NCPA - National Center for Policy Analysis

Analysts and Employers are Watching New Consumer-Driven Health Plans Closely

March 4, 2003

Since the Internal Revenue Service issued regulations in June allowing the use of consumer-driven health plans, 7 percent of employers with 20,000 or more workers have offered such plans. Another 14 percent say they are likely to have them in the next two years.

  • Consumer-driven plans are variations on Preferred Provider Organizations (PPOs) and Health Maintenance Organizations (HMOs) which analysts hope will help contain the cost of health care.
  • But they differ from those arrangements in that they carry considerably higher deductibles, around $3,000 for families -- which employers cushion at the front end by financing individual cash accounts ranging from a few hundred to several thousand dollars.
  • Employees can use these accounts to cover medical spending -- and, in some cases, treatments not usually covered by health insurance.
  • Those who do not deplete their accounts may roll over the money remaining from year to year.

Experts say that consumer-driven plans are especially attractive to younger individuals and families who typically don't have heavy medical bills.

The question is whether the payback feature will encourage people to think of their accounts as their own money and think twice before spending it on treatments and medicines which are unnecessary.

Source: Beth Kobliner, "A New Health Plan Works, at Least for the Healthy," New York Times, March 2, 2003.


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