Patients Managing Their Own Health Care Budgets

Critics of consumer-directed health care often argue that patients are not knowledgeable enough and the market is not transparent enough for consumerism to work in health care. But a new study by The Commonwealth Fund says there is an international trend toward self-directed care (SDC) and it is focused on a most unlikely group of patients: the frail, the old, the disabled and even the mentally ill.

  • In the United States, Medicaid “Cash and Counseling” programs — underway for over a decade — allow home-bound, disabled patients to manage their own budgets and choose services that meet their needs.
  • In Germany and Austria, a cash payment is made to people eligible for long-term care — with few strings attached and little oversight on how the money is used.
  • In England and the Netherlands, the disabled and the elderly manage budgets in a manner similar to Cash and Counseling in the United States.
  • Also in this country, Florida and Texas have SDC programs for patients with serious mental illness and the Veterans Administration has an SDC program operating in 20 states for long-term care and mental illness.

And, as I wrote in an earlier version of this post at the Health Affairs blog, it appears that we have barely scratched the surface in taking advantage of patient power opportunities.

[Wait a minute. Aren’t we usually critical of Commonwealth Fund studies at this site? Yes, but CWF studies often come with press releases, hoopla, fanfare and the touting of public policy implications. I found this study back in the archives, covered with dust and mold, underneath stacks of other papers — figuratively speaking, of course — to be found only by the diligent and the tenacious.]

“I did it my way”


Chronic Care. As I wrote at my blog and at the Health Affairs blog, the greatest potential in this area is in the treatment of chronic illness. Studies show that chronic patients can often manage their own care with results as good or better than under traditional care; and if patients are going to manage their own care, it makes sense to allow them to manage the money that pays for that care.

The British National Health Service (NHS) is already contributing to SDC budgets for muscu­lar dystrophy, severe epilepsy, and chronic obstructive pulmonary disease. The NHS believes it is saving money in reduced hospital and nursing home costs. The NHS is also about to launch pilot programs that will include mental health, long-term chronic conditions, maternity care, substance abuse, children with complex health conditions, and end-of-life care.

Other countries are moving in a similar direction. The fastest-growing use of personal budgets in the Netherlands is for families with children who have attention-deficit hyperactivity disor­der, autism, and other types of serious emotional distur­bances.

The advantage of empowering patients and families in this way are straightforward: lower costs, higher quality care and higher patient satisfaction.

Lower Costs. In Germany, long-term care patients are given 50% less than what would have been spent if they agree to manage their own budgets. In the Netherlands, spending is 30% less. In England, long-term care services purchased by individuals cost from 20% to 40% less than equivalent services purchased by local governments. In the Arkansas Cash and Counseling program, participants were given more than what Medicaid would have spent, but an 18% reduction in nursing home use reduced Medicaid’s overall costs.

Higher Quality. In Arkansas, Cash and Counseling patients got 100% of their authorized hours of personal care, compared to only 70% for those in traditional Medicaid. In New Jersey, “mentally ill adults with physical dis­abilities…were less likely to fall, have respiratory infections, develop bed sores, or spend a night in hospital or a nursing home if they were directing their own personal care services.”

Overall, SDC participants get more preventive care; and as a result, “make significantly less use of crisis stabilization and crisis support.” One reason is that SDC gives participants access to a broader range of services. “In Texas,… [where] Medicaid will not cover routine counseling… SDC is providing individuals access to counseling using funds from their individual budgets.”

Higher Satisfaction. In the Netherlands, close to 80 percent of disabled and elderly participants who were eligible for long-term care services and opted for a personal budget had a positive assessment of the services they received, compared with less than 40% in traditional care. In England, 79% of those who employ a personal assistant were very satisfied with the care and support they received, compared to only 26% in traditional care. In the United States, satisfaction rates in the Cash and Counseling programs have hovered in the high 90 percentiles.

