Exchanges and CDHPs: The Insurance Model of the Future

It's less than a year before the state-based health insurance exchanges are laughed in the United States. Many Americans are started to prepare now and are expressing interest in learning about what new health care options they will have starting January 1, 2014.

According to a study by J.D. Power and Associates, people with health insurance who either buy their own plan directly or have high deductible plans are looking forward to the exchanges in 2014. They reported that 73 percent of subjects who purchase their own health insurance plans will be considering the health insurance exchange to shop for coverage.

"As health care costs continue to increase and members pay a higher percentage of the premium, health plan members are increasingly aware of exactly what they are getting for their premium," said Rick Millard, Senior Director of the healthcare practice at J.D. Power and Associates. "If a member has experienced problems and perceives the possibility of having more control over costs through exchanges, this new purchasing method may become more appealing."

The exchanges will provide a variety of insurance options, including consumer-driver health care plans (CDHPs). The advantage of CDHPs is that they give the consumers a greater incentive to take medical costs into consideration with their medical decisions. They ultimately aim to reduce overall health care expenses. We shop around for the best deal on everything we spend our money on - cars, electrical work, clothes, appliances - but how about medical care? Do you shop around for the least expensive facility for your MRI? How about your prescriptions? In a system of copays, the consumer usually has no idea what the true cost of their care is; they just know what they pay (copay), and not all providers charge the same thing for the same service. CDHPs encourage you to shop around for the best pricing, which saves you money as well as the insurance companies - giving you lower premiums, which again, will save you money.

Employers are listening. In 2012, 59 percent of large employers offered at least one CDHP option (or high deductible option), according to Rand Health. Research shows that families saved between 17 and 21 percent in medical costs. As medical expenses continue to rise, this insurance model is expected to thrive.

If we translated the large employer percentage to all consumers, and we said that 50 percent of Americans will enroll in a CDHP, the research indicates that this country could save $57 Billion in total health care spending.