Value, Rather Than Cost, Will Become Key Differentiator For Plans and Providers
WASHINGTON, Dec. 2, 2004 -- America's health and wellness benefits industry is poised for "a major makeover," according to H. Edward Hanway, chairman and chief executive officer of Cigna Corporation (NYSE: CI). In a speech delivered Wednesday at the Consumer-Directed Health Care Conference in Washington, DC, Hanway predicted that, within the next five years, the majority of health benefits in the U.S. will be delivered through some form of consumer-directed benefits plan.
"Even though the concept is relatively new, employers are adding some version of consumer-directed health plans to their more traditional offerings at a dramatic pace," Hanway noted. "Only about three percent of the 180 million Americans with health care benefits are currently enrolled in consumer-directed benefits plans. We believe that number could rise to nearly 50 percent by 2007, and still have room to grow from there."
Hanway attributes the shift to a combination of spiraling health care costs, patient safety issues and growing consumer demand for better quality, information and value.
"Employers can't continue to absorb year-over-year cost increases and compete effectively in the current market environment," he said. "But employees will accept additional cost-sharing if they are offered a greater degree of choice, quality and control in their own care."
The shift to consumer-directed health plans will satisfy the needs of both, he added.
"Instead of paying the lion's share of ever-increasing costs, employers will pay an annual contribution to employee health savings or reimbursement accounts. Instead of having limited control over how their health benefit dollars are spent - and only limited choices for care - employees will decide which benefits to purchase, and when and where to seek care. And, instead of serving as care gatekeepers, health benefits providers will return to their original role as patient advisors and advocates," he said.
Quality is key to gaining employee acceptance
According to Hanway, the concept of consumerism in health benefits strikes a chord with employers because it links employee actions to consequences, and thus engenders personal accountability. The shift to consumerism also will restore stability to the health care portion of employers' budgets.
But research also shows that Americans are willing to shoulder more of the costs for their health benefits when given control over their own choices. Hanway cited a recent study by the Select Quality Care Committee, in which 76 percent of respondents said it was "very important" to have a wide range of benefits or a specific benefit, versus 74 percent who gave the same weight to keeping their cost of coverage low.
Hanway attributed this attitude to consumers' desire for better quality care.
"Consumers know that quality varies widely among doctors, hospitals, health plans and insurance companies," he said. "Far too many are injured in avoidable medical accidents or impacted by preventable clinical errors and inconsistencies in health care delivery."
Hanway blamed much of the variation in quality on the lack of national provider performance standards and reporting.
"Cigna strongly favors the national quality standards proposed by the Institute of Medicine over the current patchwork of proprietary quality measures," Hanway said. "Adherence to IOM standards, which are based on proven clinical data, will raise the bar for provider performance and patient safety and thereby improve medical outcomes."
Cigna also supports the National Committee for Quality Assurance's voluntary performance reporting initiative. Hanway noted that only 25 percent of U.S. health plans and health care providers currently participate in the NCQA program, leaving three-quarters of the country's health care system "a virtual unknown" with regard to key quality indicators.
"People need reliable information in order to make informed choices about benefits and treatment options," he said. "Measuring care against demonstrated best practices, then reporting results, will help ensure that health care providers are meeting their responsibilities to consumers. That's the only way a value-based benefits model can truly work."
Hanway said that employers, health care providers and insurers must work together, if the industry is to fully leverage the potential of a value-based health benefit system.
"We have to encourage employees to begin thinking and acting like consumers with regard to health care," he said. "We also have to empower them with meaningful options, provide easy access to solid information and support them with education and tools to help them make the right choices for themselves and their families. If we do our job well, we can provide real relief for employers struggling with cost inflation, and at the same time, help foster high-quality health care outcomes for America's work force."
As a Business of Caring, Cigna provides employers with benefits programs, expertise and services that improve the health, well-being and productivity of their employees. Serving millions of customers, clients and members in the US and around the globe, Cigna's operating subsidiaries offer a full portfolio of medical, dental, behavioral health, pharmacy and vision care benefits; group life, accident and disability insurance, and health care coverages for expatriate employees. For more information: http://www.cigna.com/.SOURCE: Cigna Corporation
Contact: Wendell Potter, Cigna Corporation, +1-215-761-4450, firstname.lastname@example.org
Web site: http://www.cigna.com/
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