Consumer and Provider Costs
Insurance! This dreaded word, and its associated effects, has become a necessity in life. Today we need insurance for everything – our house, our vehicle, our life, and our health! Without health insurance, also known as a safety cushion, we tend to feel exposed. Most working class Americans used to get traditional insurance plans (TIP) where a higher premium was charged each month. The high premium cost remained roughly stagnant each month, regardless of whether healthcare services were used or not. In essence, the premiums were a precautionary monthly payment, in case something happened and an insured individual needed medical assistance (Rodeck, 2018). As the premiums increased each year, people longed for a more economical solution. In the early 2000's, consumer driven health plan (CDHP) were introduced. CDHP controls expenses by giving more financial responsibilities to the health insurer (Rook, 2018). We will analyze the differences between a TIP and CDHP.
The Two Options
Initially, CDHP was perceived as futile because "the high deductible and tax-exempt nature of the savings account meant that both the employer and the employees were spending less money on health care upfront, but if the employee got sick the majority of the cost was deferred onto them, whereas with a plan with a lower deductible the employee and employer would share the costs more evenly" (Rook, 2018). The main idea behind CDHP was that the buyers have the authority to make decisions regarding what kind of health care coverage they would like to receive and by analyzing the premium pricing. It also decreases the use of unnecessary health services due to the high deductibles. Most employers also offer discount incentives if an employee takes precautionary measures to stay healthy. Any saved money can simply be used the following year or can be recycled to any impending health related costs which includes retirement ("Why a Consumer Driven Health Plan (CDHP)", 2018). Before making a decision regarding what plan is most suitable, consumers need to understand that CDHP's are frequently interchanged with high-deductible health plan (HDHP). A HDHP is a type of CDHP, which comprises of a minimum deductible, usually high, in the early thousands.
Pros
There seem to be many added benefits of going the CDHP way, as opposed to the traditional insurance way. According to the "Why a Consumer Driven Health Plan (CDHP)" (2018) website, over time, CDHP steadies or even decreases insurance premiums, it creates the much-needed awareness of choosing the right plan at the most beneficial cost, it increases consumer satisfaction, it helps employees make healthy decisions which benefit them via additional annual discounts, and it also helps maintain a balanced health management, which is an absolute necessity.
From an employer's perspective, it reduces their financial burden towards employee coverage. Although the money saved is not significantly high, to a healthcare entity, every penny matters. The biggest indirect advantage for the consumer is that they spend less on unnecessary care since the deductibles are so high. Another positive advantage is that different treatment options, and generic drugs, are considered because they might save a lot of money over the year. For example, if a splint can treat the problem, the patient will not ask for expensive oral medications; if oral medications can treat the problem, the patient will not ask for a steroid injection; if a steroid injection can treat the problem, the patient will not ask for surgery. Non-invasive or invasive surgeries can be one of the last options since that would mean that the minimum deductible amount will be the patient's responsibility (Rook, 2018).
Cons
In all reality, when picking a healthcare plan, it is always good to focus on how and why a certain plan is not the right pick. In case of CDHP, consumers have reported a 25% lower satisfaction rate compared to traditional plans. The primary reason could be that CDHP's require the consumer to differentiate between necessary and unnecessary care. Not all, in fact most, consumers do not understand the medical language, and usually agree and comply with the providers diagnosis (Rook, 2018). The biggest drawback of HDHP within CDHP's is that the overall yearly out-of-pocket expenses, which include deductibles, co-pays, coinsurance, can reach to about $6,550 for one person or about $13,100 for the whole family. CDHP's can save needless expenses, but it may also raise the risk for a patient who might not be seeking help for smaller problems that can turn into something big unless caught in time. Overall, CDHP can have diminutive importance for certain consumers (Rook, 2018).
Conclusion
In conclusion, CDHP gives the power back to the insurer. It gives the consumer an opportunity to take control of their healthcare needs and become more knowledgeable. It is, by no means, flawless, but if tweaked, it has a potential to be quite favorable to the consumer. Majority of people seeking medical services are not aware of what is required versus what is avoidable. If this awareness is created, certain CDHP's can be extremely powerful (Rook, 2018). From an optimistic perspective, giving consumers the responsibility of regulating their finances can eventually slow the increase in health care expenses (Rodeck, 2018).
