View source for Consumer-driven healthcare

{{short description|Type of health insurance plan}}
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'''Consumer-driven healthcare''' ('''CDHC'''), or '''consumer-driven health plans''' ('''CDHP''') refers to a type of [[health insurance]] plan that allows employers or employees to utilize pretax money to help pay for medical expenses not covered by their health plan. These plans are linked to [[health savings account]]s (HSAs), [[health reimbursement account]]s (HRAs), or similar [[Medical savings account|medical payment accounts]]. Users keep any unused balance or "rollover" at the end of the year to increase future balances or to invest for future expenses. They are a [[high-deductible health plan]] which has cheaper premiums but higher out of pocket expenses, and as such are seen as a cost effective means for companies to provide health care for their employees.<ref>{{Cite web|date=2019-07-02|title=Understanding Consumer-Driven Health Plans (CDHPs)|url=https://www.paychex.com/articles/employee-benefits/consumer-driven-health-plan-might-be-right-for-you|access-date=2021-09-20|website=Paychex|language=en}}</ref>
In this system, health care costs are first paid for by an allotment of money provided by the employer in an HSA or HRA. Once health care costs have used up this amount, the consumer pays for health care until the deductible is reached, after this point, it operates similar to a typical [[Preferred provider organization|PPO]]. Once the out-of-pocket maximum is reached, the health plan pays all further costs.<ref name="bls">{{cite web |title=Consumer-Driven Health Care: What Is It, and What Does It Mean for Employees and Employers? |url=https://www.bls.gov/opub/mlr/cwc/consumer-driven-health-care-what-is-it-and-what-does-it-mean-for-employees-and-employers.pdf |website=Bureau of Labor Statistics |access-date=30 April 2019}}</ref>
CDHC plans are subject to the provisions of the [[Affordable Care Act]], which mandates that routine or health maintenance claims must be covered, with no cost-sharing (copays, co-insurance, or deductibles) to the patient.
Proponents suggest the plans increase free-market variables in the healthcare system, fostering competition, which, in turn, lowers prices and stimulates improvements in service. Critics argue they cause those less wealthy and educated to avoid needed and appropriate healthcare because of the cost burden.
==Background==
Consumer-driven healthcare plans had their origin in the U.S. in the late 1990s. It was developed as a business model for health ventures. They were designed to engage consumers more directly in their healthcare purchases. The initial conceptual model made cost and quality information available to the consumer, usually through the Internet.
HSAs are seen by proponents as a way to make healthcare more affordable and accessible in the U.S.{{citation needed|date=April 2019}}
The [[Medicare Prescription Drug, Improvement, and Modernization Act]], which included provisions designed to stimulate the popularity of these plans, was passed by [[United States Congress|Congress]] in November 2003 and signed into law by [[George W. Bush|President Bush]] in December 2003. The law expanded medical savings accounts, renaming them Health Savings Accounts and created tax incentives to encourage adoption of high-deductible health plans. Banks were empowered to create HSAs, which deliver tax-free interest to the holders, who can then withdraw money tax free to pay for qualified expenditures. To qualify for an HSA, the purchaser must also have a qualifying high-deductible health insurance plan. Over time, participants are allowed to contribute more (cumulatively) to the savings account than would be required to fulfill their annual [[deductible]] for a given year (although annual limits on pre-tax contributions [other than a 1-time IRA rollover option] are well below the annual deductible), and any unused portions of the account accrue without [[tax]] penalty so long as the funds are used only for qualified medical expenses.<ref>{{cite web | title = 2010 Publication 969 | publisher = U.S. Department of the Treasury – Internal Revenue Service | date = 2011-01-14 | url = https://www.irs.gov/pub/irs-pdf/p969.pdf | access-date = 2011-05-02 }}</ref> Further enhancements to HSAs went into effect in 2007.<ref>{{cite press release | title = President Bush Signs Bill to Make Health Care more Affordable, Accessible | publisher = U.S. Department of the Treasury | date = 2006-12-20 | url = http://www.treas.gov/press/releases/hp209.htm | access-date = 2007-07-10 | archive-url = https://web.archive.org/web/20070710223857/http://www.treas.gov/press/releases/hp209.htm | archive-date = 2007-07-10 | url-status = dead }}</ref> The combination of tax breaks for premiums and the health savings account as well as a tax subsidy to pay for the catastrophic [[insurance]] [[Insurance premium|premium]] of lower income individuals has boosted the popularity of these plans.
