor and the Legislature. For more information about Covered California, please visit www.CoveredCA.com.

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