Megatrends represent major movements so powerful that the direction of change cannot be stopped. Federal laws can speed up or slow down megatrend forces. But, like dammed rivers, megatrends will redirect themselves to achieve the inevitable result. Health care consumerism is such a force.
Government and the quest for political power is a strong force in and of itself. Cynics will point to increasing demands for federal support and government dependency by large parts of our population. That may be a current political direction, but growing welfare and expanding entitlements is not a financially sustainable path and therefore cannot be a megatrend.
ObamaCare is fighting health care consumerism and broad cultural movements to personal responsibility, individual ownership, self-reliance, convenience, choice and transparency. The health mandates violate the growth of personal responsibility and self-reliance. Government-required plan designs violate the cultural movement to choice. Added bureaucracies create barriers to responsive plan designs and convenient medical services. Federal subsidies violate the concept of individual ownership. Backroom dealing between big government and lobbying interests violate transparency. For the political class the passage of ObamaCare is a pyrrhic victory. It assumes that Americans are sheep that can be led to slaughter for feeding the political class and its favored supporters. It will either fail in court as unconstitutional or be defeated by the ballot box.
The future is not the opiate of government, but the empowerment of “health care consumerism:” transforming health benefit plans by putting economic purchasing power and decision-making in the hands of participants. It’s about supplying the information and decision support tools needed, along with financial incentives, rewards and other benefits that encourage personal involvement in altering health and healthcare purchasing behaviors.
Health care consumerism is independent of plan design. It includes opportunities to accumulate funds and/or receive grants through shared savings. Individuals can be financially rewarded for doing the right activities that improve their health and lower costs. The rewards can be for activities such as participation in a wellness assessment, compliance with a condition management program (taking medications, diet, exercise, office visits, etc.), and maintenance of good health characteristics (e.g. blood pressure, cholesterol, nicotine use, body mass index).
Since 2004, a popular form of health care consumerism has been HSA-eligible plans. Insurance with personal savings accounts (HSAs and FSAs), while not killed are seriously limited by the new federal law. But these are not the only forms of health care consumerism. In 2002, health reimbursement arrangements (HRAs) were established by the Treasury Department. HRAs can be used with any plan that the Secretary mandates. Congress either forgot about or ignored the many uses and flexibility of HRAs.
The new law deals with limited plan choices, mandated benefits and premium controls, but the real world has moved to next-generation health care consumerism. Plans are now focusing on rewards and incentives. Health Incentive Accounts (HIAs) are a special form of HRA that builds value only from rewards and incentives. There are many other special use HRAs that may become the channels for health care consumerism.
This is a compelling force because it embraces reducing costs, improving quality, enhancing choice and expanding access by empowering individuals and reinforcing personal responsibility. A force operating throughout our economy is just beginning to be structured into health care and insurance.
The 2009 American Academy of Actuaries’ multi-year study of healthcare consumerism concluded that first-year claims could be lowered by 12 percent to 20 percent, with future cost trends decreased by 3-5 percent. While HSAs are disfavored, employers and insurers would be wise to consider health care consumerism as allowed. Under the legislation, financial rewards based on health status are increased from 20 percent to 30 percent. The Secretary of Health and Human Services has the authority to increase that limit to 50 percent. The new federal still allows unlimited rewards and incentives for participation and engagement.
ObamaCare was never about health or health care reform. At best it is a health insurance law, at worst it is government intrusion into the insurance industry that creates a transfer of wealth from Medicare beneficiaries and pre-ObamaCare insureds to low-income non-elderly and the previously uninsured. It will produce changes and unintended consequences for individuals, employers, companies and medical industry stakeholders. Everyone will now begin to reposition their personal and business interests to minimize the damage and maximize opportunities in this new world.
As we await the ultimate demise of ObamaCare, the megatrend of health care consumerism continues. Americans who bank electronically at ATMs, purchase stocks over the Internet, buy and sell goods through eBay, maintain their music with iTunes, keep personal videos on Facebook, seek employment through LinkedIn, and control television programming with Tivo will not tolerate the government controlling their health, their most personal asset. The Dutch boy learned decades ago that one cannot hold back the waters in a dam.
Ronald E. Bachman FSA, MAAA, is president and CEO of Healthcare Visions, Inc. and a Senior Fellow at the Georgia Public Policy Foundation, an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. He is also a Senior Fellow at the Center for Health Transformation, the Wye River Group on Health and the National Center for Policy Analysis.