By April 2007, some 4.5 million Americans were enrolled in HSAs; more than a fourth of those were previously uninsured.<ref>{{cite press release | title = 4.5 Million Enrolled in Health Savings Account Plans | publisher = America's Health Insurance Plans | date = 2007-04-02 | url = http://www.ahip.org/content/pressrelease.aspx?docid=19314 | access-date = 2007-07-10 | quote = The full census is available at http://www.ahipresearch.org. | archive-url = https://web.archive.org/web/20090201103958/http://www.ahip.org/content/pressrelease.aspx?docid=19314 | archive-date = 2009-02-01 | url-status = dead }}</ref> Only people enrolled in high-deducible health plans are eligible for HSAs.  Another type of account in the consumer driven healthcare model is [[Health Reimbursement Arrangement]]s (HRAs), which are employer-funded, and in which employers receive the tax benefits. These accounts are available to people that do not qualify for HSAs.<ref name=bls/>
Other countries with experience in this type of health insurance include [[China]], [[Taiwan]], [[Singapore]] and [[South Africa]].{{citation needed|date=April 2019}}
== Popularity ==
By 2007, an estimated 3.8 million U.S. workers, about 5% of the covered workforce, were enrolled in consumer-driven plans. About 10% of firms offered such plans to their workers, according to a study by the [[Kaiser Family Foundation]].<ref>[http://www.kff.org/insurance/7672 Employer Health Benefits 2007 Annual Survey] {{webarchive|url=https://web.archive.org/web/20070915144031/http://www.kff.org/insurance/7672/ |date=2007-09-15 }}, Kaiser Family Foundation, 2007-09-11, accessed 2007-10-28</ref> In 2010, 13% of consumers in employee-sponsored health insurance programs had consumer-driven health plans.<ref>{{cite journal |last1=Haviland |first1=Amelia M. |last2=Marquis |first2=M. Susan |last3=McDevitt |first3=Roland D. |last4=Sood |first4=Neeraj |title=Growth Of Consumer-Directed Health Plans To One-Half Of All Employer-Sponsored Insurance Could Save $57&nbsp;Billion Annually |journal=Health Affairs |date=1 May 2012 |volume=31 |issue=5 |pages=1009–1015 |doi=10.1377/hlthaff.2011.0369 |pmid=22566440 |doi-access= }}</ref> In 2016, 29% of employee were covered by a CDHP.<ref name=fistimes>{{cite web |title=Consumer Directed Health Plans: A Step in the Right Direction |url=https://www.thefiscaltimes.com/Columns/2018/07/19/Consumer-Directed-Health-Plans-Step-Right-Direction |website=The Fiscal Times |access-date=30 April 2019 |language=en}}</ref>
According to economist [[John C. Goodman]], "In the consumer-driven model, consumers occupy the primary decision-making role regarding the healthcare they receive." Goodman points to a [[McKinsey]] study which found that CDHC patients were twice as likely as patients in traditional plans to ask about cost and three times as likely to choose a less expensive treatment option, and chronic patients were 20% more likely to follow treatment regimes carefully.<ref>{{Cite news|last=Goodman|first=John C.|year=2006|title=Consumer Driven Health Care|periodical=Networks Financial Institute Policy Brief, Indiana State University|doi=10.2139/ssrn.985572|ssrn=985572}}</ref>
In 2014, when major portions of the [[Patient Protection and Affordable Care Act]] are implemented in the United States, high deductible plans and the concept of consumer-driven healthcare may become more popular. Although new federal tax subsidies will help reduce health insurance rates for many consumers, individuals and families that do not qualify, are expected to consider Health Savings Accounts (HSAs) if they do not have employer-sponsored coverage. .{{citation needed|date=December 2019}}{{update inline|date=April 2019}}
==Impact==
Researchers at the [[Carlson School of Management]] at the [[University of Minnesota]] ([[Stephen T. Parente]]),<ref>{{Cite web|url=http://www.ehealthplan.org |title=eHealthPlan.org |access-date=2007-07-10 |work=Carlson School of Management, University of Minnesota }}</ref>
[[Harvard University]] (Meredith Rosenthal),<ref name="Rosenthal">{{cite journal |last1=Rosenthal |first1=Meredith |last2=Milstein |first2=Arnold |title=Awakening Consumer Stewardship of Health Benefits: Prevalence and Differentiation of New Health Plan Models |journal=Health Services Research |date=2004 |volume=39 |issue=4p2 |pages=1055–1070 |doi=10.1111/j.1475-6773.2004.00273.x |pmid=15230911 |pmc=1361053 |url=https://doi.org/10.1111/j.1475-6773.2004.00273.x |access-date=9 November 2021 |language=en |issn=1475-6773}}</ref>
