In the United States, there is the emergence of the new type of third-party-reimbursement healthcare plan, CDHPs. The objective of the CDHPs is to facilitate effective control of the costs and improvement of the quality of care through creating room for the consumers to manage or take control of their healthcare decisions. Consumers have the chance to decide on how they want to spend their healthcare dollars following what they deem important or significant. The development of the CDHPs aims at encouraging participants to enroll in specific wellness programs and improvement of the lifestyles. Some of the specific types of CDHPs include HRA (Health Reimbursement Accounts), FSA (Flexible Spending Accounts), and HSA (Health Savings Account). In spite of these developments, there are various challenges or concerns on CDHPs such as lack of effective understanding among the consumers on the tools to manage their healthcare effectively creating long-term implications on their healthcare outcomes and success of the program. The purpose of this project is to evaluate CDHPs following the developments in the context of the United States.
Notably, CDHPs is the acronym for Consumer-Directed Health Plans. The first CDHP came into limelight in the late 1990s under the influence of health e-commerce ventures. The designing of the products sought to incorporate consumers to have a direct influence on the procurement of their health care (Barry, Cullen, Galusha, Slade, & Busch, 2008). Since then, the CDHPs have focused on the utilization of the conceptual model aimed at making cost and quality information evident at the disposal of the consumers majorly through the internet for the creation of the more efficient health care market in the 21 st century. Following the inception of the CDHPs, the programs continue to undergo evolution shifting the designing of the health benefit coupling high deductible health plan with the account for the pay of the first dollar medical care expenses.
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CDHPs create room to encourage employees on the need to make informed decisions while spending wisely on their health care procurement, thus, substantial reduction in the cost of operations and financial output for the different corporations. Since 2000s, the CDHPs have had the chance to grow and develop into prominent programs (Barry, Cullen, Galusha, Slade, & Busch, 2008). The CDHPs depict the promise of reining in healthcare spending through provision of the greater stake to the consumers in the procurement of their healthcare. In spite of this, there is little known information on the experiences of the employers concerning the products at their disposal.
HSA, HRA, and FSA Analysis
There are three types of CDHPs. The first type of CDHPs is HSAs referring to the true bank account, which consumers use to deposit financial resources or money utilized for their future healthcare expenses. In the Health Savings Accounts, consumers can contribute their financial resources, as well as deduct their contributions upon filing their income taxes. Moreover, family members can also contribute to the consumers’ HSAs. Regardless of the contributor, the money belongs to the owner of the account. Just like the case of the regular bank account, HSAs have the chance to earn interest. Consumers have to utilize the qualifying HDHP (high-deductible health plan) to go with the HSAs (Hibbard & Cunningham, 2008).
For example, except preventing care in certain circumstances, it is ideal for the HDHPs to have the deductible of $1,150. One of the greatest things on the HSAs is the chance for the consumers to use the money in their respective accounts in the process of paying for the deductible expenses. In case of unused financial resources in the HSAs, consumers can experience carrying over of their money from year to year as evident in the cases of the regular savings accounts, thus, the chance for the consumers to save money for their future medical expenses (Hibbard & Cunningham, 2008). Critically, most banks, credit unions, and various financial institutions offer HSAs coming with checkbooks, as well as debit cards for the consumers to access their account funds. It is ideal to note that consumers remain responsible for their receipts and documentation to prove that they use their HSAs appropriately just in case there are IRS audits.
Other than HSAs, there are HRAs as part of the CDHPs in the modern context. From a definitional perspective, HRA comes out as the account-like arrangement integrated by the employers to enable their reimburse qualifying medical expenses for their employees. As opposed to the HSAs, HRAs are reflections of the bookkeeping arrangements between employee and employer. In this aspect, the employer must avail a specific amount for the employee in the form of the HRAs (Health Reimbursement Arrangements). Based on the plan design, there are HRAs that come with the debit cards, which employees have the chance to use in the process of accessing their funds (Hibbard & Cunningham, 2008). In the absence of such cards, consumers or employees must offer documentation on their incurred expenses before reimbursement by direct deposit or check.
Finally, there are the FSAs as part of the CDHPs. From a definitional perspective, Flexible Spending Accounts (FSAs) refer to the element of reimbursement account by the employers allowing employees to set aside financial resources from their paychecks before taxations in the course of paying for their family’s healthcare costs in the financial year. In such approaches, employees can decide on much to set aside in their FSAs. This is because of the act of spending pre-tax money on the healthcare practices, thus, the chance to pay fewer taxes resulting in a higher portion of their salaries in spending on other things.
Different Segments of the Population & Socioeconomic Group Likely to Benefit Most
CDHPs are critical in the provision of significant opportunities in changing or transforming consumers’ conception of health care spending. In spite of this, the success of CDHPs is contingent in the demonstration of the more cost-effective health insurance product in comparison to the existing PPOs, as well as the HMOs. In this aspect, there is a need for the serious, as well as transparent accounting of the cost differences among the plan designs aimed at addressing the queries of the CDHPs in the improvement of the healthcare outcomes among the patients. In the healthcare sector, there are many ways of segmenting the population (Hibbard & Cunningham, 2008). For example, it is possible to segment a population by age; thus, the essence of being an age group.
Similarly, it is possible to segment the population based on the standard of living, income levels, and level of education. It is ideal for CDHPs to benefit the diverse groups or segments of the populations. According to recent research, CDHPs will have substantial implications on the vulnerable groups (Dixon, Greene, & Hibbard, 2008). From this perspective, CDHPs will likely benefit the vulnerable groups the most in comparison to the general population in modern society. CDHPs’ enrollees with little to no income, as well as chronic illnesses, will benefit the most. These are the individuals with the opportunity to optimize the plans in taking charge of the procurement of their healthcare. The identified population is individuals who engage in reporting cost access issues, as well as ending care.
