There has been quite a bit discussion among readers of this blog about what will become of consumer-driven health care now that the health care reform package has become law. Some worry the regulations yet to evolve will strangle CDHC plans out of existence; others say that the new universal coverage requirements of the law will allow these plans to flourish.
A new analysis of data collected by New York-based benefit consultant Mercer LLC would indicate that the verdict will come down on the side of those who look for the adoption rate for CDHC plans to explode.
According to the analysis of data Mercer collected from its 2009 health care cost survey of nearly 3,000 employers, more than one in three employers have at least some employees for whom coverage would be considered "unaffordable" under the new health care reform law.
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Beginning in 2014, employers will be subject to stiff penalties if premiums paid by full-time employees exceed 9.5 percent of their household income. The annual penalty for unaffordable coverage will be $3,000 for each full-time employee who receives government assistance and uses it to buy coverage in state insurance exchanges, up to a maximum of $2,000 times all of an employer's full-time workers, excluding the first 30.
Here is where consumer-driven health plans come into play. They are health insurance plans that allow members to use personal health savings accounts, health reimbursement arrangements, or similar medical payment products to pay routine health care expenses directly, while a high-deductible health insurance policy protects them from catastrophic medical expenses.
Not only do these higher deductible policies cost less, they are showing great promise for controlling costs over the longer haul by giving patients greater control over their own health budgets. A 2009 study by the insurer CIGNA found that in the first year, normalized medical trend for CIGNA CDH plans was -3.3 percent vs. +10.6 percent for traditional plans — almost a 14 percent difference.
There will continue to be doomsayers who will predict doom for CDHC, but more and more, the smart money is betting they will actually be the engine that will allow health care reform to deliver on its promise to cover more Americans without breaking the bank.
Subscribe to Benefits Selling's new e-newsletter, Consumer Driven Online, and stay on top of this fast-growing market.
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