Another side of Consumer-Directed Health Plans (CDHP)

Advocates believe CDHPs promote better decision making regarding patients’ use of health care services. According to a McKinsey study, 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 treament regimes carefully. Well that works great for insurers – premiums coming in without reimbursements going out.

Critics believe that CDHPs cause consumers, particularly those who are poorer and less educated, to avoid needed and appropriate health care because of the cost burden and lack of available information needed to make informed, appropriate choices. I suppose cost-sharing the price of the premium with an employer is taxing enough, doesn’t leave much left over to contribute to deductible expenses.

But these are just two sides of an octagon, in my opinion. The latest profit-maker for insurers, CDHPs are big business. Not only does this model allow for more profit from premium dollars that only need to be spent in the event of catastrophic illness, it has also opened the door to banking for many of the larger companies.

Let’s think about this.

First, if your CDHP comes with a high deductible, and you are relatively healthy, then the premiums you pay will never be used. Many plans come with deductibles of $3,000 and up. A tyical family of four plan may have a deductible of $5,000 and roughly $12,000 in premiums per year. If everyone is healthy, and the majority of insurance consumers are, then you have the privilege of paying for any health care costs throughout the year out of your own pocket while handing over thousands for insurance benefits you won’t use.  Rather than shopping around to save money, I’d be more likely to want to reach the deductible limit in order for my benefits to kick in. You want something to show for those dollars, right?

Second, it costs you to have a health savings acocunt (HSA/HRA). I had the pleasure of being covered by a UnitedHealthcare CDHP plan, who owns a bank specifically created to manage consumer and employer contributions deposited toward deductible expenses. When I received my account information, I made sure to read the fine print. It was full of charges – a monthly fee for the privilege of owning the account, a per-transaction fee any time I used the funds for health care related expenses, and even a fee for recieving statements. And I got the impression that reading the fine print had resulted in charges too. . .

So can someone please explain where the value proposition is in this for the consumer? High premiums (though lower than ‘traditional’ plans), large out-of-pocket expenses, nickled and dimed for the privilege of having an HSA/HRA, and none of the premiums being returned in the form of covered health care services – I just don’t see the value in it.

But the insurance companies sure do. Caa-ching!