Consumer-driven Insurance Plans: An Alternative to the ACA?

While opponents are clearly unified in their continued efforts to overturn the Affordable Care Act, it is less clear what they are proposing as an alternative.

A recent trip I took to the Woodstock for health services research geeks – otherwise known as AcademyHealth’s Annual Research Meeting – offered clues.

At the meeting, I was reminded of the exponential growth of consumer-driven health plans within the private insurance market over the past five years. These plans frequently take the form of a policy with a high annual deductible (often defined as $1,000 for an individual and $2,000 for a family), coupled with some sort of savings option, such as a Health Savings Account (HSA). The idea is that catastrophic illnesses or injuries will be covered, while the out-of-pocket costs for routine or preventive care come out of the HSA.

These types of combinations are gaining a foothold among employers and employees. According to a recent Kaiser Family Foundation survey, the percentage of workers covered by such plans rose from 4 percent to 17 percent between 2005 and 2011.

Proponents argue that these plans keep health care spending lower because they promote a market-driven approach, empowering consumers to “shop around” for their health care and revealing the true cost of medical services. Critics argue that these plans represent a significant financial burden for low-income populations, that individuals often curtail their use of preventive care to save money, and that there is not yet enough price transparency in the market to truly allow consumers to make informed decisions.

The future of these plans under the ACA will be an area to watch. First, the true test for Colorado will come when the state decides on its essential health benefit benchmark plan. This will establish the minimum set of services to be included in plans offered on the Colorado Health Benefit Exchange. The benchmark plan essentially establishes the minimum actuarial requirements (called the “bronze plan”) that most policies must meet. Thus, the question becomes whether existing high deductible health plans will qualify as bronze plans or whether they will need to be re-engineered to cover additional benefits.

Second, will these plans be truly affordable to consumers? The ACA contains multiple provisions related to making health insurance more affordable. The out-of-pocket costs associated with these plans may be of concern as these provisions (such as credits to reduce cost-sharing) are sorted out and implemented.

The fate of the ACA has moved from the judicial to the executive and legislative branches. The November elections will largely influence what provisions (if any) are carried forward, and the degree to which consumer-driven plans will continue to grow and be proposed as an approach to get more Americans covered.

Jeff Bontrager is the director of research on coverage and access at CHI.