Evolution of Consumer Driven Health Plans Blog Series: Part 1
Part 1: Healthcare Spending – The Facts
This is the first in our five-part series, “The Evolution of Consumer Driven Health Plans: From Cost Shifting to True Healthcare Consumerism.” Here we will explore the trends that have led to a dramatic rise in consumer driven health plans (CDHPs) and the impact these plans are having on employees. The goal of the series is to help employers and plan managers assess both the positive and negative consequences of CDHPs, and to recommend steps they can take to better equip employees to be informed healthcare consumers.
CDHPs were initially conceived in the late 1990s and started gaining mainstream adoption after the passage of the Medicare Prescription Drug, Improvement and Modernization Act in 2003. The rise in overall healthcare costs has been the main catalyst for the explosive growth in consumer driven health plans.
U.S. Healthcare costs are growing at three times the rate of GDP and the Centers for Medicare and Medicaid Services have projected that spending will reach 20 percent of GDP by 2021 compared to 15 percent in 2002.
Increasingly, the burden of these rising costs is falling on the employee. Between premiums, coinsurance and deductibles, the average family of four has experienced a nearly $7,000 increase in out-of-pocket healthcare expenses since 2002, while average wages over the same period have actually decreased.
U.S. Healthcare Spending vs. OECD Average
Back in 1980, U.S. per capita healthcare spending was in line with that of other developed nations. Since that time, however, the percent of GDP spent on healthcare in the U.S. has more than doubled while other nations have experienced increases more in line with overall economic growth. According to an Organization for Economic Co-operation and Development (OECD) 2010 study, 2008 average per capita healthcare spending in the U.S. of $7,539 was 91.2 percent higher than the 16 country average of $3,944, and that gap has continued to widen.