Consumer-Driven Health Plans Don't Attract Americans Yet

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Americans have not yet warmed to consumer-driven health insurance plans, a relatively new kind of coverage that offers reduced premiums but carries higher annual deductibles.

Enrollment in consumer-driven plans remains low, and satisfaction continues to lag when compared with more comprehensive health insurance, according to a survey released today by the Employee Benefit Research Institute (EBRI) and The Commonwealth Fund, nonpartisan organizations.

The second annual EBRI-Commonwealth Fund Consumerism in Health Care Survey also finds that, despite the expectations of some policymakers that the lower premiums and tax benefits of consumer-driven health plans (CDHPs) would substantially reduce the number of people without health insurance, adults in these plans were no more likely to have been uninsured before enrolling in their plans than are those with more comprehensive insurance coverage.

Dallas Salisbury, EBRI president and chief executive officer, said, "It will be interesting to see if continually rising health care costs prompt more workers to conclude that the tradeoff of lower premiums for higher deductibles, and potentially higher out-of-pocket costs, is worth it. The survey does find participants in consumer-driven health plans are more cost-conscious. Clearly, the choice becomes easier when some of the drawbacks of first-generation consumer-driven plans are removed, such as lack of protection for prevention and chronic care management within the deductible that may cause patients to delay or avoid getting needed care."

Karen Davis, Commonwealth Fund president, said, Despite their tax benefits, consumer-driven health plans are not attracting large numbers of adults without insurance coverage, relative to other insurance. New strategies are needed to provide affordable and meaningful insurance to the nation's 47 million uninsured.

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A full report on the survey is published in the December 2006 EBRI Issue Brief. The report is available on both organizations' Web sites, www.ebri.org and www.cmwf.org

The survey defined consumer-driven and high-deductible plans as having deductibles of $1,000 or more for employee-only coverage and $2,000 or more for family coverage. According to the survey, consumer-driven plans also feature one of two kinds of tax-exempt savings accounts: health savings accounts (HSAs) and health reimbursement arrangements (HRAs). Employers and employees can contribute pre-tax income to HSAs, while only employers can contribute to HRAs. Employees can use money in the accounts, without tax penalty, to pay for medical expenses not covered by their health plans.

The survey, a nationally representative sample of individuals with consumer-driven and high-deductible health plans and more comprehensive health plans, found that:

  • One percent of the privately insured U.S. population ages 2164, or 1.3 million individuals, were enrolled in consumer-driven health plans in September 2006, unchanged from the year before despite the widespread attention the new plans have received. Another 7 percent, or 8.5 million adults, had plans with deductibles high enough to qualify for health savings account but did not have an account.

  • Ten percent of consumer-driven plan enrollees were uninsured before being covered by their current plan, compared with 20 percent among high-deductible health plan enrollees and 24 per-cent among those with comprehensive coverage.

  • A large majority of people with high-deductible health plans do not have a savings account, mainly because they can't afford to contribute to it. About one-third of the 1.3 million adults in consumer-driven plans do not receive employer contributions to their accounts, and nearly 1 in 5 does not contribute their own money to the accounts. People with lower incomes who have consumer-driven plans are much less likely to contribute to their accounts than are those in higher-income households.

  • People in consumer-driven plans spend large shares of their income on out-of-pocket costs and premiums. Forty-four percent of adults in
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