Employees Fear Consumer-Driven Health Insurance Plans Are On Decline
Consumer-Driven Health Insurance Plans
Employees who fear high out-of-pocket costs aren't blocking the growth of consumer-driven health (CDH) plans, as more individuals and employers take advantage of money-saving options as healthcare costs rise, according to a survey conducted by Aon Consulting Worldwide, the global human capital consulting organization of Aon Corporation and the International Society of Certified Employee Benefit Specialists.
The nationwide study of 470 employers found the number of employers offering CDH plans is on the rise, with 37 percent offering this plan type to employees, up from 28 percent of employers in 2006 and 22 percent in 2005, the first year this study was conducted.
"This finding shows that the CDH movement continues to grow," said Bill Sharon, senior vice president with Aon Consulting and co-author of the survey. "Early CDH results have been very positive. Employers like them because they are seeing a reduction in healthcare cost increases. Our analysis shows that a company can achieve first year savings of 8 percent of their premium if they implement an effective consumer-driven healthcare strategy."
More employees this year than last are enrolling in a CDH plan. Sixty percent of employers have more than 10 percent of their employees participating in a CDH plan, up from 53 percent of employers in 2006. Additionally, employee fears about enrolling in this new plan type have decreased. Of those employers offering a CDH plan, 54 percent cited concerns among employees about high out-of-pocket costs as the principal reason for not enrolling in a CDH plan. That figure is down from 66 percent in 2006.
"There is a growing recognition that most employees do not want a medical plan with high out-of-pocket costs," Sharon said. "Therefore, most companies with CDH enrollments of 40 percent or more have designed CDH plans with out-of-pocket maximums comparable to their more-traditional HMO and PPO plans. In addition, employers have used out-of-pocket cost comparisons to show employees the relative cost advantages of the CDH plan." (See health plan out-of-pocket cost comparison chart, page 5).
Employers offering CDH plans
The survey found that 83 percent of employers offer a CDH plan in addition to other healthcare plans, with the remaining 17 percent offering CDH plans in lieu of more traditional health plans.
"This finding has held pretty steady over the past five years," Sharon said. "The majority of employers offer CDH as an optional plan, since these plans operate very differently from an HMO or PPO, and it takes time for employees to become comfortable with a new plan type." The main drivers behind employers offering CDH plans are similar to the reasons stated in the 2006 survey: To introduce consumerism into the purchasing of health care for long-term change (47 percent) and to control rising healthcare costs (33 percent).
The survey found the CDH plan models and contribution levels to be consistent with 2006 as well. Forty-two percent of employers are using health reimbursement arrangements (HRA), 48 percent are using health savings accounts (HSA) and 10 percent are offering both. Of the employers offering an HSA, 67 percent contribute either a flat dollar amount of less than $500 per person (17 percent), $500 or more (40 percent) or match employee contributions (10 percent).
Employers without a CDH plan
Similar to 2006, 42 percent of employers without a CDH plan are planning to offer one in the future. Eleven percent are planning to offer one this year or next, while 31 percent are undecided on an effective date. The remaining 58 percent of these employers are not seriously considering a CDH plan as a future plan offering.
The survey also reported the following results from employers:
-- 83 percent of employers began offering a CDH plan in 2005, 2006 or 2007.
-- 77 percent of employers believe employee meetings are the most effective method of communicating about CDH plans to employees.
-- 49 percent believe CDH plans make employees better, more efficient consumers of health care;