Understanding Costs Critical for Consumer-Directed Health Plans

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According to the US Government Accountability Office (GAO), more than 60 percent of American employers are expected to offer a consumer-directed health plan (CDHP) in 2011 in an effort to curb costs. With a CDHP plan, an enrollee is responsible for more of the decision making process in obtaining healthcare, making knowledge of the costs involved a critical component.

Prescription Drugs Offer the Greatest Opportunity for Cost Savings

A consumer-directed health plan combines a high-deductible health plan with a tax-advantaged account – a health reimbursement arrangement or HRA - that enrollees can use to pay for healthcare expenses. The GAO estimates that CDHP enrollees spend $2,000 less than those with traditional health insurance plans. Large companies that currently offer CDHP’s include Microsoft, Kraft, GE and General Motors.

Read: Consumer-Directed Health Plans Encourage Preventive Care

In an HRA, the enrollee must pay a premium to access covered services, which are also subject to a deductible. Some services, such as preventive care services, may be exempted from the deductible. HRA account funds are used to pay for these qualified medical expenses, and the employee must keep track of the available funds in their account. If the funds are exhausted before the deductible is met in a given year, the difference must be paid out-of-pocket.

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Because of this feature, enrollees must be especially cognizant of the cost of their healthcare services. The Healthcare Transparency Index has been issued to provide consumers with ongoing trends about healthcare costs.

Read: Comparison of CDHC, Non-CDHC Healthcare Insurance Users Shows Some Differences

The HTI has found that prescription drugs offer the highest opportunity for cost savings. In general, switching to a generic drug offers more cost savings than remaining on a brand name medication. The generic drugs offering the highest opportunity for costs savings include pravastatin sodium (cholesterol), sertraline (depression), metoprolol succinate (high blood pressure) and omeprazole (acid reflux).

Costs for prescribed drugs can vary greatly, so consumers are encouraged to “shop” around when purchasing their medications. For example, the index finds that a patient on Abilify, a drug prescribed for the treatment of depression, can save as much as $2500 a year just by making a pharmacy change. Patients on Lipitor can save close to $50 a month by switching pharmacies.

In addition to prescription medications, other areas with the highest opportunities for cost savings include dental care, routine primary care physician office visits, psychotherapy, physical therapy and chiropractic care.

“The way healthcare costs are hidden from the people who need to understand them has to change,” said Christopher Parks, CEO of change:healthcare. “We created the Healthcare Transparency Index to highlight the most significant healthcare trends, and even more importantly, the cost savings opportunities that we believe every person should understand BEFORE they are forced to make important decisions about their care.”

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