One Area Where Health Costs are Dropping

It is remarkable in the current debate over health care reform how policymakers are ignoring the one thing that has been proven to work: consumer-driven health care.

This is an approach that has proven to work after six years of testing by many millions of people in real-world conditions all across the nation. Consumer-driven health plans empower individuals by taking money away from third-party payers and putting it in the hands of consumers to spend as they wish.

Now that one out of five American consumers under age 65 is paying some of his or her own bills through health savings accounts, high deductible plans and similar consumer-driven plans,  policy makers are beginning to see a profound effect on the service side of the ledger. Consumer-driven health (CDH) plans cost 25 to 40 percent less than PPOs and HMOs, and their rate of cost increases from year to year is one-third of that of PPOs and HMOs, according to a wide variety of health plans and benefits consulting firms.

Last fall the Kaiser Family Foundation's annual employer survey found the average family premium for an HMO totaled $13,100, while a health savings account (HSA) program cost only $9,100. The premiums for CDH plans at WellPoint and Cigna actually fell over a two-year period, while premiums for their HMO and PPO plans rose about 10 percent.

Costs for CDH plans are falling because people are becoming more invested in their own health. Consumers with a CDH plan participate in wellness and prevention programs at a higher rate than others, and they choose generic medications over name brands, avoid using hospital emergency rooms in favor of retail clinics or their own doctor, and comply better with recommended treatment programs.

By any measure, CDH is a rip-roaring success, confirmed last year by the Centers for Disease Control and Prevention. It found 20 percent of the under-65 population is now in some version of a CDH plan. That is an astonishing rate of growth for an approach that has been around only for six years or so.

Comments (3)

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  1. Joe S. says:

    Greg, are you surprised that Congress is not paying a bit of attention to these results?

  2. Ron Greiner says:

    Our HSA is a PPO with up to 5 different networks in any one zip code. We strive in giving the consumers the most HSA choices. Of course we also have an HSA with no network too. Consumers need more options, more choices, more freedom.

    Greg, don’t forget that we do customer service on HSAs that are over 12 years old. That other company, Golden Rule, didn’t enroll the first MSA as some uninformed people have reported.

  3. Kartik says:

    All the more reason to encourage consumer driven approaches. Insurance should ONLY be for major events, like cancer treatment and transplants. It makes NO sense that insurance companies or the government pay for both routine expenses as well as major treatments – no wonder it’s so expensive!! Allow for competition on the basis of price and quality! HSAs allow people to save up money for routine expenses.

    Michael Moore is a pain, I have no respect for him. In SICKO, he never goes in depth at WHY costs are high – and that too much third party involvement and this entitlement mentality. Here’s my theory, instead of wasting his time promoting failed systems (I live in Canada, we have good doctors but our system is an overbloated mess too), he could’ve spent some of his money (which he has A LOT OF) to help those who couldn’t afford the very expensive procedures.