Revolution in funding health: you

These cautions ignore that the current US system is unworkable, with exploding costs and 45 million people uninsured, says Regina Herzlinger, the Harvard Business School professor who coined the term "consumer-directed healthcare" in 1999. A traditional family health insurance policy can cost a family $10,000 to $16,000 today.

"Many people are uninsured because health insurance costs too much," she says. "Is it terrible for them to now have access to affordable health insurance? I think it's great."

For example, an employee can purchase a high-deductible insurance policy for $2,500 to $3,000 to protect against catastrophic medical costs, then supplement it with a tax-sheltered health savings account (HSA) to cover smaller expenses. Unused HSA funds can be rolled over, kept for use the following year.

Besides, this is only the first step in the consumer-driven concept, Professor Herzlinger says. Advocates see the beginning stages of a "let a thousand flowers bloom" experiment, with insurers creating new forms of coverage and doctors and hospitals experimenting in the ways they price and deliver healthcare.

A key to success: consumer access to accurate healthcare data - perhaps mandated and audited by the federal government - so individuals can make informed choices.It's "absolutely, dramatically important," says Newt Gingrich, former speaker of the US House and an evangelist for the movement. Programs such as Medline (www.medlineplus.gov), an online database of medical information provided by the US National Library of Medicine show what is possible, he says.

The full impact of CDHPs won't be felt for three to five more years, he adds, which suits him just fine. "Health is the largest single sector of the economy; it's a matter of life and death; it's an enormously complicated system," says Mr. Gingrich, whose Center for Health Transformation is holding seminars on healthcare innovation in November. "And I think you have to view it that way. This is not something that can or should change overnight. I'm very happy with a gradual rollout."

The US ought to take a look at Switzerland, Herzlinger argued recently in the Journal of the American Medical Association. The Swiss have universal health insurance, not from the government, but bought from insurers. It's mandatory, like car insurance, but the poor receive government money to pay the premiums. They still make their own choices.

The result: The Swiss have an excellent healthcare system and excellent outcomes with patients, but with one-third lower healthcare costs,she says. "It shows what a consumer-driven healthcare system can do," she says.

Others remain unconvinced. "We should be focusing on what's out there that's working rather than some theory that if only patients paid more money the cost problems would go away," says Karen Davis, president of The Commonwealth Fund and author of one of the cautionary reports on CDHPs. "There just isn't any evidence that supports that."

"It's probably a good idea to make consumers more aware of what care actually costs and make them a little more prudent," says Laura Tolen, who coauthored the Kaiser Permanente report. But in her opinion CDHPs "are not likely to have the really widespread beneficial impact that people might hope."

Economist Melnick is among those who worry that CDHPs might come too quickly.

"This consumer-driven model assumes that consumers have the information they need to be rational," he says. "We're not even set up for that now."

Herzlinger acknowledges she sees growing resistance, but takes it as a good sign. With giant insurers such as UnitedHealthcare now offering CDHPs, the landscape is already changing. After millions of workers make their next round of health-insurance choices in November, the US will know even more about just how quickly.

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