References
Rodeck, D. (2018). How do consumer driven health plans compare to traditional insurance? Retrieved from https://thebenefitsguide.com/consumer-driven-health-plans-compare-traditional-insurance/
Rook, D. (2018). The pros and cons of consumer-driven healthcare. Retrieved from https://www.griffinbenefits.com/employeebenefitsblog/consumer-driven-healthcare-cdhc-cdhp
Why a consumer driven health plan (CDHP)(2018). Retrieved from https://www.healthplan.org/agents/services/consumer-driven-services/why-CDHP
Insurance! This dreaded word, and its associated effects, has become a necessity in life. Today we need insurance for everything – our house, our vehicle, our life, and our health! Without health insurance, also known as a safety cushion, we tend to feel exposed. Most working class Americans used to get traditional insurance plans (TIP) where a higher premium was charged each month. The high premium cost remained roughly stagnant each month, regardless of whether healthcare services were used or not. In essence, the premiums were a precautionary monthly payment, in case something happened and an insured individual needed medical assistance (Rodeck, 2018). As the premiums increased each year, people longed for a more economical solution. In the early 2000's, consumer driven health plan (CDHP) were introduced. CDHP controls expenses by giving more financial responsibilities to the health insurer (Rook, 2018). We will analyze the differences between a TIP and CDHP.
The Two Options
Initially, CDHP was perceived as futile because "the high deductible and tax-exempt nature of the savings account meant that both the employer and the employees were spending less money on health care upfront, but if the employee got sick the majority of the cost was deferred onto them, whereas with a plan with a lower deductible the employee and employer would share the costs more evenly" (Rook, 2018). The main idea behind CDHP was that the buyers have the authority to make decisions regarding what kind of health care coverage they would like to receive and by analyzing the premium pricing. It also decreases the use of unnecessary health services due to the high deductibles. Most employers also offer discount incentives if an employee takes precautionary measures to stay healthy. Any saved money can simply be used the following year or can be recycled to any impending health related costs which includes retirement ("Why a Consumer Driven Health Plan (CDHP)", 2018). Before making a decision regarding what plan is most suitable, consumers need to understand that CDHP's are frequently interchanged with high-deductible health plan (HDHP). A HDHP is a type of CDHP, which comprises of a minimum deductible, usually high, in the early thousands.
Pros
There seem to be many added benefits of going the CDHP way, as opposed to the traditional insurance way. According to the "Why a Consumer Driven Health Plan (CDHP)" (2018) website, over time, CDHP steadies or even decreases insurance premiums, it creates the much-needed awareness of choosing the right plan at the most beneficial cost, it increases consumer satisfaction, it helps employees make healthy decisions which benefit them via additional annual discounts, and it also helps maintain a balanced health management, which is an absolute necessity.
From an employer's perspective, it reduces their financial burden towards employee coverage. Although the money saved is not significantly high, to a healthcare entity, every penny matters. The biggest indirect advantage for the consumer is that they spend less on unnecessary care since the deductibles are so high. Another positive advantage is that different treatment options, and generic drugs, are considered because they might save a lot of money over the year. For example, if a splint can treat the problem, the patient will not ask for expensive oral medications; if oral medications can treat the problem, the patient will not ask for a steroid injection; if a steroid injection can treat the problem, the patient will not ask for surgery. Non-invasive or invasive surgeries can be one of the last options since that would mean that the minimum deductible amount will be the patient's responsibility (Rook, 2018).
Cons
In all reality, when picking a healthcare plan, it is always good to focus on how and why a certain plan is not the right pick. In case of CDHP, consumers have reported a 25% lower satisfaction rate compared to traditional plans. The primary reason could be that CDHP's require the consumer to differentiate between necessary and unnecessary care. Not all, in fact most, consumers do not understand the medical language, and usually agree and comply with the providers diagnosis (Rook, 2018). The biggest drawback of HDHP within CDHP's is that the overall yearly out-of-pocket expenses, which include deductibles, co-pays, coinsurance, can reach to about $6,550 for one person or about $13,100 for the whole family. CDHP's can save needless expenses, but it may also raise the risk for a patient who might not be seeking help for smaller problems that can turn into something big unless caught in time. Overall, CDHP can have diminutive importance for certain consumers (Rook, 2018).
Conclusion
In conclusion, CDHP gives the power back to the insurer. It gives the consumer an opportunity to take control of their healthcare needs and become more knowledgeable. It is, by no means, flawless, but if tweaked, it has a potential to be quite favorable to the consumer. Majority of people seeking medical services are not aware of what is required versus what is avoidable. If this awareness is created, certain CDHP's can be extremely powerful (Rook, 2018). From an optimistic perspective, giving consumers the responsibility of regulating their finances can eventually slow the increase in health care expenses (Rodeck, 2018).
References
Rodeck, D. (2018). How do consumer driven health plans compare to traditional insurance? Retrieved from https://thebenefitsguide.com/consumer-driven-health-plans-compare-traditional-insurance/
Rook, D. (2018). The pros and cons of consumer-driven healthcare. Retrieved from https://www.griffinbenefits.com/employeebenefitsblog/consumer-driven-healthcare-cdhc-cdhp
Why a consumer driven health plan (CDHP)(2018). Retrieved from https://www.healthplan.org/agents/services/consumer-driven-services/why-CDHP