Consumer-Driven Health Plans: Do They Work?

"Consumer-driven" health plans are favored by many Utah legislators & other conservatives as a market-based solution to rising healthcare costs. These plans typically combine high deductibles with a tax-advantaged health account that can be used to pay deductible and medical/dental expenses that are not covered.

The latest survey by the non-partisan Employee Benefit Research Institute found that

• More high-income consumers enroll: 31% of enrollees have household incomes of $100,000 or more. Percentages of low-income enrollees (<$50,000) have dropped drastically since 2005.
• Missed care: People in these plans were more likely to skimp on needed medical care or medications because of cost.
• Are these plans saving money? A new study found a modest 1.5% saving, mostly because the higher deductible discouraged consumers from using the healthcare system.
• Enrollment in consumer-driven plans remains low but is growing slightly: it was 2 % of the privately insured adult population in 2007, up from 1 percent the previous year. These plans have been around since 2001, so consumers are not exactly rushing into them.

TAKEHOMES: If you want to discourage people from getting needed care, these plans work well. Households with incomes above $100,000 (like most of the Utah Lege) can probably manage OK by utilizing the medical account back-up. The lower-income folks will just do without care.