NCPA - National Center for Policy Analysis

Is Consumer Driven Health Care Controlling Costs?

October 20, 2003

Consumer-driven health care (CDHC) work on the principle that giving employees the incentive and ability to manage their own health care expenses will cut unnecessary costs. Given that many of the plans have been operating for only a year or more, some experts think it is too soon to prove the ability of CDHC plans to control costs over the long term. Yet there have been some notable success stories:

  • Between July 2002 and June 2003, premiums for traditional health benefits increased about 20 to 25 percent; premium increases for companies with CDHC plans from Destiny Health were between 11 and 17 percent.
  • Destiny Health claims to save clients about 25 percent on the cost of drugs by providing plan members with an incentive to buy generic drugs and increasing generic drug utilization 50 percent within two years.
  • Humana Inc. reported that the first 12 companies under its plan experienced only a 6 percent increase in claims costs compared to the national average increase of 15 percent; representing an aggregate savings of $9 million.
  • A Massachusetts company facing a 14 percent increase in health benefit premiums in 2002 enrolled in a CDHC plan instead and experienced an increase of only 4.5 percent.

Source: "Questions Linger about whether CD plans are controlling costs," Consumer Driven Healthcare, September 2003.

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