Number of Adults with Consumer-Driven Health Plans Grows to 21 Million

A new survey from the Employee Benefits Retirement Institute (EBRI) reports that 21 million adults have health plans that qualify them to open a Health Savings Account or a Health Reimbursement Arrangement.

We refer to these plans as Consumer-Driven Health Plans (CDHP) because they offer lower premiums in return for higher deductibles than traditional plans. Although the groundwork for these plans was laid as early as 1978, they really took off in 2004, as a result of the 2003 Medicare Modernization Act, which allowed any working American to sign up for such a health plan.

An added benefit is the Health Savings Account (HSA) or Health Reimbursement Arrangement (HRA), which are means whereby the individual can avoid tax on income used to pay medical bills.

In 2013, according to the survey:

  • 11.8 million adults were enrolled in a plan with an HSA or HRA;
  • 9.3 million more were enrolled in a plan, but had not opened an HSA or HRA;
  • Including children, 26.1 million, 15 percent of persons with private insurance, had such a plan.

The point of these plans is to make patients more sensitive to prices. It has worked. According to the survey, patients with these plans are more likely to ask physicians for less expensive treatment options or use online cost-tracking tools to manage medical expenses.

A number of sources confirm that these plans have succeeded in bending the cost curve of medical care. Although Obamacare is driving health-insurance premiums up ruthlessly, we can be grateful that Consumer-Driven Health Plans, Health Savings Accounts, and Health Reimbursement Arrangements have not been crushed by its regulatory onslaught.

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For more on consumer-directed healthcare, see Priceless: Curing the Healthcare Crisis, by John C. Goodman, “the father of Health Savings Accounts” (The Wall Street Journal).

John R. Graham is a former Senior Fellow at the Independent Institute.
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