Consumer-Directed Health Plans

Many years ago, before the HMO concept had gained currency or the term managed care had been coined, health insurance benefits basically were structured as indemnity coverage with a high deductible and co-insurance on most benefits.  Somehow, this kept costs for coverage from rising much from year-to-year.  The wave of “consumer-directed health plans” is basically a return to this design, with the difference that there is often first-dollar or low copay coverage for preventive services and the benefit design is usually coupled with a health reimbursement or health savings account.  Concern has been expressed about the effects of these plans, which have growing enrollment.  An Employee Benefit Research Institute publication looks at the current state of knowledge.   (EBRI Report)

The EBRI brief finds that about 15% of employers offered a CDHP in 2009, up from 5% in 2005.  Growth at small firms has stalled, but CDHPs continue to show good increases at larger companies.  About 20 million people are likely enrolled in a CDHP in 2010, and maybe half of those have an HSA.  Premiums for these CDHP plans tend to be lower and to have at least lower initial health cost growth rates than do other designs.  Much of this could be due to healthier employees choosings the CDHP option.   Most studies find little change in the use of preventive services for people covered by a CDHP design.  Use of prescription drugs overall may fall, but generic and mail-order use may rise.

The report makes it clear that a lot more high-quality research is needed before we can fully understand the longer term effects of CDHPs on cost or quality outcomes.  The presence of an HSA probably mitigates any untoward effects of consumers feeling a heavier cost burden from the deductible and coinsurance features of the plans, but consumers’ understanding of the details of their coverage may not be good, so they may be responding to what they believe their coverage is instead of what it actually is.  Having consumers responsible for the costs of the care they use is generally a good thing, but if they fail to seek needed care because of a perception that they can’t afford it; that is not so good.