Health – Donald Marron

Should Congress Use The Income Tax To Discourage Consumer Drug Ads?

Senator Jeanne Shaheen (D-NH) and a score of Democratic cosponsors want to use the tax code to discourage direct-to-consumer advertising by drug companies. Their bill, the End Taxpayer Subsidies for Drug Ads Act, would prohibit firms from taking tax deductions for any consumer advertising of prescription drugs.

Limiting tax deductions is a blunt and arbitrary way of approaching a legitimate concern. Consumer drug ads play an important role in debates about the costs of prescription drugs, the risks of misuse and overuse of some medications, the balance of authority between doctors and patients, the limits of commercial speech, and a host of other issues. For overviews, see here, here, and here.

But the bill is not well crafted to address those issues. The problem starts with the legislation’s name: Allowing drug companies to deduct advertising costs is not a subsidy. Many other deductions are: The charitable deduction in the personal income tax, for example, subsidizes charitable giving. And the mortgage interest deduction subsidizes borrowing to buy a home.

But the business deduction for advertising costs is not a subsidy. Continue reading “Should Congress Use The Income Tax To Discourage Consumer Drug Ads?”

What Should We Do with the Money from Taxing “Bads”?

What do indoor tanning, shopping bags, junk food, alcoholic beverages, tobacco, “gas guzzling” cars, ozone-depleting chemicals, sugary drinks, marijuana, gasoline, coal, carbon-containing fuels, and financial transactions have in common? Taxes that discourage them. The United States taxes indoor tanning to reduce skin cancer, for example, while Washington DC taxes shopping bags to cut litter, and Mexico taxes junk food to fight obesity.

Governments hope these “corrective taxes” will reduce harms from pollution, unhealthy consumption, and other risky behaviors. But taxing “bads” can also bring in big money. A US carbon tax could easily raise more than $100 billion annually, for example, and a tax on sugary drinks could raise $10 billion.

How should governments use that money? As you might expect, policymakers, advocates, and analysts have proposed myriad ways to use the revenue to pay for new spending, to cut taxes, or, in a few cases, to reduce borrowing. In a new paper, however, Adele Morris and I argue that all these options boil down to four basic approaches:

Revenue Use Table 2

Advocates often suggest that revenue be put toward the same goal as the tax. Carbon tax revenues might subsidize energy efficiency or clean energy, for example, and sugary drink revenues might subsidize healthier food or nutrition information programs. Using revenue that way may make sense if you believe the tax won’t sufficiently change business and consumer choices. But there are downsides. A successful tax will typically reduce the potential benefits from other policies aimed at the same goal. As a result, it may make sense to roll back other policies, rather than expand them, when a substantial corrective tax is implemented. Directing revenues to the same goal may also limit lawmakers’ ability to build a coalition for a corrective tax, while other uses may attract supporters with other priorities.

Another approach is to use the revenue to offset the burdens that a corrective tax creates. New taxes on food, energy, and other products can squeeze household budgets, particularly for families with lower incomes. Shrinking the market for targeted products may disproportionately burden specific workers, industries, and communities. If a tax is large enough, moreover, it may slow overall economic activity. Tax cuts, expansions in transfer programs, or other spending increases may offset some of these harms while leaving the incentives intact. This is particularly important when taxes are intended to help people who suffer from internalities—health risks and other costs they unintentionally impose on themselves. In those cases, rebating revenue to affected consumers can help ensure that a tax actually helps the people who pay it.

A third approach is to use revenues to offset costs of the taxed activity. If an activity imposes costs on an identifiable group of people, it may make sense to compensate them for the harm. A US tax on coal does this, for example, by funding assistance to workers who develop black lung disease. Revenues can also cover some costs of providing public services that support the taxed activity. Fuel taxes paid by drivers, airplane passengers, and maritime shippers , for example, help fund the creation and maintenance of the associated infrastructure.

Finally, governments could treat corrective taxes like any revenue source, with receipts used to reduce borrowing, boost spending, or cut taxes in ways unrelated to the goal of the tax. Governments could allocate the money using ordinary budget processes, as Berkeley, California does with its soda tax revenue, or could earmark revenues to specific efforts, as France does by directing some financial transactions tax revenue to international aid.

