CDHPs and HSAs Will Heal Health Care
Consumer-driven health plans (CDHPs) and health savings accounts (HSAs) are the future of health care in the U.S.
Pro: A Workable Plan for Low-Income Americans
The only way to truly reduce health-care costs is to put as many health-care dollars in consumers’ pockets as possible through consumer-driven health plans (CDHPs), aka high-deductible health plans (HDHPs).
The empirical evidence of this is overwhelming: According to a study by the American Academy of Actuaries, premium costs for CDHPs have trended as much as 40% lower than managed-care insurance, and multiyear premium savings reached $21 million per 10,000 employees, according to a study conducted by Aetna (AET). These plans, utilizing a high-deductible health plan coupled with a tax-deductible health savings account (HSA), are reengaging consumers in managing their health care, with impressive results. Consumers with CDHPs are increasing their use of generic drugs, reducing emergency room visits, and increasing participation in wellness programs.
The managed-care model disconnects consumers from understanding what their health-care costs really are. Insulated from the actual price of care through co-pays and co-insurance, they have no way of determining the real market cost of the services they need. Using Web-based tools, people are seeking information and shopping for their care like never before. With this level of engagement, consumers are directly involved in their health-care decisions, and in reducing their overall health-care costs.
CDHPs turn patients into true consumers of health care and health insurance, in the same way they’re consumers of car insurance. This is the most effective way to reduce health-care costs.
Con: The Cost Can Make You Sick
The U.S. is half a decade into its experiment with High Deductible Health Plans (HDHPs) and health savings accounts (HSAs). Promoters promised these structures would be cheaper for employers by making consumers more careful buyers, with more skin in the health-care game. That is, they offload more financial risk onto patients.
So what’s happened? HDHPs are on a fast growth path—almost one-quarter of covered families now have them—though their affordability is likely responsible for that. As an employee-benefits survey by Towers-Perrin discovered, though, user satisfaction is low. Patients’ costs are high and they generally don’t get information for better decisions.
There are other problems. People with chronic diseases, who need regular care, may exhaust their HSA money nearly as fast as they deposit it, never building a surplus. (Many smaller employers don’t even offer HSAs in the first place). And a recent study by the non-partisan Kaiser Foundation found that only about 9% of uninsured households can cope with the onerous financial requirements of HDHPs.
HDHPs and HSAs have proven an acceptable solution for the healthy and the financially stable. If patients have access to inexpensive, comprehensive primary care, like on-site clinics, they could be much better solutions. But unless reforms include meaningful system restructuring, they will remain a heavy financial burden on the American people.