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The Advantages of Consumer Driven Health Plans

Consumer driven health care may be the key to circumventing the inequitable practices and restrictions imposed by health insurance companies. Most commonly used in the form of health savings accounts (HSA) or health reimbursement accounts (HRA), these plans allow consumers to save funds through high-deductible policies. Consumers also have more freedom to determine the types of coverage they want to receive, and reap the benefits of maintaining good health.

  1. Lower Premiums

    • Traditional insurance plans require that consumers pay monthly premiums to maintain coverage, regardless of whether or not the individual actually seeks medical attention. Choosing a high deductible plan means paying much lower premiums, because medical costs are covered by the insurance savings account and out-of-pocket funds before claims are made to the insurance provider.

      Consumers can also save money during the years when they require minimal medical treatment. A study conducted by the Kaiser Family Foundation estimated that, in 2008, premium costs for family HSAs were an average of $8,100 less than PPOs and $9,600 less than HMOs.

    Annual Savings

    • Funds can rollover if the annual limit of the spending account is not reached at the end of the year. As a result, the individual will have additional coverage in the event that they do encounter costlier health issues in the future. In the case of HSAs, the accounts can also earn interest, which is not taxable when withdrawals are used for legitimate medical expenses.

    Unbiased Coverage

    • Individuals with consumer driven plans choose the types of coverage they receive, and are not limited to a specified network of physicians. With traditional health insurance, coverage and benefits are defined by the policy, and many states permit providers to permanently deny coverage for medical conditions that are considered too costly to be insured.

      Depending on the policy, insured consumers must wait for referrals to see a specialist, or may not be covered for certain fields at all. Consumer directed insurance counters such practices by allowing people to only pay for the coverage they need.

    Non-Health-Related Expenses

    • The funds in a health savings account can be withdrawn for non-health-related expenses, if necessary. However, an unqualified withdrawal is subject to taxation and a 10% penalty for individuals under 65.

    Health Literacy

    • According to Greg Scandlen, Director of the Center for Consumer Driven Health Care, consumer driven plans encourage the public to become educated about the health care industry, leading to improved spending and better lifestyle choices.

      As Scandlen points out, researching the best physicians, treatments, and health care facilities would be futile for consumers with standard health plans because decisions about eligible coverage, benefits and physicians are ultimately made by the insurance provider. Scandlen also asserts that consumer directed plans bring the public face to face with the imbalances of the health care industry, providing greater motivation for reform.

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