Consumer directed 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 (HSA’s).

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, HSA’s are proposed as a solution to the high rate of health care inflation as well as potentially reducing the number of the United State’s uninsured population.