By Evan Falchuk
Over at The Corner, Ramesh Ponnuru theorizes that people want more control over how they spend their health care dollars:
[Ezra] Klein’s argument is that if employees understood that the employer’s alleged share of their health-care costs are really part of their wages — and if they saw it on their paychecks — they would be more supportive of cost control. I agree with that. But I assume he means (based on his examples in this op-ed) that they would be more supportive of cost controls imposed by HMOs or Congress. I think they would be more inclined to favor turning over control of health insurance from their employers to themselves, and making the cost-quality trade-offs for themselves with their own money. Under the status quo, those trade-offs are made by other people and the fact that it’s the employees’ money is obscured.
It sounds nice in theory. But in practice it seems to be exactly wrong.
For years, employers have been trying to get employees to “mak[e] the cost-quality trade-offs for themselves with their own money.” They’re called “high-deductible” or “consumer-driven” health plans. Under these plans, which are much less expensive than traditional plans, employees have responsibility for as much as the first few thousand dollars of health care expense.
In theory, these plans make a lot of sense.
With a traditional plan, you pay for those first few thousand dollars anyway, in the form of premiums. Since you probably don’t use anywhere near that much health care in a year, you save a lot of money right away if you’re healthy. Even if you’re sick, it can work out pretty much the same, since the money you would otherwise pay to the insurance company goes to pay for your medical bills.
Your employer saves money, too. It may still pay for half or more of your premium, but since the premium is lower, its total expense is less. Some people think these plans can even help transform the health care system. If large numbers of people are armed with these kinds of plans, they will demand that doctors and hospitals offer a high quality, cost-efficient care. It all sounds great.
The trouble is, employees don’t see it that way.
When given the choice, people don’t enroll in these plans. Studies suggest the reason is that employees don’t want to be health care consumers. For example, one study found that people in traditional plans were more likely to be “extremely or very satisfied” with their coverage, because they liked the lower out-of-pocket costs. Another study found that anywhere from 20%-40% of employees preferred to pay a higher premium in order to keep their health care costs “low and predictable.”
It means making a plan like this available can be tricky business. Still, some companies have just gone for it: getting rid of their traditional plans and replacing them with high deductible-type ones. This can be so perilous for employee morale that experts in the benefits community call it the “nuclear option.”
So, then, is it true that people want more control over their health care costs?
The answer is clearly “no.” People want more control over their health care, but they don’t really want to be involved in the process of paying for it.
Whether this fits into a rational calculation of economic self-interest, I don’t know. But in health care, people don’t always deal with things in the most rational ways.