Health care spending is spiraling out of control in part because consumers are becoming “increasingly insulated from the costs of health care,” Heritage Foundation experts Kathryn Nix and Alyene Senger argue in a new report.

Third-party payment for health care means that many Americans are unaware of the full cost of their care, meaning they make decisions with little regard for cost.

Plans that put consumers in control of their health spending, known as consumer-directed health plans or CDHPs, offer a promising solution to bridging this information gap by enabling consumers to make more cost-conscious decisions about their health care. They provide comprehensive coverage by combining a high-deductible health plan with a tax-preferred health savings account (HSA) or an employer health reimbursement arrangement (HRA).

Consumer-directed health plans are becoming more attractive for good reason, Nix and Senger argue:

 These types of CDHPs have become an especially attractive option for employers who offer health care coverage to their workers, since they have significantly lower premiums. Employers are able to make contributions to workers’ HSAs or HRAs, which can be used to cover part or all of the employee’s deductible and other medical expenses…CDHPs increase consumer engagement and awareness of the cost of routine health care expenses, meanwhile providing true protection against catastrophic events.

These plans work. In 2006, Indiana introduced plans with health savings accounts as an option for state employees. Enrollment has since increased substantially as a result, while costs have fallen.

Health care decisions can be positively influenced if consumers are empowered with information about provider quality and treatment options. Health care reforms that support this can be a dependable tool for reducing costs without sacrificing quality of care.

Read more about consumer-directed health plans.

Do you think that consumer-directed health plans offer a better way to control health costs than does President Obama’s plan?

Comments (11)

Darin Alvord - July 12, 2012

Absolutely. Government direction is antithetical to producing reduced cost to anything. The incentives, methodology and purpose in being cause government to be the wrong vehicle for efficiency in any market activity. By reason, by view of history and by examination of the influences already brought on by “Obama Care”, this is shown to be a truism. If one understands the superiority of a Capitalist society in controlling costs and improving goods and services produced, the case should be closed.

Bill Warren - July 12, 2012

Absolutely, moneycan be saved! We operate convenience careclinics, offering thousands in savings when compared to urgent care center and the emergency room — in some case doctor’s offices. Need to stop the insulation from costs by patients.

John Smith - July 12, 2012

These CDHPs are a lot better in structure than Obamacare (not to mention cheaper for both businesses and taxpayers). Combine these with a good comeback of the market (jobs) and some much needed tax reform, and we would be in much better shape than we are in now.

Leonard Hartman - July 12, 2012

Consummer directed Health Care will be more responsive than any government program.

Frank C Leitnaker, M.D. - July 13, 2012

Definitely a move in the right direction and this approach is the only current one that recognizes the source of the real waste in present medical care. However, Medical Consumers–double-speak term for “patients”–cannot reasonably be expected to become experts in medical cost-effectiveness but there is no doubt that the lack of concern for cost by “well-insured” patients and, therefore, their “providers”–double-speak for physicians–is THE primary reason that medical care is unreasonably expensive. There is an even better way to go but the medical profession itself must do it..

Skip Stein - July 13, 2012

While I do believe that this type of ‘Consumer Directed’ Health Plan will provide vital information and awareness of the True cost of medical care, the attention is miss-directed when we discuss HealthCare in general. If MORE focus would be on Health & Wellness achievable through good nutrition there wouldn’t be a need for the huge expense we now see in the USA. If anyone would simply open their eyes and observe how sick America is; it is primarily due to Lifestyle and lousy nutrition! Eating junk food, fast food, high fat, low fiber ‘food’ is killing America and making the pharmaceutical industry rich beyond measure.

Treatments are notoriously plagued with ‘side effects’ that most people ignore. Cancer treatments are poison; you CANNOT POISON a sick person well! Heart disease is treated with hugely expensive surgeries when just changing your nutrition will reverse most of the debilitating effects of heart disease! Diabetes 2 can be reversed in 30 days, simply by changing one’s diet; no drugs necessary.

These ‘cures’ are happening all over and constantly have been for decades but ‘mainstream press’, controlled by the big business of making people sick ignore the simple facts.

I am not just a crusader, I am a Nutritionally Cured Holistic Survivor of Prostate Cancer!

Better nutrition coupled with this type of insurance program would have dramatic effects in less than 12 months and turn America around. Combine education with revision of the Insurance Plans and you have a winning combination.

We all need Health Insurance for those times when accidents or catastrophic things occur. Even with excellent nutrition, people can get sick, but less often. Focus on this and you will have success and in the meantime saves literally millions of lives. Provide incentives for people to stay WELL, NOT get sick! Reduce premiums based on LESS use, not more use of healthcare, doctors etc. There are plenty of really sick people who need attention, unclog the doctor’s offices from people suffering from ‘voluntary diseases’! They do NOT have to get sick!


Skip Stein
Whole Foods 4 Healthy Living

Olga Ryan - July 13, 2012

CDHP’s are definitely a part of my plan (if I were in charge?!) My plan would require a complete and universal reversal in the system by requiring any health care provider to charge the patient and no third party. Insurance companies could still exist, but now they work for the consumer. Employers can still contribute, but to the patient’s chosen insurance plan. Some gov’t assistance would still exist: either in CDHP or HMO format. The preventive health parts of current CDHPs (mine provides well baby, annual exams and screening without personal cost, and the HSA for anything else) or HMO’s would be mandatory for taxpayer funded plans. The HSA part of gov’t provided assistance would have some oversight but allow alternative choices (i.e. acupuncture/chiropractics). The HMO choice is available for those who cannot or will not make informed decisions. All will still be informed by USPTSF and AHRQ services. I’d allow a six month adaptation phase for insurance companies to figure out how to re-route their services to patients rather than corporations etc. Health care providers would have an immediate relief in the mad requirements that currently exist on their time due to gov’t accountability, which allows them to drop their expenses and rates. Innovation is still a motivator, and best of all we would TRULY get patient/family centered health care (which is inherently safer). Olga Ryan, RN.

Kenneth A. Fisher, M.D. - July 13, 2012

See a little more detailed plan in our Washington Times article,

Steven Rankens - July 13, 2012

Absolutely YES! If you want to see government run health care, just any veteran who has deal with the VA. And if that still does not satisfy you, ask some Canadian’s how their “Government” run health care is working for them! If this administration claims to have transparency, has anyone seen or read the health care bill that was passed for the “People of the United States”, no one has, you call that transparency when it is shoved down our throats! These new taxes are aimed right at the middle class. The private sector has and always will do a better job thanks to American Ingenuity.

Fred Wilson - July 13, 2012

Yes. The house has made several proposals for things like tort reform, interstate competetion in insurance, risk pools, subsidies fo the truly needy, insurance coverage tailored to the customer … All of which can improve service and drive down costs.

Fred Wilson - July 13, 2012

Yes. The house has made several proposals for things like tort reform, interstate competetion in insurance, risk pools, subsidies fo the truly needy, insurance coverage tailored to the customer, putting the patient in the loop so he recognizes the cost of health care … All of which can improve service and drive down costs.

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