Improving Value

Consumer Directed Health Plans

Consumer Directed Health Plan (CDHP) is a term sometimes used interchangeably with High Deductible Health Plans but is most often used to indicate a plan that qualifies for a tax-advantaged savings account and the presence of decision aids to help consumers shop for health care.

As discussed on their respective pages, these two strategies should be viewed with caution. High deductible health plans are not a recommended strategy. While these designs lower premiums, they do not result in smart consumer shopping that drives value in the marketplace and they lead to many consumers being underinsured, delaying or forgoing care due to concerns about costs and incurring unmanageable medical debt. 

When high-deductible health plans meet certain criteria, they may be accompanied by a tax-advantaged health savings account such as a Health Savings Account (HSA) or Health Reimbursement Account (HRA). These tax-advantaged savings vehicles are attractive to higher-income families that can afford the plan deductibles and are positioned to benefit from the tax treatment of these accounts. However, given the competing needs we have for our tax dollars, we need to ask ourselves if tax relief that benefits high income families the most is the best use of our resources.