Policymakers must consider a host of factors when deciding what mix of these options to pursue. Complete flexibility may allow them to put revenue to its best use over time. But surveys suggest that the public is often skeptical of corrective taxes if they don’t know how the revenue will be used. Many worry, for example, that the corrective intent of a tax may just be a cover story for policymakers’ real goal of expanding government.

Recycling corrective tax revenue into offsetting tax cuts can assuage that concern. But revenue neutrality has downsides as well. Matching incoming revenues and offsetting tax cuts may be difficult, given uncertainties in future revenues from a corrective tax and any offsetting tax cuts. In addition, it may be easier to achieve some distributional goals through spending than tax reductions. For example, a new spending program may be a more straightforward way to help coal miners hurt by a carbon tax than some kludgy tax credit. People who generally oppose wholesale revenue increases from corrective taxes should thus be open to modest deviations from revenue neutrality that provide a more effective way to accomplish policy goals.

Should Governments Tax Unhealthy Foods and Drinks?

With obesity and diabetes at record levels, many public health experts believe governments should tax soda, sweets, junk food, and other unhealthy foods and drinks. Denmark, Finland, France, Hungary, and Mexico have such taxes. So do Berkeley, California and the Navajo Nation. Celebrity chef Jamie Oliver is waging a high-profile campaign to get Britain to tax sugar, and the Washington Post has endorsed the same for the United States.

Do such taxes make sense? My Urban Institute colleagues Maeve Gearing and John Iselin and I explore that question in a new report, Should We Tax Unhealthy Foods and Drinks?

Many nutrients and ingredients have been suggested as possible targets for taxes, including fat, saturated fat, salt, artificial sweeteners, and caffeine. Our sense, though, is that only sugar might be a plausible candidate.

Sugar in foods and drinks contributes to obesity, diabetes, and other conditions. By increasing the price of products that contain sugar, taxes can get people to consume less of them and thus improve nutrition and health. Health care costs would be lower, and people would live healthier, longer lives. Governments could put the resulting revenue to good use, perhaps by helping low-income families or cutting other taxes.

That’s the pro case for a sugar tax, and it’s a good one. But policymakers need to consider the downsides too. Taxes impose real costs on consumers who pay the tax or switch to other options that may be more expensive, less enjoyable, or less convenient.

That burden would be particularly large for lower-income families. We find that a US tax on sugar-sweetened beverages would be highly regressive, imposing more than four times as much burden, relative to income, on people in the bottom fifth of the income distribution as on those in the top fifth.

Another issue is how well sugar consumption tracks potential health costs and risks. If you are trying to discourage something harmful, taxes work best when there is a tight relationship between the “dose” that gets taxed and the “response” of concern. Taxes on cigarettes and carbon are well-targeted given tight links to lung cancer and climate change, respectively. The dose-response relationship for sugar, however, varies across individuals depending on their metabolisms, lifestyle, and health. Taxes cannot capture that variation; someone facing grave risks pays the same sugar tax rate as someone facing minute ones. That limits what taxes alone can accomplish.

In addition, people may switch to foods and drinks that are also unhealthy. If governments tax only sugary soda, for example, some people will switch to juice, which sounds healthier but packs a lot of sugar. It’s vital to understand how potential taxes affect entire diets, not just consumption of targeted products.

A final concern, beyond the scope of our report, is whether taxing sugar is an appropriate role for government. Some people strongly object to an expanding “nanny state” using taxes to influence personal choices. Others view taxes as acceptable only if individual choices impose costs on others. Eating and drinking sugar causes such “externalities” when insurance spreads resulting health care costs across other people. Others go further and view taxes as an acceptable way to reduce “internalities” as well, the overlooked harms consumers impose on themselves.

Policymakers must weigh all those concerns when considering whether to tax sugar. If they decide to do so, they should focus on content, not proxies like drink volume or sales value. Mexico, for example, taxes sweetened drinks based on their volume, a peso per liter. That encourages consumers to reduce how much they drink but does nothing to encourage less sugary alternatives. That’s a big deal because sugar content ranges enormously. Some drinks have less than 10 grams of sugar (2 ½ teaspoons) per serving, while others have 30 grams (7 ½ teaspoons) or more. Far better would be a content-based tax that encourages switching from the 30-gram drinks to the 10-gram ones.

