NCPA - National Center for Policy Analysis

Growth of Consumer-Directed Could Save Billions Annually

May 17, 2012

Over the past decade, many employers have introduced consumer- directed health plans that proponents claim will engage consumers by giving them "skin in the game" through higher deductibles and by emphasizing personal responsibility for their health and health care decision making, say researchers in the journal Health Affairs.

  • Consumer-directed health plan enrollment has increased from 4 percent of all employer-sponsored insurance in 2006 to 13 percent in 2010.
  • A recent survey reported that more than half of large employers offered a consumer-directed health plan option in 2011, and another 13 percent of large employers planned to offer one for the first time in 2012.
  • The affordability of the plans will encourage their expansion after 2014 with the implementation of the Affordable Care Act, which will in effect penalize large employers who do not offer affordable coverage.

The growth of these plans, which usually entail employees paying for uncovered medical expenses out of personal health savings accounts, are substantial and diverse.  Consider the scenario in which consumer-directed plan enrollment grows from its current level of 13 percent to 50 percent of the total employer-sponsored enrollment.

  • Continued cost pressures, combined with the financial incentives in the Affordable Care Act, make the 50 percent level plausible over the coming decade.
  • Estimates peg the national savings in health care expenditures at $57.1 billion annually.
  • Savings of this magnitude would account for 7 percent of all health care spending for the population with employer-sponsored insurance and 4 percent for the nonelderly population as a whole.

Nevertheless, consumer-directed health plans do suffer from several pitfalls that policymakers will need to address if the plans are to be made viable on a national scale.  Specifically, a recent study showed preventive treatments were negatively affected in the first year of consumer-directed plan enrollment, despite plan provisions that reimbursed some of these preventive services.

Source: Amelia M. Haviland et al., "Growth of Consumer-Directed Health Plans to One-Half of All Employer-Sponsored Insurance Could Save $57 Billion Annually," Health Affairs, May 2012.

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