Some Minnesota Businesses Switch to Consumer-Driven Health Care Plans.

By Jim McCartney, Saint Paul Pioneer Press, Minn. Knight Ridder/Tribune Business News

May 25--It's been more than three decades since Minnesota helped bring forth the health maintenance organization. Led by two local startup companies, the state is now at the forefront of another trend in health care -- consumer-driven plans that shift the choice and financial responsibility for health care from back-office bureaucrats to the patient.

No referrals, no gatekeepers, no co-pays. It could be called the anti-HMO.

"This is a direct response to the backlash against managed care," said Steve Parente, a professor of health care management at the University of Minnesota, who is researching the trend.

Aside from the advantages of choice, proponents argue that the new plans will prompt consumers to cut health care costs by buying generic drugs, avoiding unnecessary care and forcing doctors and hospitals to compete for their business.

For consumers, the challenge is that they will also have to assume the financial risks and make the tough decisions involved in their health care.

Critics argue that the consumer-driven model is a subterfuge for employers to cut costs and shift risks to employees. They fear it could benefit the healthy to the detriment of the sick, and could hurt low-income employees who may defer needed health care because they can't pay for it. And they worry that consumers don't have the information they need to make good choices.

Employers hope the new approach will slow skyrocketing health care costs. Premiums for the average HMO are up 15 percent this year -- the biggest hike since 1989 and the fourth straight double-digit increase, according to a recent survey by Towers Perrin.

"There is no end in sight as to where health care prices are going," said Mike Scandrett, a Minneapolis-based health care policy consultant. "There's high frustration among employers about rising health care costs, part of which is related to consumers not being cost-conscious."

In the late 1980s and 1990s, managed care put a brake on accelerating health care spending by pushing preventive health, squeezing lower rates out of health care providers and limiting access to costly specialists and tests.

In the late 1990s, a consumer backlash against…