Consumer-directed health plans

Consumer-directed health plans (CDHPs) are high deductible health plans (HDHP), often paired with medical expense accounts funded with pre-tax dollars. These accounts may be Health Reimbursement Arrangements (HRAs) or Health Savings Accounts (HSAs). Employers fund HRAs and permit employees to use them for medical costs up to a stated limit. Employers may help fund HSAs, but employees manage funds and retain them when changing jobs. Federal law requires minimum deductibles for HSAs, but not for HRAs (Haviland 2011). HSA HDHPs have legal maximum out-of-pocket costs, but HRA HDHPs do not have legal limits on out-of-pocket costs (KFF-Employer health benefits 2013).

Expected Beneficial Outcomes (Rated)

  • Reduced health care costs

Evidence of Effectiveness

There is mixed evidence about the effects of consumer-directed health plans (CDHPs). Overall, CDHPs can reduce short-term health care costs by inducing participants to seek less health care (EBRI-Fronstin 2010, Haviland 2011).

CDHP participants have been shown to reduce office visits, recommended screenings (, Haviland 2011), procedures, and overall care (Haviland 2011). Participants are also more likely to reduce prescription drug use (), especially those with chronic conditions (Haviland 2011) such as hypertension (EBRI-Fronstin 2010). Most CDHPs cover preventive services; however, participants often do not realize this (EBRI-Fronstin 2010) and forgo preventive care (Haviland 2011). After several years with a CDHP, participants may increase emergency department visits ().

Families that have CDHPs have been shown to spend an average of 14% less on health care than families with traditional health plans (Haviland 2012). About two-thirds of the cost savings associated with CDHPs come from forgone care. The remaining cost savings come from choosing less expensive care alternatives such as using generic drugs, avoiding hospital stays, and visiting fewer specialists (RAND-Haviland 2012). CDHPs with HSAs appear to reduce spending more than CDHPs with HRAs, especially on outpatient services and prescription drugs (Haviland 2011).

Impact on Disparities

No impact on disparities likely

Implementation Examples

As of 2013, 23% of US firms offered an high deductible health plan with savings option. Large firms are more likely to offer the option than small firms; in 2013 43% of firms with 1,000 or more employees offered high deductible plans with a savings option (KFF-Employer health benefits 2013).

The Affordable Care Act (ACA) allows HDHPs, though over 70% of plans offered in the Marketplace have deductibles under $3,000, and out-of-pocket costs are capped at $6,350 for single coverage and $12,700 for family coverage ( 2014). Under ACA, all plans must offer free preventive care (PBS-Kane 2012). 

Implementation Resources

NCSL-HSAs and CDHPs - National Conference of State Legislatures (NCSL). State legislation and actions on health savings accounts (HSAs) and consumer-directed health plans, 2004-2013.

Citations - Evidence

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EBRI-Fronstin 2010 - Fronstin P. What do we really know about consumer-driven health plans? Washington, DC: Employee Benefit Research Institute (EBRI); 2010:Issue Brief No. 345.

Haviland 2011 - Haviland AM, Sood N, Mcdevitt R, Marquis MS. How do consumer-directed health plans affect vulnerable populations? Forum for Health Economics & Policy. 2011;14(2).

Haviland 2012 - Haviland AM, Marquis MS, McDevitt RD, Sood N. Growth of consumer-directed health plans to one-half of all employer-sponsored insurance could save $57 billion annually. Health Affairs. 2012;31(5):1009–15.

RAND-Haviland 2012 - Haviland AM, McDevitt R, Marquis MS, Sood N, Beeuwkes Buntin M. Skin in the game: How consumer-directed plans affect the cost and use of health care. Santa Monica: RAND Corporation; 2012: Research Brief 9672.

Fronstin 2013* - Fronstin P, Sepúlveda MJ, Roebuck MC. Consumer-directed health plans reduce the long-term use of outpatient physician visits and prescription drugs. Health Affairs. 2013;32(6):1126–34.

Citations - Implementation Examples

* Journal subscription may be required for access.

PBS-Kane 2012 - Kane J. High-deductible health plans: Your questions answered. PBS NewsHour. 2012. 2014 - Centers for Medicare & Medicaid Services (CMS). 6 things to know about deductibles in the Health Insurance Marketplace. 2014.

KFF-Employer health benefits 2013 - Employer health benefits: 2013 annual survey. Menlo Park: Henry J. Kaiser Family Foundation (KFF) and Health Research Educational Trust; 2013.

Date Last Updated

Sep 4, 2014