Consumer Driven Health Plans (CDHPs) are the outgrowth of the Consumer Driven Healthcare (CDH) movement, both a recent and rapidly evolving phenomenon in the United States. See also, Glossary of Consumer Driven Healthcare (CDH).
What is Consumer Driven Healthcare?
Consumer driven healthcare focuses on turning healthcare users into educated, empowered, accountable healthcare consumers. This happens by delivering:
Participants are given the power to make choices about how their healthcare dollars are spent. With empowerment, employees need information and tools to help research price and quality, select appropriate providers, become their own healthcare advocate, and ultimately, improve their health.
Having participants be accountable for their health and healthcare decisions. One way is to give them more responsibility for the financial consequences associated with their health choices.
What is a Consumer Driven Health Plan, and what are the reasons for their existence?
Consumer Driven Health Plans (CDHPs), also referred to at times as "defined contribution" or “consumer (engaged / oriented / directed)” health plans, use both education and technology to help members (“consumers”) determine how their employer-sponsored health plan dollars should be spent. In such plans, which often are likened to 401(k) plans, an employer will typically subsidize the cost of a high deductible health plan (HDHP) with perhaps some permitted first dollar benefits for preventive care AND provide funding on some basis into either an employer-funded health reimbursement arrangement (HRA) or a health savings account (HSA), both of which are tax-advantaged health accounts (Note: The IRS provided clarification on the tax status of HRAs in June of 2002, and HSAs, a centerpiece of the Medicare Modernization Act (MMA) passed in December of 2003, have been available since January 1, 2004).
One basic difference between HDHPs used in conjunction with HRAs and HSAs is that the HRA model permits the use of fixed dollar copayments for things such as physician office visits and prescription drugs, whereas HDHPs used in conjunction with HSAs apply expenses for such services toward deductibles. Also, the range of deductibles with HDHPs used in conjunction with HRAs is wider than the statutorily defined deductibles and out-of-pocket limits found under HSA-compatible HDHPs.
The reasons for a shift in the design and administration of health plans from defined benefit to defined contribution are fairly obvious, none the least of which are the relatively high costs of health benefits and the fact that managed care’s cost effectiveness seems to have run its course. In reality, the shift from defined benefit to defined contribution approaches in health care in many ways mirrors a similar shift in the '80s and ‘90s from defined benefit pension plans to defined contribution retirement plans.
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Last Updated on Wednesday, 26 March 2008 15:29 |
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