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Enthoven on CDHPs

I recently had the opportunity to meet Dr. Alain Enthoven of Stanford University at his offices in California. One of the topics about which we have corresponded is the relatively new “consumer directed health plans” or CDHPs. Faithful readers will know that I am no fan of CDHPs; my take is they are simply the old indemnity insurance programs with higher deductibles coupled with broad based PPOs.
My problem with CDHPs is rooted in a belief that they will have no real impact on health care costs, except for the very real potential to increase acute episodes and associated costs due to lower compliance with preventive treatment plans. This opinion is backed up with facts, and has been the subject of an energetic debate on this blog.
Dr. Enthoven recently debated Regina Herzlinger on this very subject. Here are a few excerpts from his comments.
1. CDHP will be ineffective at moderating growth of health expenditures in the long run and in improving value for money. Health expenditures are very concentrated on relatively few people. In any given year, some 85% of health expenditure dollars will be spent on people who have exceeded their deductibles or can reasonably expect to do so, for any level of deductibles that is reasonable for most people. For them, the marginal cost of more care will be small, probably near zero, certainly not enough to affect their decisions once they are hospitalized.
2. The main appeal of CDHP is to employers who are eager to find a way to shift costs back onto employees, to “rebalance their compensation portfolios,” as benefit consultants say. The costs will be shifted to people with chronic conditions who will usually reach and exceed their deductibles. CDHP, including HSAs, will be great for the healthy and wealthy who can benefit from the tax shelter aspect more than ordinary workers. So CDHP can be expected to grow rapidly.
3. About three quarters of health care spending is now on people with chronic conditions. The emphasis in our health care delivery system needs to be on teaching and motivating these patients to change their life styles and adopt much more healthy patterns of behavior. CDHP is based on the idea that a key to economy is keeping people away from the doctor

4 thoughts on “Enthoven on CDHPs”

  1. I agree with Dr. Enthoven’s points. The CDHP and HSA are not going to be the answer to solving the healthcare crisis. What impact will they actually make on the system?
    It is encouraging to have these discussions. I am glad to hear professionals seeking creative ideas to change the system hopefully before the train wreck occurs.

  2. It would have been great if that transcript had Regina Herzlinger’s responses. I’m really curious to see where her thinking has gone in the past 8 years, has she evolved at all? Based on a cursory glance around the web today, it seems that no, she hasn’t.

  3. at the request of several readers, and in the interest of seeing how DR. H responded, I have asked for the complete transcript of the event. If and when I get it, I’ll post it.

  4. I asked the folks at Kaiser Network for a copy of Dr. Herzlinger’s comments, but evidently she had declined to be filmed or recorded.
    Too bad – a counterpoint to Dr. Enthoven would have been interesting.

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Joe Paduda is the principal of Health Strategy Associates




A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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