What "Replace" Should Look Like

Cross-posted from Critical Condition on National Review Online.

When Republicans talk about “repeal and replace,” what should go in the “replace” category? One essential element must be to increase the penetration of consumer-driven health care. CDHC, as regular readers of this blog are well aware, consists of health plans in which consumers buy insurance for catastrophic health events, but pay routine expenses directly using tax-free health savings accounts. While Obamacare will do much to increase the cost of health insurance, consumer-driven plans can make health care more affordable, without raising taxes or increasing government spending.

Today, John Goodman’s blog draws attention to a revealing new analysis by Aetna. Aetna compared health expenditures by participants in its HealthFund consumer-driven plans to those of demographically similar participants in its traditional preferred provider organization (PPO) plans. Among the highlights:

• Companies that fully converted their employees from traditional plans to Aetna HealthFund plans reduced their medical costs by over 10 percent relative to their PPO counterparts, saving $1,812 per member over a five-year period.
  
• HealthFund members spent 10 to 15 percent more than their traditional counterparts on preventive care.
  
• HealthFund members used the emergency room 5 to 10 percent less than PPO members did.
  
• HealthFund members used cheaper, generic drugs at a higher rate than members of traditional plans did.
  
• HealthFund members with chronic conditions used drugs as frequently as those on traditional plans (i.e., they were not deprived of needed health-care resources.)
  
• HealthFund members were twice as likely to use online consumer tools to search for information on health-care costs.

Naturally, the Patient Protection and Affordable Care Act puts consumer-driven health plans at the mercy of the Secretary of Health and Human Services, where they are at risk of being curtailed, if not asphyxiated. Republicans are most likely to gain the chance to repeal Obamacare if they can show that their own ideas will make health care more affordable. There are few better places to start than with consumer-driven health insurance.