Consumer Driven Healthcare System - Essay Example

Essay The global economic recession and the rising cuts in Medicaid policies due to lack of federal funding has made healthcare unaffordable to a vast group of people especially the elder population. In families where there is strict budgeting or who lack sufficient resources, healthcare remains an elusive entity. However, people who can afford to pay more through premiums enjoy better coverage under the healthcare facility. Hence, in the present consumer driven healthcare system (CDHC), the services rendered to the people by the industry are based on their ability to pay and those who pay less receive only mediocre medical services.

Proponents of the system have claimed that the high-deductibles involved and the health savings account plan of the CDHC system are important factors for its success (Gould, 2006). Providing better service and care for those who cannot afford healthcare should be promoted by increasing the taxes of those with a higher income and thereby make such consumer-driven healthcare initiatives care for the welfare of the needy people (Rodwin, 2003). The consumer-directed health care initiatives were introduced as a means to provide healthcare benefits to the employees within an organization.

Initially by this plan employers funded the health reimbursement accounts (HRA) of their employees and hence they decided on what medical expenses can be covered by the plan and whether the funds could be carried over to the next year. However, following the passage of the Medicare Modernization Act in the year 2003, health savings accounts (HSA) were created by which both the employees and their employers contributed to the account and federal standards determined which medical expense was eligible for claim.

The funds in the account could be rolled over to the next year and the employee retains the funds in case of job shifts or after retirement. This plan is a highly-deductable health plan which is coupled along with the health savings account which is aimed to increase consumer knowledge about healthcare costs and benefits of the scheme as well to become more conscious about their health (Hughes-Cromwick, 2007). However, despite the many gains of the CDHC plan, many experts have reported that such plans have only increased the spending on part of the consumers and that better transparency of the cost and quality of service involved in the system is required (Feinberg, 2007; Hughes-Cromwick, 2007; Gould, 2006).

As a result many people prefer other comprehensive health care plans as they have been led to believe that initiatives such as CDHC are not doing enough to cut costs (Gould, 2006). A study on this found that most employers actually saved money by providing such plans and the employees also spent less on healthcare. However, the lesser money spent only resulted in compromise in healthcare quality. Another problem associated is the inclusion of younger people within the plan while the older population was left to seek other forms of conventional healthcare policies whose costs would only rise over the years.

Many critics have pointed out that it is the older generation of people who are in dire need of health plans as they tend to suffer from many health problems owing to old age and in addition those with lower incomes are also at a disadvantage of not being benefited by such plans (Feinberg, 2007; Hughes-Cromwick, 2007; Gould, 2006). The recently adopted legislation has introduced provision that would help sustain and develop the CDHC initiative. By this plan the disadvantages faced by the general public with regard to the CDHC plan is expected to be overcome.

The provisions include the inclusion of an individual retirement account or flexible account transfers to the HAS, to increase HAS deposits throughout the year, and to alternative means of funding by employers for the HSA based on the earnings of their employees. In addition, the growth of the healthcare industry is gaining momentum with the introduction of new healthcare services and other developments such as the maintenance of electronic health records which are further simplifying the process of healthcare delivery to the public.

Thus several factors are encouraging the consumer-directed healthcare service offered to the public (Hughes-Cromwick, 2007). Reference 1. Feinberg, D.T. (2007, Mar.). Consumer-Directed Health Care: Not Quite the Cure Yet. Journal of Child and Adolescent Psychopharmacology, 17(1), 143-145. 2. Gould, E. (2006, Oct.). Consumer-driven healthcare is a false promise. Economic Policy Institute. Retrieved February 27, 2011, from http://www.epi.org/publications/entry/webfeatures_viewpoints_consumer_driven_healthcare/ 3.

Hughes-Cromwick, P., Root, S., & Roehrig, C. (2007, Apr.). Consumer-driven healthcare: information, incentives, enrollment, and implications for national health expenditures. Business Economics, 42(2), 43-57. 4. Rodwin, M. (2003). The dark side of a consumer-driven health system. Frontiers of Health Services Management, 19(4), 31-34.