Consumer-Directed Health Care: Understanding the Basics & Trends

Consumer-directed health care is a strategy designed to reduce costs by giving patients more financial incentives to use fewer nonessential health-care services. A small percentage of Americans were enrolled in consumer-directed health plans as of 2010, but their use was growing.

Basics

• Consumer-directed health care is based on the premise that if consumers have to pay more out of pocket for health care, they will use fewer health-care services. A typical arrangement for consumer-directed health plans is a high annual deductible of about $1,500, lower monthly premiums and a reimbursement account, which covers a portion of the enrollees' out-of-pocket health-care expenses.

Usage

• According to a 2010 study by the Employee Benefit Research Institute, 4 percent of Americans were enrolled in a consumer-directed health plan in 2009, which was an increase from 3 percent in 2008.

Considerations

• Critics, including the Urban Institute, have argued that the trend toward consumer-directed health care will shift a heavier burden for costs on those who are sick, particularly people with chronic conditions, and on larger families and older Americans.