What is a consumer driven health plan?

A consumer driven health plan (CDHP for short) is a new development in the health insurance world.  It came about because of recent legislation allowing rollover of funds set aside for one’s individual use not spent on medical care in the current plan year.   Rollovers weren’t previously allowed.

The term refers to an employer paid health plan in which funds are paid into an employer-paid employee Health Savings Account (HSA). If the employee, or dependent, has a medical expense, that expense is paid for by the pre-funded HSA.   Insureds are allowed to choose their own health care providers, manage their own medical expenses and improve their health with the factors that an individual can control.

The employer also buys a high-deductible health insurance policy, which costs less than a low-deductible policy.  This insurance policy protects users from catastrophic medical expenses.

The insured pays routine medical claims using a prefunded spending account, often with a special debit card provided by a bank or insurance plan. If the balance on this account runs out, the insured then pays claims just like under a regular deductible. 

What’s notable about this kind of plan is that insureds keep any unused balance or “rollover” at the end of the year to increase future balances, or to invest for future expenses.  In effect an insured is able to save up money for future health expenses.  As we grow older, we tend to spend more on medical care so being able to save up for those higher expenses is highly beneficial.  If at retirement, the plan still has cash, that cash can be used for other purposes, such as retirement income.

According to Wikipedia, “This system of health care is referred to as “consumer driven health care” because routine claims are paid using a consumer-controlled account versus a fixed health insurance benefit. That gives patients greater control over their own health budgets. According to economist John C. Goodman, “In the consumer-driven model, consumers occupy the primary decision-making role regarding the health care they receive.” Goodman points to a McKinsey study which found that CDHC patients were twice as likely as patients in traditional plans to ask about cost and three times as likely to choose a less expensive treatment option, and chronic patients were 20 percent more likely to follow treatment regimes carefully”

According to the Bureau of Labor Statistics.  Some employers are considering the switch to consumer-driven health plans (CDHPs) in order to reduce the cost of providing health insurance benefits to their employees. Because CDHPs generally have lower premiums, they might be a popular choice for some employees. Employers and employees will need to carefully weigh the costs and benefits of CDHPs compared with more traditional health insurance plans before deciding which type of plan to use.”  To read more about Uncle Sam’s opinion, click on  Bureau of Labor Statistics.

How do you save money for the future if you have a Consumer Driven Health Plan?

1. Take care of yourself.
Follow our recommendations for living well. These aren’t just our recommendations, because we have scoured the Internet for resources that we can share with you. Also, fellow members will share with you what has worked for them and what hasn’t. We like to call this consumer driven “peer review.”

2. Employer support
A growing number of employers now offer wellness programs for their people. It really is a win-win for employer, employees, and dependents when employees and dependents stay well. These new wellness programs are designed to motivate and engage people in living healthy lifestyles.

3. Use the Internet to learn from others what did and didn’t work for them
The Internet has become a great vehicle for individuals to share what has worked for them and what hasn’t. Wellness Online is delighted to become a part of this new trend. That’s why our byline is “People Powered Health.”

4. Consider complementary and alternative care (What Uncle Sam calls CAM) if you do get sick.
For example, we have an article called “Don’t use pills for 7 common ills.” In it we describe what the Harvard Health Letter has found are 7 diseases for which prescription medications aren’t necessarily the best solution to these medical issues. This is only one example of what you can do for yourself to possibly avoid the need for expensive medical treatment.  Of course, ALWAYS check with your doctor before using CAM.

What does ThatGuyNurse.com have to say?

We quote from his book Choose Today Live Tomorrow: “I can’t resist getting on my soapbox for a bit.  I spell out how the American medical system must change.  It will become a true “wellness system” only when patients assume responsibility for their own health and learn to use the skills of physicians, nurses, and others in the medical system as vehicles for health rather than as mechanics who fix the things that go wrong.  The focus of the new system will be on prevention of disease and trauma and on the maintenance of health.”

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