Focusing on sugar content would bring another benefit. Most sugar tax discussions focus on changing consumer choices. But consumers aren’t in this alone. Food and beverage companies and retailers determine what products they make, market, and sell. Taxing drink volumes or the sales value of sugary food gives these companies no incentive to develop and market lower-sugar alternatives. Taxing sugar content, however, would encourage them to explore all avenues for reducing the sugar in what we eat and drink.

Note: I updated this post on December 15.

Should Governments Tax Products That Are Fun But Harmful?

Should you face an extra tax if you drink soda? Eat potato chips? Uncork some wine? Light up a cigarette or joint? Toast yourself in a tanning booth? Many governments think so. Mexico taxes junk food. Berkeley taxes sugary soft drinks. Countless governments tax alcohol and tobacco. Several states tax marijuana. And thanks to health reform, the U.S. government taxes indoor tanning.

One rationale for these taxes is that some personal choices impose costs on other people, what economists call externalities. Your drinking threatens bystanders if you get behind the wheel. Tanning-induced skin cancer drives up health insurance costs.

Another rationale is that people sometimes overlook costs they themselves face, known as internalities. Limited self-control, inattention, or poor information can cause people to eat too many sweets, drink too much alcohol, or take up smoking only to later regret the harm.

In a new paper, Should We Tax Internalities Like Externalities?, I examine whether the internality rationale is as strong as the externality one. Economists have long argued that taxes can be a good way to put a price on externalities like the pollutants causing climate change, but does the same logic apply to internalities?

People who look down on certain activities sometimes think so, with taxes being a way to discourage “sinful” conduct. People who prioritize public health often favor such taxes as a way to encourage healthier behavior. Those who emphasize personal responsibility, by contrast, often oppose such taxes as infringing on individual autonomy—the overreaching “nanny state.”

Economists don’t have much to say about sin. But we do have ideas about balancing health and consumer autonomy. One approach is to focus on efficiency: How do the benefits of a tax compare to its costs? Internalities and externalities both involve people consuming too much because they overlook some costs. Taxes can serve as a proxy for those overlooked costs and reduce consumption to a more beneficial level. In that way, the logic of taxing internalities is identical to that for taxing externalities.

But that equivalence comes with a caveat. Internality taxes should be targeted only at harms we overlook. If people recognize the health risks of eating bacon but still choose to do so, there is no efficiency rationale for a tax. Informed consumers have decided the pleasure is worth the risk. Efficiency thus differs sharply from sin and public health views that would tax harmful products regardless of whether consumers appreciate the risks.

Economists often temper cost-benefit comparisons with concerns about the distribution of gains and losses. At first glance, taxes on internalities and externalities generate similar equity concerns. Both target consumption, so both may fall more heavily on poor families, which tend to spend larger shares of their incomes. But there’s another caveat. Internality taxes do not target consumption in general. Instead, they target products whose future costs consumers often overlook. Nearly everyone does that, but it may be more of a problem for people with low incomes. The stress of poverty, for example, can make it more difficult to evaluate the long-term costs of decisions today. As a result, taxes aimed at internalities are more likely to hit low-income families than are those aimed at externalities.

A third, paternalistic perspective focuses on people who overlook harms. Do internality taxes help them? To meet that standard, the benefit consumers get from reducing purchases must exceed their new tax burden. That can be a high hurdle. If consumers only buy a little less, they may end up with small health gains but a large tax bill. That might be a success from an efficiency perspective since the tax revenue ultimately helps someone. But it’s a loss from the perspective of affected consumers.

The economic case for taxing internalities is thus weaker than for taxing externalities. Internality taxes raise greater distributional concerns, and they place a new burden on the people they are intended to help. Internality taxes can still make sense if consumers find it easy to cut back on taxed products (so health gains are large relative to the new tax burden), if overlooked health risks are very large (as with smoking), or if governments rebate revenues to affected consumers. But when those conditions do not hold, we should be skeptical.

No Surprise: Electronic Medical Records Help Doctors Bill More

In 2000, I was CFO of a health software startup in Austin, Texas. Our product: an innovative electronic medical record oriented to a doctor’s actual workflow. It was a good idea then, and it’s a good idea today. But one of the biggest hurdles (besides classic startup execution issues and the bursting of the tech boom) was how to get doctors to adopt it.

Even if it integrated perfectly into a doctor’s routine, there was the small issue of paying for thousands of dollars of hardware and software and, we hoped, a little bit of profit for us and our investors. Even if we could get insurers and medical suppliers to defray some costs, we would still need doctors to reach into their own pockets.

