Consumer directed health care is a trend in the health insurance industry that many hope will lower health care costs. Employers that provide health insurance benefits have borne the burden of double-digit increases in premiums over the last several years, to the point where many worry that U.S. employers are not able to compete with their global rivals. Managed care models have not had the level of success desired by business, and have garnered employee resentment because they interfere with patient choice. The philosophy of consumer directed health care is that if a person has to use his/her own money to pay for health care, that person will have more motivation to behave like an educated consumer – that is, to seek out the lowest-cost, highest-quality health care provider, and to forgo unnecessary care.
A typical vehicle for consumer directed health care is to combine a high deductible health plan (HDHP) with a health savings account (HSA) as an option for employees. The HDHP typically has a lower premium cost (to the employer and employee) than more traditional HMOs and PPOs. To make this option even more attractive, some employers may contribute toward the employee’s HSA. HDHP’s and HSA’s work together, because to offset some of the risk of the high deductible feature, the employee can fund an HSA on a tax-favored basis. The funds in the HSA can then be used to pay out-of-pocket expenses until the deductible is satisfied, when the HDHP will start to pay. The HSA is owned by the employee and is not forfeited when the employee changes jobs. The funds in the HSA can earn income tax-free.
Since the individual owns his/her HSA, he/she will have an incentive to economize on health care. Some ways of doing this are well known, like seeing a primary care physician for non-emergencies rather than going to a hospital emergency room. The full benefit of consumer directed health care will not be realized until comparative price and quality information is widely available, so that you can make an informed choice in choosing your doctor, just as you can in choosing your new car.