Consumer-directed health plans

Evidence Rating  
Evidence rating: Mixed Evidence

Strategies with this rating have been tested more than once and results are inconsistent or trend negative; further research is needed to confirm effects.

Health Factors  
Date last updated

Consumer-directed health plans (CDHPs) are high deductible health plans (HDHP) paired with medical expense accounts that are funded with pre-tax dollars and include information tools for consumers1. Medical expense 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, and retain control of funds if an employee leaves the organization. Employers may also help fund HSAs, but employees manage funds and retain them when changing jobs. Federal law requires minimum deductibles for HSAs, but not HRAs2. HSA HDHPs have legal maximum out-of-pocket costs, capped at $6,550 for single coverage and $13,100 for family coverage in 2017, and almost all HRA HDHPs do as well3.

What could this strategy improve?

Expected Benefits

Our evidence rating is based on the likelihood of achieving these outcomes:

  • Reduced health care costs

What does the research say about effectiveness?

There is mixed evidence about the effects of consumer-directed health plans (CDHPs). CDHPs reduce short-term health care costs by inducing participants to seek less health care1, 2, 4, 5, 6, 7.

Enrollment in CDHPs appears to reduce both appropriate and inappropriate care4, 5. Overall, CDHP participation has been shown to reduce office visits2, 4, 6, 8, 9, preventive care and recommended screenings2, 4, 6, 9, specialist visits6, and procedures2, particularly among individuals with lower incomes and chronic conditions6, 8. CDHP participants are more likely to reduce prescription drug use and, in some cases, can be less likely to adhere to medication regimens than peers with traditional health insurance2, 4, 6, 7, 9, 10, 11.  A three year study suggests little to no effect on cancer screening rates following CDHP enrollment, despite increases in screening before enrollment12.

CDHPs cover preventive services; however, participants often do not realize this7 and forgo preventive care2. In some cases CDHPs may increase hospitalizations, likely due to participants deferring needed care4. Recent studies have found little evidence that CDHP participation reduces the use of low value services1, 13.

The effect of CDHPs on emergency room use is unclear. Some studies suggest CDHPs reduce non-emergency ER visits. Other studies suggest CDHPs increase visits to the ER4. A six year study indicates ER visits and hospital admissions among low income individuals increase in their first year of CDHP enrollment, though not the second year6.  

Overall, switching to a CDHP can decrease outpatient spending compared to traditional plans6, 13, 14, though decreases in spending may erode over time15. In one study, for example, only spending on laboratory services and prescription drugs remained lower over four years11. CDHPs with HSAs appear to reduce spending more than CDHPs with HRAs, especially on outpatient services and prescription drugs2. However, one recent study suggests that enrollment in CDHPs may increase out-of-pocket spending and the likelihood of financial burden, particularly among enrollees with lower incomes or chronic conditions16. Another study suggests increased spending on procedures17.

A majority of cost savings and spending reductions associated with CDHPs are the result of forgone care5, 18, including reduced use of outpatient services1, 6, 15 and prescriptions1, 6, 11, 15. Cost savings can also result from choosing generic drugs, avoiding hospital stays, and visiting fewer specialists18.  

Healthier individuals are more likely to enroll in CDHPs than less healthy individuals19, and the spending reductions from CDHPs appear concentrated among the healthiest enrollees1. There is little evidence available on provision, use, or effectiveness of tools to assist decision making in CDHPs1. A study of a large self-insured firm found no evidence of price shopping, despite the availability of a comprehensive price shopping tool, among enrollees who have had a CDHP for two years5.

CDHPs are a type of high deductible health plan (HDHP). Individuals enrolled in HDHPs are more likely to face problems paying medical bills or to delay or forgo medical care than peers with traditional plans20. The higher the deductible on HDHPs, the higher the burden on enrollees with lower incomes21.

How could this strategy impact health disparities? This strategy is rated likely to increase disparities.
Implementation Examples

As of 2017, 24% of U.S. firms that offer health benefits offer high deductible health plans (HDHP) with savings options. Large firms are more likely to offer the option than small firms; 53% of firms with 200 or more employees offer high deductible plans with a savings option. Deductibles vary but, as of 2017, 24% of HDHP-covered workers were in a plan with a deductible of $3,000 or more3.

