September 2004

Will Consumer-Directed Health Care Improve System Performance?
Karen Davis

Consumer-directed health care plans have attracted attention as a method for managing rising health care spending by giving consumers greater financial control over their health care. However, increased cost-sharing the principal tool used by these plans to achieve lower spending  may also cause patients to consume less care, even when that care is essential. Research studies have found that lower-income individuals and those with serious health concerns will particularly be at risk, as these consumers bear the burden of higher out-of-pocket costs.  Instead of focusing solely on financial incentives, the real goal should be to encourage quality and efficiency among health systems, physicians, and hospitals.