NCPA


Policy Issues

NCPA Publications

Both Sides

Editorial Opinions

Audio/Visual


NATIONAL CENTER FOR POLICY ANALYSIS
HOME / SUPPORT US / ONE LEVEL UP / ABOUT NCPA / CONTACT US
"Consumer-Directed" Options for Employee Health Insurance

Daily Policy Digest

Health Issues

Wednesday, October 17, 2001

The current health care system has particularly disenfranchised two groups, the uninsured and retirees -- especially with escalating medical costs, changing consumer expectations, the backlash against managed care, the increasing burden of health care benefits administration and threat of liability on employers.

A new publication, "Employer's Guide to Consumer-Directed Healthcare Approaches," identifies a range of options to improve conditions by using defined contributions, in which an employer makes a core contribution to a plan (health insurance plan, HMO, etc.) or an account (e.g. a personal health account), then gives the employee choices about how the money is spent.

These so-called "consumer-directed healthcare benefits" offer several key features:

  • Employer-only dollars set aside for medical expenses can be accumulated from year to year, and don't have a "use it or lose it" requirement.
  • The accounts can be used to purchase health insurance and, at the employer's discretion, can be portable after employment ends.
  • Use of web-enabled decision support tools makes it easier for employees to make informed decisions about coverage more independently, possibly reducing employers' administrative burden.
CDHBs options range from least to most consumer-directed:

  • Multi-Plan Option, in which the employee chooses from among health plans selected by the employer and pays any difference in cost.
  • Multi-Plan Option "Supermarket" plus Personal Health Account (PHA) and/or Flexible Spending Account (FSA), with a more comprehensive menu of choices and direct consumer participation in making cost/benefit choices.
  • High Deductible Plan plus Health Account (PHA or FSA), which is similar to the Medical Savings Account in use today.
  • PHA plus FSA, the most consumer-directed plan, which removes the requirement that an employee purchase insurance with the employer's core contribution, although the employee can choose to do so.
Source: Wye River Group on Healthcare, "An Employer's Guide to Consumer-Directed Healthcare Approaches," October 2001.

For text
http://www.ncpa.org/extra/health/wye_full.pdf

For more on Health
http://www.ncpa.org/iss/hea/
12770 Coit Rd., Suite 800 - Dallas, TX 75251-1339 - 972/386-6272 - Fax 972/386-0924
601 Pennsylvania Ave. NW, Suite 900 South Building - Washington, DC 20004 - 202/220-3082 - Fax 202/220-3096
Copyright © 2001 National Center for Policy Analysis - All rights reserved.