NCPA - National Center for Policy Analysis


June 17, 2009

In the debate over health care reform, policymakers are ignoring the one thing that has been proven to work: consumer-driven health (CDH) plans, says Greg Scandlen, director of Consumers for Health Care Choices at the Heartland Institute.

CDH plans empowered individuals by taking money away from third-party payers and putting it in the hands of consumers to spend as they wish.  As a result, one out of five Americans under age 65 is paying some of his or her own bills through health savings accounts (HSA), high deductible plans and similar consumer-driven plans.  Policymakers are beginning to see a profound effect on the service side of the ledger, says Scandlen:

  • Consumer-driven health plans cost 25 percent to 40 percent less than preferred provider organizations (PPO) and health maintenance organizations (HMO), and their rate of annual cost increases is one-third of that of the two other plans.
  • It isn't just vendors with a vested interest that are capturing these results. Last fall the Kaiser Family Foundation found the average family premium for an HMO totaled $13,100 while an HSA cost only $9,100.
  • The premiums for CDHs at WellPoint and Cigna actually fell over a two-year period, while premiums for their HMOs and PPOs rose about 10 percent.

Costs for CDH plans are falling because people are becoming more invested in their own health - something policymakers have long been trying to achieve without success, explains Scandlen.   Consumers with a CDH plan participate in wellness/prevention programs at a higher rate than others, and they choose generic drugs over name brands, avoid using emergency rooms in favor of retail clinics or their own doctor, and comply better with recommended treatment programs.

By any measure, CDH is a success, confirmed last year by the Centers for Disease Control and Prevention.  It found 20 percent of the under-65 population is now in some version of a CDH plan.

Source: Greg Scandlen, "More Choice For Consumers Is Always Healthy," Boston Herald/Heartland Institute, June 14, 2009.


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