After a bit of research, it was obvious that the best way to drive adoption would be to design the EMR so that it boosted doctor earnings. There are, of course, good and bad ways to do that. The good ways help doctors avoid undercoding (i.e., mistakenly billing too little) or remind them to do appropriate, health-improving, billable activities (e.g., “Mrs. Jones has diabetes, so consider checking her eyes and toes.”) The bad ways … well, you don’t need to be Neil Barofsky to realize that there are myriad ways that doctors could game the system. Our goal was to stay on the right side of that line.

But as a New York Times article by Reed Abelson, Julie Creswell, and Griffin Palmer makes clear, that clearly isn’t true for everyone:

[T]he move to electronic health records may be contributing to billions of dollars in higher costs for Medicare, private insurers and patients by making it easier for hospitals and physicians to bill more for their services, whether or not they provide additional care.

Hospitals received $1 billion more in Medicare reimbursements in 2010 than they did five years earlier, at least in part by changing the billing codes they assign to patients in emergency rooms, according to a New York Times analysis of Medicare data from the American Hospital Directory. Regulators say physicians have changed the way they bill for office visits similarly, increasing their payments by billions of dollars as well.

The most aggressive billing — by just 1,700 of the more than 440,000 doctors in the country — cost Medicare as much as $100 million in 2010 alone, federal regulators said in a recent report, noting that the largest share of those doctors specialized in family practice, internal medicine and emergency care.

For instance, the portion of patients that the emergency department at Faxton St. Luke’s Healthcare in Utica, N.Y., claimed required the highest levels of treatment — and thus higher reimbursements — rose 43 percent in 2009. That was the same year the hospital began using electronic health records.

The share of highest-paying claims at Baptist Hospital in Nashville climbed 82 percent in 2010, the year after it began using a software system for its emergency room records.

…

Some experts blame a substantial share of the higher payments on the increasingly widespread use of electronic health record systems. Some of these programs can automatically generate detailed patient histories, or allow doctors to cut and paste the same examination findings for multiple patients — a practice called cloning — with the click of a button or the swipe of a finger on an iPad, making it appear that the physicians conducted more thorough exams than, perhaps, they did.

Critics say the abuses are widespread. “It’s like doping and bicycling,” said Dr. Donald W. Simborg, who was the chairman of federal panels examining the potential for fraud with electronic systems. “Everybody knows it’s going on.”

I contain to believe that EMRs will eventually transform health care for the better. But the idea that they would instantly lead to cost savings always struck me as naive. As the NYT article illustrates, the killer app for doctors–both the vast majority of legit ones and the nasty minority of scammers–is to find a way to boost their revenues and profits.

Expanding Medicaid Reduces Death Rates

Arizona, Maine, and New York significantly expanded Medicaid coverage in the early 2000s. That expansion appears to have reduced death rates, according to a new study in the New England Journal of Medicine.

Benjamin Sommers, Katherine Baicker, and Arnold Epstein, all of the Harvard School of Public Health, compared mortality in those states to four neighboring states (Nevada and New Mexico; New Hampshire; and Pennsylvania) that didn’t expand Medicaid coverage. They found that mortality fell in the three states that expanded coverage even as it increased in the neighbors:

The authors use the usual battery of statistical techniques to try to tease our whether some other factors, perhaps changing economic fortunes or demographics, might explain the mortality differences. After all that, their best guess is that the reduction in death rates is real: on average, one death was averted each year for every 176 extra adults covered by Medicaid.

The study does have limitations, as the authors carefully note. For example, it relies on mortality data for counties. What you’d really like, of course, are data for individuals, so you could track the impacts of Medicaid enrollment person-by-person.

For further discussion, see this NYT article by Pam Belluck.

Fixing Medicare’s Double-Counting Problem

Last week I argued that budgeting for Medicare’s hospital insurance program is flawed. Today, I offer two ways to fix it (and reject a third).

Medicare Part A is one of several federal programs that control spending through a “belt and suspenders” combination of regular program rules (the belt) and an overall limit (the suspenders). But it’s the only one that allows legislated savings to offset the costs of policy changes in other programs and extend the time before the overall limit constrains operations.

