Week X: Is Consumer-Directed Health Care Still a Thing?

Two decades ago, “consumer directed health care” (CDHC) was the buzzword in employee benefits.

Employers leaned into the idea that if employees had skin in the game and the right tools, they’d become smarter health care consumers. Pair a high-deductible plan with an HSA or HRA, sprinkle in some transparency tools, and back it up with education — that was the strategy.

In fact, CDHC approaches took off quickly. Access to high-deductible health plans (HDHPs) has grown steadily — in 2024, about 50% of private industry workers had access to HDHPs, up from 38% in 2015, according to the U.S. Bureau of Labor Statistics. And HSAs are more popular than ever: by late 2024 there were 39.3 million HSAs in the U.S., covering about 59.3 million people with nearly $146.6 billion in assets, according to Devenir and the HSA Council.

Of course, giving someone a high-deductible plan doesn’t magically make them an informed consumer.

As our good friend Sharon Alt used to say, CDHC doesn’t just stand for Consumer Directed Health Care — it also stands for Consumers Don’t Have a Clue.

And she was right. Without education, most employees won’t become better consumers on their own. They don’t know where to start, what to ask, or how to navigate a system that even experts find confusing. Education has always been the missing piece, and it’s still sorely lacking today.

Here’s the reality in 2025:

• Employers are reactive, not proactive, when moving to high-deductible plans.
• Many don’t fund HSAs or HRAs.
• Transparency tools, discount drug programs, and consumer education are often left out.

And here’s another wrinkle: the incentives have changed.

• Fully insured small groups are guaranteed issue and not rated on their own claims experience. That means even if employees shop smart, the employer doesn’t see premium discounts.
• Level-funded plans can reward lower claims with a year-end refund, but the savings are often modest.

Small employers often feel this more acutely. In 2023, small firms’ family deductibles averaged over $5,000, compared to about $3,500 for large firms, according to the Commonwealth Fund. This difference means employees at small firms are more exposed to high out-of-pocket costs and thus have more to gain from consumer-directed tools — and more to lose if those tools are missing.

But here’s the bigger picture.

The real reason employers offer benefits isn’t cost control — it’s attraction and retention.

If employees view the health plan as nothing more than an expensive, watered-down option, they won’t value it. Some may even waive coverage, undermining the whole point of offering benefits. Others may leave for a competitor with stronger benefits.

Consider what’s happening now: the median annual deductible for private industry workers in HDHPs is around $2,750 in 2024, per the Bureau of Labor Statistics. That kind of number can feel overwhelming unless employees are given tools and education to manage it.

Employers don’t need to spend a fortune to support employees — but they do need to add value where it counts.

A few tools can make a big difference:

• HSAs — Employees benefit from tax-advantaged accounts, even if the employer doesn’t contribute.

• HRAs — Employer-funded accounts that can offset high deductibles and out-of-pocket costs.

• Transparency tools — Price-shopping platforms help employees compare costs for labs, imaging, and elective care.

• Discount drug cards — Pharmacies charge different prices; these cards make costs visible and give employees alternatives.

• Telehealth — Replaces missing copays with affordable, convenient access to care.

• Advocacy programs — Help employees resolve claims issues, understand their benefits, and find high-quality providers.

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Don’t Skip Education

Tools are only useful if employees know how — and when — to use them. That’s why education is the missing ingredient in most consumer-directed strategies.

Education campaigns should do three things:

• Teach employees how to use the tools they’ve been given.

• Help them navigate a health care system that often feels overwhelming.

• Cover topics some of us assume are “common sense,” like trying generics before brand-name drugs, or heading to urgent care instead of the ER when the situation isn’t life-threatening.

When employees understand their options, they make smarter choices, spend less, and feel more satisfied with their benefits.

CDHC may have lost its buzzword status, but the concept is alive — and still critical.

Employers that pair high-deductible plans with accounts, tools, and education will give employees a better experience, even if the deductible feels daunting.

Percentages, funding, and plan type all matter — but without employee education, consumerism simply doesn’t happen. As Sharon Alt reminded us, Consumers Don’t Have a Clue. It’s up to employers, agents, and advisors to close that gap.

In a world where health care isn’t getting cheaper, the employers who succeed won’t just buy a plan. They’ll build a strategy.

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Quick Takeaways

• CDHC was designed to be proactive, but too many employers are now reactive.
• Tools like HSAs, transparency, drug cards, and telehealth make high-deductible plans more usable.
• Education is the missing ingredient — without it, consumers “don’t have a clue.”
• Benefits are about retention and employee experience, not just cost.