[[University of Illinois at Chicago]] (Anthony Lo Sasso),<ref name="Gabel">{{cite journal |last1=Gabel |first1=Jon R. |last2=Lo Sasso |first2=Anthony T. |last3=Rice |first3=Thomas |title=Consumer-driven health plans: are they more than talk now? |journal=Health Affairs |date=July 2002 |volume=Suppl Web Exclusives |pages=W395–407 |doi=10.1377/hlthaff.w2.395 |pmid=12703601 |url=https://pubmed.ncbi.nlm.nih.gov/12703601/ |access-date=9 November 2021 |issn=0278-2715}}</ref><ref name="Sasso">{{cite journal |last1=Sasso |first1=Anthony T. Lo |last2=Helmchen |first2=Lorens A. |last3=Kaestner |first3=Robert |title=The Effects of Consumer-Directed Health Plans on Health Care Spending |journal=The Journal of Risk and Insurance |date=2010 |volume=77 |issue=1 |pages=85–103 |doi=10.1111/j.1539-6975.2009.01346.x |jstor=20685291 |s2cid=154745779 |url=https://www.jstor.org/stable/20685291 |access-date=9 November 2021 |issn=0022-4367}}</ref>
and [[RAND Health Insurance Experiment]]<ref name="Chen"/> have examined results of consumer-driven plans. In addition to their own research, health insurers [[Aetna]],<ref name="Fuhrmans">{{cite news |last1=Fuhrmans |first1=Vanessa |title=Aetna to reveal what doctors really charge |url=https://www.post-gazette.com/news/health/2005/08/19/Aetna-to-reveal-what-doctors-really-charge/stories/200508190225 |access-date=9 November 2021 |work=The Wall Street Journal / Pittsburgh Post-Gazette |date=August 19, 2005 |language=en}}</ref><ref name="Kaufman">{{cite news |last1=Kaufman |first1=Wendy |title=Aetna Pilot Site Details Fees Paid to Doctors |url=https://www.npr.org/templates/story/story.php?storyId=4806495 |access-date=9 November 2021 |work=NPR |date=August 19, 2005 |language=en}}</ref><ref>{{cite web |title=Encouraging signs for consumer-directed health care plans |url=http://www.aetna.com/producer/aetnalink/2008-02/1q08MM_cdhp.html |website=AETNA |access-date=9 November 2021}}</ref>
[[Humana]]<ref name="Gauthier">{{cite journal |last1=Gauthier |first1=Anne K. |last2=Clancy |first2=Carolyn M. |title=Consumer-Driven Health Care-Beyond Rhetoric with Research and Experience: Consumer-Driven Health Care |journal=Health Services Research |date=28 June 2004 |volume=39 |issue=4p2 |pages=1049–1054 |doi=10.1111/j.1475-6773.2004.00272.x |pmc=1361052 }}</ref>
and [[UnitedHealth Group]]<ref>{{cite news |title=UnitedHealth Group Reports Customers are Selecting CDHPs at a Rapid Pace |url=https://www.darkdaily.com/2006/09/22/unitedhealth-group-reports-customers-are-selecting-cdhps-at-a-rapid-pace/ |access-date=9 November 2021 |work=Dark Daily |date=22 September 2006}}</ref> have all provided their own claims data for independent analyses by the Health Care Cost Institute.<ref name="Gruessner">{{cite news |last1=Gruessner |first1=Vera |title=Consumer-Driven Health Plans Reduce Medical Care Utilization |url=https://healthpayerintelligence.com/news/consumer-driven-health-plans-reduce-medical-care-utilization |access-date=9 November 2021 |work=HealthPayerIntelligence |date=14 September 2016}}</ref>
The [[RAND Health Insurance Experiment]] (1974–1982) is  considered "one of the best experimental social science studies ever conducted".<ref name="Chen">{{cite journal |last1=Chen |first1=Alice |last2=Goldman |first2=Dana |title=Health Care Spending: Historical Trends and New Directions |journal=Annual Review of Economics |date=31 October 2016 |volume=8 |issue=1 |pages=291–319 |doi=10.1146/annurev-economics-080315-015317 |s2cid=154901081 |url=https://doi.org/10.1146/annurev-economics-080315-015317 |access-date=9 November 2021 |issn=1941-1383|doi-access=free }}</ref>
In general, most studies, starting with the RAND study, conclude that increasing the costs (co-payments and deductibles) to the patient reduces the consumption of healthcare, but it reduces the consumption of both appropriate and inappropriate care, and the reduction is greater for low-income patients.<ref name="Davis">{{cite journal |last1=Davis |first1=Karen |title=Consumer-Directed Health Care: Will It Improve Health System Performance? |journal=Health Services Research |date=2004 |volume=39 |issue=4 Pt 2 |pages=1219–1234 |doi=10.1111/j.1475-6773.2004.00284.x |pmid=15230922 |pmc=1361064 |issn=0017-9124}}</ref>  [[Joseph Newhouse]], in summarizing the RAND study, reported that visits to doctors and hospitals decline with higher cost sharing, "although for low income families such cutbacks reduced their use of beneficial as well as unnecessary services and was estimated to have increased rates of death from preventable illness."<ref>{{cite journal |author=Newhouse JP |title=Consumer-directed health plans and the RAND Health Insurance Experiment |journal=Health Affairs |volume=23 |issue=6 |pages=107–13 |year=2004 |pmid=15584103 |doi=10.1377/hlthaff.23.6.107|doi-access=free }}</ref>