Congress can’t increase Social Security payroll taxes to pay for increased health care spending or reduce flood insurance subsidies to pay for tax cuts; in both cases, the resources stay within the affected programs. And when it cuts spending on Medicare Parts B and D to pay for other spending, no one claims those cuts will also postpone the day when trust fund exhaustion will disrupt their operations.

Such double counting is possible only in Medicare Part A. And it’s a real problem, creating needless confusion and reinforcing the sense that Washington plays fast and loose with budget numbers.

Happily, Congress knows how to fix this problem. All it needs to do is apply to Medicare A the practices used by one of the other programs that have “belt and suspenders” budgeting but avoid potential double counting.

One approach would be the rules used by the National Flood Insurance Program. As I discussed in more detail last week, those rules require that any legislated savings remain in the program. Lawmakers can’t reduce NFIP subsidies to pay for new spending in other programs. Instead, any savings are automatically earmarked to pay future NFIP claims that would go unpaid because of the program’s borrowing limit. (For an example, see here.)

This approach brings the overall limit explicitly into the budget. But it makes for weird budgeting. For example, the budget baseline would show Medicare A breaking even over the long run, since the trust fund limit would take precedence over its fundamental deficits.

A better approach would adopt the rules used by Social Security. Those rules show Social Security running deficits far into the future in the budget baseline, but they still take the trust fund seriously when examining new legislation. Any proposed cuts to the program’s spending or increases in its revenues are “off budget”. The Congressional Budget Office reports them, but Congress can’t use them to pay for other spending.

A recent Senate bill provides a telling example. The bill would expand the type of income subject to payroll taxes in order to pay for a one-year extension of low interest rates on student loans. Those low rates would cost $6 billion, but the Senate proposal would raise $9 billion. The bill had to overshoot that much because $3 billion comes from higher Social Security taxes and is thus off limits. Meanwhile, the $6 billion in usable revenues comes from Medicare Part A, which is considered “on budget” despite having a trust fund just like Social Security’s.

That difference highlights the inconsistency in current budgeting. If policymakers believe the Part A trust fund is as sacrosanct as Social Security’s, they should provide the same budgetary protection: Part A savings should be off budget, where they couldn’t be used to pay for health reform, student loans, tax cuts, or anything else outside the hospital insurance program.

If Congress doesn’t believe the trust fund deserves that protection, it should adopt a third approach: make the Part A fund as operationally toothless as the one for Medicare B and D. Those programs spend much more than they receive, so their trust fund has unlimited ability to draw on general revenues. If the same were true for Medicare Part A, program changes could be used to pay for health reform (as they were in 2010) or anything else, just like any other mandatory program. But we wouldn’t have any confusion over whether those changes also extend the program’s ability to operate.

The Social Security and Medicare B and D approaches both make more sense than the mishmash that applies to Medicare A today. I think the Medicare B and D approach is the better of the two, not least because it would put all the parts of Medicare on equal footing. But one could certainly argue for the Social Security approach instead. That’s the discussion we should have now so that we can avoid needless double-counting debates in the future.

P.S. Several readers noted an important qualification to my Social Security discussion in my earlier post. Many experts believe past Social Security surpluses have been used to finance deficits in the rest of the budget and, as a result, Social Security resources have been paying for higher spending or lower revenues elsewhere in government. I agree. My comments in these posts apply only to explicit budgeting decisions, like those in 2010’s health reform or today’s student loan legislation. In that context, Social Security savings cannot be legislatively used to pay for other programs. But they still might have indirect effects. For example, by reducing future unified budget deficits, Social Security savings might weaken future congressional efforts to reduce deficits outside Social Security.

The Fight over Medicare Double Counting

The recent double-counting dispute isn’t just about politics; it also reveals a flaw in budgeting for Medicare Part A.

Budget experts are waging a spirited battle over the Medicare changes that helped pay for 2010’s health reform. In April, Chuck Blahous, one of two public trustees of the program, released a study arguing that the Affordable Care Act (ACA) would increase the deficit by at least $340 billion by 2021, a sharp contrast from the $210 billion in deficit reduction estimated by the Congressional Budget Office (CBO).

Chuck bases his estimates on several factors, but the item that has garnered the most attention is his charge that the ACA’s spending cuts and revenue increases in Medicare Part A are being double counted: once to help pay for the ACA’s coverage expansion and a second time to improve the finances of the Part A trust fund, whose predicted exhaustion was delayed by several years.

