Most commercial insurance plans have at least 3 options:
High deductible health plans, sometimes called Consumer Directed Health Plans (CDHPs) are becoming more popular among employers who offer health insurance to its employees. Most CDHPs have two features: (1) an initial deductible often exceeding $1000 (High deductible) and (2) financial support from the company in the form of a Health Savings Account (HSA) or a Health Reimbursement Account (HRA) to partially offset the high deductible.
- Varying deductible—the amount the employee has to pay, before any insurance starts to pay
- Varying co-pay or co-insurance –-a fixed amount (co-pay) or percentage (co-insurance) the employee has to pay for each service incurred
- Maximum out of pocket expense—a pre-determined amount the employee has to pay until the maximum is reached; after the maximum is reached, the employer pays 100% of the bill
Employees appreciate the lower premiums associated with CDHP, but can be surprised when an expensive medical procedure is purchased and the employee has to pay 100% up to the deductible. As an example, in a CDHP with a $5000 deductible, the employee pays the first $5000 in medical expenses every year before the insurance pays anything.
A CHDP is designed to motivate employees to be more judicious in selecting medical services, considering they are responsible for a higher portion of the bill. The expected outcome is the employee will choose higher quality or cheaper services.
Employees often make these coverage decisions annually, with little guidance from the employer as to which plan might work best. Fortunately, tools are now available to help employees examine their prior year’s medical costs to determine costs for each plan option. The new information allows employees to make more informed decisions. This tool should ideally take into account the actual medical charges incurred and provide options for varying coverage levels.
Another helpful tool is a cost calculator; employees using this tool can compare the cost of a procedure at different locations. The medical literature shows significant price variation for radiology, lab and diagnostic tests, even within the same community, so a cost calculator can be a great help. MRIs, for instance, might vary three to four fold in price with no difference in quality.
Truven Health Analytics has developed these tools to help consumers better understand the coverage level of insurance plans and the costs of services by plan. Users of our tools have experienced better plan decision-making and a decrease in medical costs. This is part of our mission--to use data to help consumers make more informed decisions.
Michael L. Taylor, MD FACP
Chief Medical Officer