However, proponents counter these findings with studies indicating that CDHCs have broad appeal, provide a new option for the uninsured, and are leading to new incentives for people to be more engaged in managing their health.{{Citation needed|date=January 2009}} One study found that the levels and trends of use of preventive and screening services by enrollees in consumer-directed health plans (CDHPs) was similar to that of enrollees in [[Preferred provider organization]] (PPO) plans.  The authors concluded that "[p]eople enrolled in CDHPs such as those we studied do not underuse preventive services to any greater degree than do those in traditional PPOs."<ref>{{cite journal |vauthors=Rowe JW, Brown-Stevenson T, Downey RL, Newhouse JP |title=The effect of consumer-directed health plans on the use of preventive and chronic illness services |journal=Health Affairs |volume=27 |issue=1 |pages=113–20 |year=2008 |pmid=18180485 |doi=10.1377/hlthaff.27.1.113|doi-access= }}</ref>
The Kaiser Family Foundation studied how consumer-driven health plans cover pregnancy. They found wide variations in cost sharing. Pregnant women could face exposure to high out-of-pocket costs under consumer-driven health plans, particularly when complications arise. In one scenario, a complicated pregnancy, with gestational diabetes, pre-term labor, cesarian section and neonatal intensive care, would be priced at $287,000. Under some consumer-directed health plans, the cost to the family would be $6,000, less than some traditional policies. But under other consumer-directed health plans, the cost to the family would be as high as $21,000.<ref>[http://www.kff.org/womenshealth/upload/7636ES.pdf Maternity care and consumer-driven health plans] {{webarchive|url=https://web.archive.org/web/20070927203050/http://www.kff.org/womenshealth/upload/7636ES.pdf |date=2007-09-27 }}, Kaiser Family Foundation, June 2007.</ref>
==Consumer satisfaction==
Results of [[consumer satisfaction]] studies regarding consumer-driven health plans have been mixed. While a 2005 survey by the [[Blue Cross and Blue Shield Association]] found widespread satisfaction among HSA customers,<ref name=hsafinder200510>{{Cite web|url=http://www.hsafinder.com/10-05_1.shtml |title=Surveys Indicate Consumers Are Happy With HSA Offerings, But Want Some Changes In Custodial Accounts  |date=October 2005 |access-date=2019-12-04 |work=HSA Finder.com |archive-url=https://web.archive.org/web/20070415053315/http://www.hsafinder.com/10-05_1.shtml |archive-date=2007-04-15}}</ref> a survey published in 2007 by employee benefits consultants Towers Perrin came to the opposite conclusion; it found that employees currently enrolled in such plans were significantly less satisfied with many elements of the health benefit plan compared to those enrolled in traditional health benefit plans.<ref>{{cite press release | title = Without the Correct Approach and Implementation, Long-Term Effectiveness of Account-Based Health Plans Could Be Undermined, Towers Perrin Research Shows | publisher = Towers Perrin | date = 2007-05-22 | url = http://www.towersperrin.com/tp/jsp/hrservices_webcache_html.jsp?webc=HR_Services/United_States/Press_Releases/2007/20070522/2007_05_22.htm&selected=press&language_code=global  | access-date = 2007-07-10 | quote =As compared to traditional health benefit plan participants, ABHP members are less comfortable with the level of financial risk their plan exposes them to, less likely to understand how the plan works, less favorable about how easy it is to use the plan, less favorable about the clarity of communication around benefit change and less satisfied with the basic elements of their plans. }}</ref>{{primary source inline|date=December 2019}}
