Weighing the Risks of Consumer-Driven Health Plans for Families

Abstract

Once a year most employed families must choose which health insurance benefit plan best meets their health and financial needs. Most often these decisions are made on the basis of premium price, anticipated health care requirements, past experience, and network physicians and hospitals. In the last couple of years, in response to persistent double-digit premium inflation, new insurance products and spending accounts have been added to the mix of choices that are offered to families. The most popular of the new “consumer-driven” health options are high-deductible health plans (HDHPs) coupled with health savings accounts (HSAs). To many families, consumer-driven health plans (CDHPs) are attractive because premiums in HDHPs are typically lower than in preferred provider organization (PPO) or health maintenance organization (HMO) plans and money in tax-free HSAs can be accumulated over time. To many employers, they are attractive because more financial decision-making and risk can be shared with employees. Here we weigh the coverage, cost, quality, and practice management trade-offs that may result when families select CDHPs. Using a case study of a real Midwest company's health insurance offering and a hypothetical family with 2 children, it is possible to understand both the lure and trap of these products, especially for low-income families and previously uninsured families, as well as for healthy families. Becoming informed about HDHPs and HSAs (and other CDHP options) is essential for families and pediatricians. Although in 2004 only 10% of employers offered an HDHP, a much higher proportion of employers (27%) are considering offering such coverage by 2006.1 At this point, most employers are offering HDHPs as one of several choices, not as the only option. Unfortunately, there are no reliable national estimates of the number of adults and children enrolled in HDHPs with HSAs. According to the Internal Revenue Code, an HDHP … Address correspondence to Margaret McManus, MHS, Maternal and Child Health Policy Research Center, 750 17th St NW, Suite 1100, Washington, DC 20006. E-mail: mmcmanus{at}mchpolicy.org