Comments (19)

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  1. Ken says:

    Great post. Thanks for drawing this study to our attention. Commonwealth certainly did not do so.

  2. Joe S. says:

    Thanks for finding this study. You are right about the CWF. I don’t believe there was even a peep about this study.

  3. Linda Gorman says:

    Today’s post on the Commonwealth Fund report on liberating consumers is terrific!

  4. Tom H. says:

    This is actually fascinating on two accounts: (1) that SDC is going on and (2) that it is being ignored by people concerned with public policy.

  5. Virginia says:

    This is good news. Even the UK benefits from consumer-directed care. This should be an interesting trend to watch.

  6. Doctor Dave says:

    It is a problem in our country that the bureaucrats
    think that most Americans are unable to take care of their own needs. When did we arrive at this conclusion?
    Perhaps with LBJ and his “great society” which was a disaster in both money and “social programs”. Now we are in debt for the Medicare costs, and FDR’s plan for social security. Obama’s plan will break everyone’s budget, unless we think the paper on our one hundred dollar bills means something in ten years.

  7. Jim Morrison says:

    Hey John,
    Don’t tell me you’re actually touting something good that is happening internationally–especially from Europe. (smiles)

  8. Don McCanne, MD says:

    “I found this study back in the archives, covered with dust and mold, underneath stacks of other papers — figuratively speaking, of course — to be found only by the diligent and the tenacious.”

    Typical Goodman distortion.

    Not only was the issue brief posted promptly, the description and link were distributed widely in the 2/19/10 issue of The Commonwealth Fund Connection:

  9. Vicki says:

    Don: Try getting a sense of humor. It makes life much more pleasant.

  10. Larry says:

    It is becoming clearer that the future of health care delivery in the United States will be population health at the community level. Economic development in health care will be at the community level. Understanding the opportunities and the impacts of the new health reform laws will be the key to driving economic growth over the next ten years.

  11. Harry Cain says:

    Again, nice choice of a very appropriate song!

  12. Nancy says:

    Agree with Harry. Good song pairing.

  13. Madeline says:

    I agree with Vicki. The whole Commonwealth Fund crowd ought to practice smiling at least once a day. Or even twice a day.

  14. Charles Johnsen says:

    Larry–give it up. “Population health”? What in the h is that? Health is personal and private. “New health reform laws”? What are you referring to? Certainly it cannot be Obama care! That is not reform but doubling down on 19th Century ideology which is mean to the poor. The State has already done enough damage to medical care in America, raising costs and slowing innovation. Congress’s bill is not about health but about the rationing of health goods and services. It is not law because it is unconstitutional, not only in its details, but in its very conception.

  15. Charles Johnsen says:

    Larry–I almost forgot: “key to economic growth”? Spending money does not create wealth. Wealth is created by market driven capital and labor making things that we keep. That definition fits everything from refrigerators to rock songs but it does not fit the ordinary expenses of staying alive. Nor does it fit gov spending. More money spent chasing the same or fewer goods and services will not make economic growth. If we have fewer doctors we may end up spending more on each visit but there will be less net doctoring going on. We usually call that inflation. And rationing.

  16. Chris Ewin, MD says:

    The key to driving economic growth??
    The key is the one that orders the tests….It’s not on the community level, it’s on the personal level with your physician who orders the test (if you can find one in a timely fashion) ….
    Docs are the spoke in the wheel that can keep costs down if we work for our patients, and not third parties… In primary care, it means having smaller practice sizes….

  17. Ron Bachman says:

    Europeans are finding their way to consumer solutions. In December 2009, I was invited by an arm of the German government to study their health system. Surprise!! While we are trying to be like Europeans, Europeans don’t want to be like Europeans. Conservative political victories in France, German (Oct 2009), Hungary (Apr 2010), and likely in Great Britian (May 2010) show the movement is global. STOP THE SPENDING!

  18. Bruce says:

    Good for you Ron.

  19. Buying auto insurance tips says:

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