Consumer-Directed Health Care Flourishing

Published June 1, 2009

Amid an ongoing recession, one aspect of the economy has continued to grow unabated: investment in consumer-directed health care plans.

Experts say the better value, increased consumer control, and good word of mouth have all contributed to growth in the consumer-directed health care sector, and rather than hurting it the current bad economy may actually be stimulating its growth.

‘Remarkable Growth’

Joe Mondy, a spokesman for CIGNA, a health services provider serving 70 percent of the Fortune 100 companies, said its consumer-directed health plans have undergone remarkable growth in the past three years.

“It’s doubling each year in terms of folks accessing the plans,” said Mondy. The affordability of the consumer-directed health plans (CDHPs) makes them a better choice in the current economic climate than more expensive health insurance policies that can include unnecessary benefits, he said.

Mondy noted a CIGNA study of more than 400,000 client employees found the ultimate cost of health coverage for both the employer and the employee was typically 13 percent less for those enrolled in a CDHP than for those with a preferred provider organization or health maintenance organization.

‘Getting More for Less’

“Fundamentally, the reason that CDHPs are doing so [well] is that they’re significantly less costly for both the employer and the employee,” Mondy said. “You’re getting more for less, and that’s why those types of plans are experiencing double-digit growth every year.”

Greg Scandlen, director of Consumers for Health Care Choices at The Heartland Institute, noted CDHPs give consumers better control over their health care. “By definition, consumer-directed health care takes money out of the insurance company and puts it into the hands of the consumer,” he said.

Devon Herrick, Ph.D., a senior fellow and health economist at the Dallas-based National Center for Policy Analysis, agreed. “A lot of enrollees really like this idea because they really have a choice. Every dollar they save is a dollar they keep or defer for later use. If consumers control their dollars, they have the option of making their own decision about what holds value for them.”

Scandlen said CDHP enrollees’ good experiences have contributed to the plans’ growth.

“People are generally slow to accept changes in their health care plans because they’ve grown accustomed to a certain way of doing things,” Scandlen said. “But those who do venture away have liked CDHPs, and they are telling their friends and coworkers and neighbors.

“The experiences of real consumers support what health care experts suspected all along,” Scandlen added.

Customers More Secure

“The other thing that’s driving [the growth of CDHPs] is that now we have enough experience to be able to document how well this has worked,” Scandlen said. “Consumer-directed health care has been tested in the real world, and it’s been proven to be extremely successful.”

Scandlen estimates consumers’ and employers’ reassessments of their expenditures as a result of the worsening economy may be responsible for a 10 or 15 percent increase in the use of CDHPs.

“Amid the chaos, they’re more secure,” Scandlen explained. “Although 401(k)s are tanking and stocks are suffering, consumer-directed options like health savings accounts are still there in the bank accounts collecting interest.”

Scandlen said the bad economy has made it more important than ever for people to get the best value possible out of their health care dollars.

“Consumers control more of their own resources,” Scandlen said. “Lowering the amount of money you send to the insurance company is attractive to everyone.”

Jillian Melchior ([email protected]) writes from Michigan.

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