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California Slow to Adopt New Plans

Joseph Burns

November 2003
Commentary

California is unlikely to lead the nation in adopting new forms of consumer-directed health care, says a new report. A state that often leads the nation in health care trends, California is the birthplace of prepaid group health plans, preferred provider organizations, point-of-service plans, and Medicaid HMOs, the report says.

But the report in August from the California HealthCare Foundation (at www.chcf.org) shows that the state has been slow to adopt the consumer-directed health plans. What’s more, since so many state residents are enrolled in HMOs, the size of managed health plans in California is a significant stumbling block to the growth of new forms of care, the report says.

In the Golden State, 54% of workers and family members who have employment-based health insurance are enrolled in HMOs, about twice the national average, the report says. Such enrollment has helped to keep the average cost of coverage for single individuals about 7% less than the national average for such coverage, according to the report. In California, therefore, consumer-directed plans must compete against lower cost competitors than such plans compete against in other states.

Serious Consideration
In the report, Understanding Consumer-Directed Health Care in California, researchers say managed health plans and traditional insurers view consumer-directed plans either as a threat or an opportunity and are considering them seriously. Health plans that do not currently offer such programs have considered the possibility of doing so, even though large insurers have dominated the market so far. Conversely, employers have been cautious about consumer-directed plans and are seeking reassurance from data-driven evaluations of them. If employers gather evidence that such plans control health care costs effectively, do not lead to adverse selection, and do not negatively ....

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