Chuck notes that those resources can be used only once: They can either offset some costs of health reform or strengthen Medicare, but not both. He believes those resources will ultimately finance additional Medicare spending and thus can’t offset any health reform costs. For that reason, he concludes that the ACA would increase deficits, rather than reduce them.

That argument inspired a host of commentary from leading budget experts, ranging from denunciation to affirmation. See, for example, Jeffrey Brown, Howard Gleckman, Peter Orszag, Robert Reischauer (as quoted by Jonathan Chait), and Paul Van de Water, and a follow up by Chuck and Jim Capretta.

Why does this dispute exist? It can’t just be politics. If it were, we’d have double-counting disputes about every program. But we don’t. We thus need an explanation for why this debate has erupted around Medicare Part A, which provides hospital insurance, but not around other programs. Part A is not unique in controlling spending by a “belt and suspenders” combination of regular program rules (the “belt”) and an overall limit (the “suspenders”). Such budgeting also applies to Social Security, Medicare Parts B and D (which cover physician visits and prescription drugs), and the National Flood Insurance Program. The federal debt limit acts as “suspenders” for the entire budget. But none of those give rise to double-counting disputes.

That suggests that there is something unusual—perhaps flawed—about budgeting for Medicare Part A. To see what that is, it helps to boil the dispute down to two basic questions about programs subject to “belt and suspenders” budgeting.
First, can spending reductions or revenue increases in the program offset spending increases or revenue reductions in other programs? In short, can budget savings pay for other programs? Or must they stay within the program itself?

Second, would hitting the overall budget limit affect program operations? In other words, do budget savings extend the period during which the program can operate at full capacity? Or is the limit operationally toothless?

As shown above, policymakers have answered these questions differently for different programs (for further details, see the appendix).

This comparison reveals the unique feature of Medicare Part A: It is the only one of these programs that allows budget savings to pay for other programs and has a trust fund with real operational teeth. It alone answers Yes to both questions. That is why Medicare Part A is the only program that creates the possibility of double counting and suffers from the reality of a double-counting dispute.

Double counting isn’t possible in Social Security or the NFIP because budget rules require that savings stay in the program. It isn’t possible for the budget as a whole since there are, by definition, no other programs to fund. And double counting isn’t possible in Medicare Parts B and D because its trust fund does nothing to limit operations.

But double counting is possible in Medicare Part A. That happens whenever someone claims that the health reform legislation both reduces deficits and provides additional resources to Medicare Part A. I will leave it to others to adjudicate whether any health reform proponents committed that error. I will note, however, that every budget expert, including Chuck Blahous, agrees that CBO didn’t do so (its baseline ignores the trust fund, so savings reduce deficits and have no effect on program operations).

Bottom line: The peculiar budget rules for Medicare Part A make it possible for analysts, pundits, and policymakers—whether willfully or inadvertently—to double count budget savings in Medicare Part A. That needless confusion is a significant flaw. To correct it, Congress could adopt the budget practices it uses in Social Security, Medicare B & D, or the NFIP. In a follow-up post, I will examine the pros and cons of these alternatives.

Appendix: How “Belt and Suspenders” Budgeting Works

Continue reading “The Fight over Medicare Double Counting”

High-Deductible Health Plans Are Growing Rapidly

High-deductible plans are gaining market share.

Here’s another important fact from the Kaiser Family Foundation’s recent survey of the employer health insurance market. As shown in the chart above, health insurance plans with high deductibles and a saving option (HDHP/SO) have been gaining market share rapidly. Only 1-in-25 enrollees were in such plans in 2006; today that figure is more than 1-in-6.

The increased popularity of these plans–which involve Health Savings Accounts (HSAs, created by the 2003 tax law) or Health Reimbursement Arrangements (HRAs)–has come at the expense of health maintenance organizations (HMOs, down from 21% in 2005 to 17% in 2011), preferred provider organizations (PPOs, down from 61% to 55%), and point-of-service plans (POS, an unfortunate acronym, down from 15% to 10%).

When paired with HDHPs, HSAs and HRAs are often called consumer-driven health plans because they give the patient / consumer more direct responsibility for health spending. In return for lower premiums, beneficiaries face higher cost-sharing. To help cover those out-of-pocket costs, beneficiaries make contributions to tax-advantaged saving accounts.

Bottom line: The employer market is moving toward more consumer-driven plans. Big question: Will translate into lower health spending?