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Consumer Driven Health Care

Consumer-driven health care (CDHC) is a new method of health care delivery which has dramatically changed how patients received care that has improved the price and quality of care for thousands of Americans.

The Issue

Consumer-driven health care is commonly defined as a health plan under which individual policyholders have a personal health account, such as a health saving account (HSA) or health reimbursement arrangement (HRA), which the individual uses to pay medical expenses directly.

In a consumer-driven system, individuals choose their health insurance program and carry it with them from job to job. Employers may help with the financing of the coverage, but they do not own the policy. Individuals would get the same tax advantage they have when they get coverage at work. Under a consumer-driven system, the money an employer spends on health insurance belongs to the employee not the company’s. If an employee does not want the company’s health plan, they can use those funds to buy their own insurance or pay towards a spouse’s coverage.

Greg Scandlen, senior fellow of The Heartland Institute and founder of Consumers for Health Care Choices believes consumer-driven health care has birthed a revolution that has empowered Americans to reclaim their right to buy health care goods and services that they decide are beneficial. In doing so, they have shrugged off the heavy hand of regulation by Washington politicians, insurance companies, pharmaceutical firms, hospitals, medical organizations, federal agencies, and giant employers, all of whom are fighting over who gets what part of the trillions of dollars Americans spend each year on health care.

The CDHC revolution began in 2003 when the Medicare Modernization Act allowed consumers to deposit some of the health care money they earned into health savings accounts, health reimbursement arrangements, and flexible spending accounts, while choosing insurance policies with low premiums and high deductibles.

Empowered by control over their own money, consumers increasingly demanded the information needed to make good decisions about their health care. Once they possessed both the money and information, consumers forced changes in the delivery of services to make health care more efficient, more accountable, more convenient, and certainly more affordable.

Instead of paying an insurance company for maximum coverage they were unlikely to use, increasing numbers of consumers decided to buy less-expensive insurance for costly services and products while banking the monetary difference to pay for services only when they needed them. Employers liked the revolution, too, because it left them more money with which to raise wages or fund a savings account.

Our Stance

Already, consumer-driven plans are having a profound effect on the health care system. The growing use of generic drugs, retail clinics, medical tourism, concierge medicine, physician-owned specialty hospitals, and the reduction in the use of hospital emergency rooms may all be attributed to the growth of consumer-driven health care.