In 2016, 35% of privately insured adults were enrolled in an employment-based HDHP and 6% in a directly purchased HDHP20.

The Affordable Care Act (ACA) allows HDHPs; all plans must offer preventive care at no cost to the patient22.

Implementation Resources

NCSL-HSAs and CDHPs - National Conference of State Legislatures (NCSL). State actions on health savings accounts (HSAs) and consumer-directed health plans, 2004-2017.

ABIM-Choosing Wisely - Choosing Wisely. American Board of Internal Medicine (ABIM) Foundation.


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1 Bundorf 2016 - Bundorf MK. Consumer-directed health plans: A review of the evidence. The Journal of Risk and Insurance. 2016;83(1):9-41.

2 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).

3 KFF-Employer health benefits 2017 - KFF. Employer health benefits: 2017 annual survey.

4 Agarwal 2017 - Agarwal R, Mazurenko O, Menachemi N. High-deductible health plans reduce health care cost and utilization, including use of needed preventive services. Health Affairs. 2017;36(10):1762-1768.

5 Brot-Goldberg 2017 - Brot-Goldberg ZC, Chandra A, Handel BR, Kolstad JT. What does a deductible do? The impact of cost-sharing on health care prices, quantities, and spending dynamics. The Quarterly Journal of Economics. 2017;132(3):1261-1318.

6 EBRI-Fronstin 2016 - Fronstin P, Roebuck MC. The impact of an HSA-eligible health plan on health care services use and spending by worker income. Washington, D.C.: Employee Benefit Research Institute (EBRI); 2016: Issue Brief #425.

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

8 Reddy 2014 - Reddy SR, Ross-Degnan D, Zaslavsky AM, Soumerai SB, Wharam JF. Impact of a high-deductible health plan on outpatient visits and associated diagnostic tests. Medical Care. 2014;52(1):86-92.

9 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.

10 NBER-Huckfeldt 2015 - Huckfeldt PJ, Haviland A, Mehrotra A, Wagner Z, Sood N. Patient responses to incentives in consumer-directed health plans: Evidence from pharmaceuticals. National Bureau of Economic Research (NBER). 2015: Working Paper 20927.

11 Fronstin 2013a - Fronstin P, Sepulveda MJ, Roebuck MC. Medication utilization and adherence in a health savings account-eligible plan. American Journal of Managed Care. 2013;19(12):e400-e407.

12 Eisenberg 2017 - Eisenberg MD, Haviland AM, Mehrotra A, Huckfeldt PJ, Sood N. The long term effects of “consumer-directed” health plans on preventive care use. Journal of Health Economics. 2017;55:61-75.

13 Reid 2017 - Reid RO, Rabideau B, Sood N. Impact of consumer-directed health plans on low-value healthcare. American Journal of Managed Care. 2017;23(12):741-748.

14 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.

15 Haviland 2016 - Haviland AM, Eisenberg MD, Mehrotra A, Huckfeldt PJ, Sood N. Do “consumer-directed” health plans bend the cost curve over time? Journal of Health Economics. 2016;46:33-51.

16 Zhang 2018 - Zhang X, Trish E, Sood N. Financial burden of healthcare utilization in consumer-directed health plans. American Journal of Managed Care. 2018;24(4):e115-e121.

17 Ellis 2016 - Ellis RP, Zhu W. Health plan type variations in spells of health-care treatment. American Journal of Health Economics. 2016;2(4):399-430.

18 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.

19 McDevitt 2014 - McDevitt RD, Haviland AM, Lore R, et al. Risk selection into consumer-directed health plans: An analysis of family choices within large employers. Health Services Research. 2014;49(2):609-627.

20 NCHS-Cohen 2017 - Cohen RA, Zammitti EP. High-deductible health plans and financial barriers to medical care: Early release of estimates from the National Health Interview Survey, 2016. Hyattsville, MD: National Center for Health Statistics (NCHS); 2017.

21 Abdus 2016 - Abdus S, Selden TM, Keenan P. The financial burdens of high-deductible plans. Health Affairs. 2016;35(12):2297-2301.

22 PBS-Kane 2012 - Kane J. High-deductible health plans: Your questions answered. PBS NewsHour. 2012.