Prescription for power Featured

7:00pm EDT January 26, 2009

When shopping with someone else’s checkbook or the company credit card, one is less likely to count pennies. However, when it is coming directly out of pocket, a little more time is generally invested beforehand to ensure the quality and viability of the purchase. Consumers do this regardless of income level. Some do it because it is a way to continue to build wealth, and others do it because it is essential to spend only what is absolutely necessary.

Ironically, for many years, the health care system has been set up to separate consumers from the purchasing decision and to systematically require that they pay out of someone else’s checkbook. And the health care system has progressively paid the price, figuratively and literally.

In a recent Wall Street Journal article, experts debated the issue of the rising cost of health care and how consumer-driven health care (CDHC) might address the problems this setup has created. According to the article, most people have health insurance that pays for nearly all health services, including routine and affordable care. This creates a ‘moral hazard,’ where consumers purchase more health services than they would have if they were fully aware of the true cost. The article also states that health care providers have little incentive to limit the use of services that may make only a marginal improvement in a patient’s condition, knowing that a third party is paying the bill.

“Still, the horizon is not as bleak as the past might lead the public to believe,” says Rachel Sapoznik, president and CEO of Sapoznik Insurance. “As the article states, CDHC could break this health inflationary spiral by making consumers more aware of costs. If people are spending their own money, they’ll be invested in how that money is spent.”

Smart Business spoke to Sapoznik about CDHC and how it could help fix health care in America.

What exactly is CDHC?

CDHC isn’t about shifting costs to employees. It is about shifting money from employers to employees. That way, employees can manage their own health care, on their own terms. Shifting the money and the power of choice to the patient is a powerful change.

Critics of standard health care plans feel that something has got to give within the corporate community. The system of decision-making in health care has driven costs up so high that companies are increasingly choosing to restrict benefits or, even worse, to stop offering them altogether. For most companies, it isn’t that they aren’t willing to invest in health insurance; the problem is that the amount they are willing to invest doesn’t get much value for the employee under the old model.

Under the new model, patients have both the funds and a vested interest in becoming better informed about medical services and choices prior to making the investment of those funds. Ultimately, these patients will choose medical services that are both health- and budget-conscious, and the system as a whole can begin to operate within a healthier, competitive pricing structure.

When patients are paying more attention to the cost of health care and demanding value for their dollars, total health care spending will decline. And, when spending declines, health insurance will be much more affordable, which will reduce the number of uninsured. It’s all about making the choices that are right for the individual.

How can you get your employees on board with CDHC?

Employers like CDHC because it informs employees of the true expense tied to the medical services they use, while effectively controlling health care costs. Employees like CDHC because of the investment possibilities and/or the tax benefits.

Still, no employer can assume there will be complete employee buy-in for CDHC. CDHC cannot be successfully implemented unless the consumer is actively involved. So, if your employees are reluctant or hesitant, you must give them a clear understanding of what’s being offered and how it works. One of the most important parts of a CDHC plan is the communication program you use to educate your employees. And when explaining CDHC with your employees, repeat your message over and over again, in as many different forms as possible. The more employees read or hear about the concept, the more they’ll understand and accept it.

How should a company get started with CDHC?

When rolling out a CDHC program, you must first have organizational support. Start with senior leadership and HR, explaining why you’re making the benefit change and to clearly demonstrate how the program will work. Once the higher-ups are fully educated, announce the change to employees, demonstrating the program’s importance and its value proposition. From there, you’ll be able to start building employee buy-in. Again, get your message to employees repeatedly, through in-office and home messaging tactics, easy-to-understand examples and face-to-face meetings.

The next step is to provide enrollment support via phone and Web-based tools. Your employees must have easy access to their accounts. Finally, stay on top of the plan and how your employees are adapting to it. Provide constant education and frequent updates throughout the year. With health care constantly changing and evolving, it is vital to keep your employees up to date.

RACHEL SAPOZNIK is the president and CEO of Sapoznik Insurance. Reach her at