MORROW
AND ASSOCIATES, LLC
Improving the Business of Healthcare®
Consumer Driven Health Plans (CDHP) originating in the late 1990s primarily from health
e-commerce ventures, were designed to engage consumers more directly in their health care
purchases. The primary conceptual model made cost and quality information evident to the
consumer, usually through the Internet, thus creating a more efficient health care market.
Since that time, the CDHP design has dropped Internet capabilities as a primary distinction
and focused on the use of a health benefit that couples a high deductible health plan (HDHP)
with an account to pay for first dollar medical care expenses. Typically, there is a gap
between the account contribution and deductible threshold, with unused portions of the
account accruing without tax penalty into the subsequent benefit year. The most common
models of these plans today are Health Reimbursement Accounts (HRAs) and Health
Savings Accounts (HSAs).

The HSA benefit design has become part of the political agenda since being embraced by
the Bush Administration in 2004 as part of its health reform package. The policy dimension of
consumer directed health plans is still evident, as evidenced by explicit mention of the HSA
benefit design in the 2006 State of the Union address. Through a combination of tax breaks
for premiums and the health savings account as well as a tax subsidy to pay for the
catastrophic insurance premium of lower income individuals, HSAs are proposed as a
solution to the high rate of health care inflation as well as potentially reducing the number of
the United States' uninsured population.
Managed Care Products
Consumer Driven Health Plans (CDHP)
Health Savings Accounts
An individual employee account to help pay for medical expenses.
Pay for Performance (P4P)
  • Based on a set of pre-established quality and efficiency parameters (evidence based
    medicine)
  • Physicians and hospitals are paid based on their performance
  • Over 100 pay for performance initiatives currently operational in the U.S.
  • Developed in response to rising health care costs and quality concerns (i.e. 1999 IOM
    report 98,000 Americans die each year as the result of avoidable patient safety errors)
  • Medicare/Medicaid, implementation estimated to be 3-5 years