Some policy analysts say that patient satisfaction does not reflect quality of healthcare. Researchers at [[RAND Corporation|RAND Corp]] and the [[Department of Veterans Affairs]] asked 236 elderly patients from two managed care plans in 2005 to rate their care, and then examined care in medical records, as reported in ''[[Annals of Internal Medicine]]''. No correlation was found. "Patient ratings of healthcare are easy to obtain and report, but do not accurately measure the technical quality of medical care," said John T. Chang, UCLA, the study's lead author.<ref name=wsj20060907>{{Cite news|first=David |last=Wessel |title= In health care, consumer theory falls flat |url=https://www.wsj.com/articles/SB115758434624755703 |work=Capital |publisher=Wall Street Journal |date=2006-09-07 |access-date=2007-07-10 }}</ref><ref name=rand20060501>{{cite press release |author = <!-- staff author, no byline --> |date=May 1, 2016 |title=RAND Study Finds Patients' Ratings of Their Medical Care Do Not Reflect the Technical Quality of Their Care |url=https://www.rand.org/news/press/2006/05/01.html |publisher=[[RAND Corporation]]}}</ref><ref name=chang200605>{{cite journal |vauthors=Chang JT, Hays RD, Shekelle PG |title=Patients' global ratings of their health care are not associated with the technical quality of their care |journal=Annals of Internal Medicine |volume=144 |issue=9 |pages=665–72 | date=May 2006 |pmid=16670136 |doi=10.7326/0003-4819-144-9-200605020-00010|s2cid=53091172 |display-authors=etal}}</ref>
== Price and quality transparency ==
Healthcare markets are known for a lack of price [[Transparency (market)|transparency]], which affects the [[health care prices in the United States]]. Consumers are unable to make health care decisions based on cost due to a lack of [[free market]], a system in which price transparency is essential.<ref>{{cite web|url=https://www.tennessean.com/story/money/industries/health-care/2018/10/04/does-u-s-have-free-market-health-care/1516766002/|title=Does the U.S. have 'free market' health care?|website=The Tennessean|language=en|access-date=30 April 2019}}</ref> CDHPs cannot effectively decrease health care costs without the ability for consumers to compare prices prior to use.<ref>{{cite journal |last1=Sood |first1=Neeraj |last2=Wagner |first2=Zachary |last3=Huckfeldt |first3=Peter |last4=Haviland |first4=Amelia |title=Price-Shopping in Consumer-Directed Health Plans |journal=Forum for Health Economics & Policy |date=2013 |volume=16 |issue=1 |pages=35–53 |doi=10.1515/fhep-2012-0028 |pmid=25342936 |pmc=4204109 }}</ref><ref name="rch">{{cite news |first1=George |last1=Kalogeropoulos |first2=Shandon |last2=Fowler |date=June 21, 2018 |title=Health Care Transparency Deserves a Serious Bipartisan Effort |url=https://www.realclearhealth.com/articles/2018/06/21/healthcare_transparency_deserves_a_serious_bipartisan_effort_110796.html |website=RealClearHealth }}</ref>
While cost-estimator tools have become available as part of a broad trend towards [[Health technology in the United States#Consumer-driven healthcare software|consumer-driven health technology in the United States]], they often do not use actual negotiated rates and lack quality information.<ref name=mhc>{{cite web |url=https://www.modernhealthcare.com/reports/achieving-transparency-in-healthcare |title=Achieving transparency in healthcare |website=www.modernhealthcare.com |language=en |date=<!-- date of report is unknown, and not included on the website --> |access-date=2019-05-18 }}</ref> Conversely, some companies such as [[MyMedicalShopper]] have attempted to address the problem by sharing negotiated rate estimates along with quality scores.
==See also==
* [[Consumers for health care choices]]
* [[Flexible spending account]]
* [[Health care systems]]
* [[Health economics]]
==References==
{{reflist}}
== External links ==
* {{cite web|url=http://www.treasury.gov/resource-center/faqs/Taxes/Pages/Health-Savings-Accounts.aspx|title=Health Savings Accounts (HSAs) |date=15 August 2011|publisher=U.S. Department of the Treasury}}
* [http://www.actuary.org/pdf/health/cdhp_jan04.pdf "The Impact of Consumer-Driven Health Plans on Health Care Costs: A Closer Look at Plans with Health Reimbursement Accounts."] Public Policy Monograph, [[American Academy of Actuaries]], January 2004
{{DEFAULTSORT:Consumer-Driven Health Care}}
[[Category:Health insurance in the United States]]
[[Category:Health care reform]]