In the recent years, such enrollees with low-income levels continue to decline in the number of people visiting doctors’ offices, thus, the decision to go to the ER for the serious conditions compared to their counterparts with the higher income levels. Notably, integration of the CDHPs will have substantial implications on the low-income earners and chronically ill populations in equal measure. In this aspect, the deductible plans and overall spending will be on the decrease, as the consumers will have the chance to participate in the management of their procurement of healthcare.
Incentives
There are types of incentives to providers for efficiency in the delivery of healthcare services. In the provision of efficiency in the delivery of healthcare services, providers focus on the exploration of economic incentives. Additionally, they focus on the assessment of financial incentives. Other forms of incentives include the performance and physician to mention a few. There are different practitioners in these practices, such as the provider, the patient, or the CDHP. Among these practitioners, it is ideal to note that the patient is responsible for the financial risk rather than the provider of the CDHP (Dixon, Greene, & Hibbard, 2008). From this perspective, rather than just having direct involvement in the procurement of their health care, patients have the expectations of bearing the financial risk in the optimization of the healthcare outcomes.
Recommendations
In the integration of the CDHP, employees have the chance to benefit from their savings, as well as experience smaller premiums offering more or substantial control concerning their procurements of health care. Additionally, it is ideal for the individuals to consider using the CDHPs as platforms for the substantial decrease in the employees’ costs while enabling the employers to utilize the option of providing lower premium costs. Employees can decide on the appropriate type of CDHPs they might wish to use in the improvement of their health outcomes. For example, employees have the chance to utilize HRAs, HSAs, or FSAs in having control over their procurement of the health care resulting in informed decisions. In recent years, there has been substantial research showing that enrollees do not experience the desired satisfaction because of the high out of pocket expenses resulting from the plans or programs (Haviland, Eisenberg, Mehrotra, Huckfeldt, & Sood, 2016).
However, it is ideal to note the diversity in the tax savings through unique CDHPs as identified in the above illustrations of the accounts. Employees can use low premiums that are best for their conditions. CDHPs have the chance to contribute to the reduction of the costs while enabling enrollees to optimize best or informed decisions in the improvement of their health care, as well as those of their respective families in the highly complex health care needs in the 21 st century. I would say that CDHPs have great benefits for the employees as they can make their own decisions. It is highly appealing based on the essence of the employees having the right to decide on how they are going to spend their money, as well as what medical expenses to tackle or take on. In this process, employees can experience substantial risks.
Nonetheless, these employees have the opportunities to enjoy their savings through optimization of the identified types of CDHPs in the context of the United States. It is also ideal for the physicians to benefit from the CDHPs because of the minimization of the administrative work or less paperwork in the delivery of the desired healthcare practices in pursuit of the improved health care outcomes. Integration of the CDHPs is ideal in enabling physicians to obtain critical compensation for their access, communication, and professionalism attributes or abilities in the highly complex healthcare in modern society. Younger enrollees also have the chance to gain more from the CDHPs since they can use the chance to optimize more control over their health activities and procurement (Bundorf, 2016). Such enrollees are more serious or focused on their healthcare choices, home, and work-life balance, thus, the need to integrate the desired control in improving their healthcare practices.
Additionally, such enrollees believe in the exploitation of healthier environments as determinants of better health care. Older enrollees have the opportunity to benefit from the integration of the CDHPs as they use the chance to look up to the healthcare practitioners for their wellness, as well as components of the healthy sources. These aspects are ideal in ensuring that people benefit from the emerging CDHPs in the context of the United States. Categorically, I would recommend the adoption of the CDHPs as viable plans for the employees seeking to have more control in the procurement of their health care in modern society.
Conclusion
In attempts to transform the delivery of healthcare, there are emerging CDHPs as part of the healthcare system in the case of the United States. In this aspect, payers might find the existence of advantages and challenges when dealing with the CDHPs. In spite of this, the advantages of CDHPs are more valuable and prominent compared to the challenges. Based on the findings of the paper, the consumers who would find value in the CDHPs are low-income consumers and chronically ill patients. CDHPs are low cost-sharing plans with higher deductibles creating room for the active engagement among the consumers in the procurement decisions associated with their health care. From this perspective, it is possible for the plans to appeal highly to the younger persons or individuals with the higher health literacy, as well as an overwhelming desire for substantial control of their spending on health care. In the promotion of the CDHPs, payers have the expectations of aligning the benefits with the needs of the consumers for smart healthcare utilization. The approach is also effective in satisfying priorities of the identified beneficiaries in unique financial circumstances.
References
Barry, C. L., Cullen, M. R., Galusha, D., Slade, M. D., & Busch, S. H. (2008). Who chooses a consumer-directed health plan? Health Affairs , 27 (6), 1671-1679.
Bundorf, M. K. (2016). Consumer ‐ Directed Health Plans: A Review of the Evidence. Journal of Risk and Insurance , 83 (1), 9-41.
Dixon, A., Greene, J., & Hibbard, J. (2008). Do consumer-directed health plans drive change in enrollees’ health care behavior? Health Affairs , 27 (4), 1120-1131.
Haviland, A. M., Eisenberg, M. D., Mehrotra, A., Huckfeldt, P. J., & Sood, N. (2016). Do “consumer-directed” health plans bend the cost curve over time? Journal of Health Economics , 46 , 33-51.
Hibbard, J. H., & Cunningham, P. J. (2008). How engaged are consumers in their health and health care, and why does it matter. Res Brief , 8 (8), 1-9.
