Whether a mandate for pricing transparency is truly in the offing remains to be seen. What is clear is that the Bush administration views HSAs and other strategies for shifting greater cost and greater health care responsibility onto consumers as the only viable strategy for the nation's health care financing woes.
During a separate session at the meeting, Jack Brennan, CEO of the Vanguard Group, the nation's second largest mutual fund company, and Jim Guest, president of Consumers Union (publisher of Consumer Reports), reviewed the potential strengths and weaknesses of consumer-driven health care plans.
Mr. Brennan, who said that he believes the health care world has a lot to learn by studying the evolution of the 401(k) business, said that Vanguard offers its 12,000 employees a consumer-driven health plan option, and has for several years.
However, no more than 10% of the company's employees have chosen it. “I'd say there's a bit of a reluctance, but it is a start, and I'd like to see more,” Mr. Brennan said.
Asked whether he himself had enrolled in such a plan, Mr. Brennan said he had not.
“I don't use it because I'm still trapped in the belief that if it is more expensive, it must be better,” he joked, but added that one of his family members has a complicated medical situation that would make a consumer-driven plan a less-than-optimal prospect for him.
Consumer Reports' Mr. Guest said his organization supports the general idea of “consumer-informed health care,” but said it is far too early to tell whether strategies like those advocated by the Bush administration will really deliver on their stated promises.
“We're really far away from where we need to be. I don't think the consumer voice has been strongly heard. The movement [toward consumer-driven plans] has been driven more by the industry than by the consumer,” said Mr. Guest.
“Until consumers have full information about what the choices are that they're making, it is not really consumer driven. And right now, most people do not understand what they're deciding between, he added.”
Can 401(k)s Set Health Care Example?
Health care right now is in a situation somewhat analogous to that facing the employee benefits, pension, and investment world nearly 3 decades ago, when the 401(k) concept was first developed, the Vanguard Group's Mr. Brennan said.
“Twenty-five years ago, the 401(k) industry was very fragmented. It was high cost and poorly understood by the public. Now, it has gotten to the point where 90% or more of all U.S. companies offer them. It is a $2.1 trillion market, and it's basically a story of empowering people to make decisions and choices that are good for them. It is based on one single bedrock idea: that given good information and good tools, the consumer will make smart decisions.”
Why did the 401(k) movement succeed? Effective consumer education based on simple language and clear elucidation of benefits was the fundamental key to winning buy-in from ordinary people. “You can't have overeducated MBAs writing explanations for working people. It all needs to be very simple and straightforward.”
The benefits promised by early advocates of 401(k) investment (greater personal control over investment choices, tailored investment planning, facilitated transactions, and strong returns) were delivered via a vast powerhouse of new interactive technology. “Before 401(k) [plans], you were dependent on quarterly statements. The 401(k) industry developed all this real-time transactional information, 800 numbers, and Web sites that offered more consumer interactivity.”
Choice, said Mr. Brennan, is the watchword of the 401(k) industry. Previously, people had few retirement investment options. They got the plans their employers gave them, end of story. They didn't see where their money was going, and for the most part, they didn't care.
The 401(k) put a new range of investment options within reach of ordinary working people, and more important, the industry taught people how to think about investment choices in a way that really spoke to their concerns and needs.
To what extent is health care really similar to retirement investing? Should the health care industry operate more like the investment world? These are open questions, and one could easily tear holes in Mr. Brennan's comparisons. But the issue of how to communicate the relative benefits and downsides of various forms of health care financing to the public is one that physicians, health benefits managers, and policy makers need to face.
Underneath all the policy debate, Mr. Brennan said the real question posed by the consumer-driven health care vision amounts to this: Is the average American worker smart enough to make good decisions about present and future health care needs?