Consumer Driven Health Insurance
Although industry surveys indicate that employers anticipate strong growth in consumer-driven healthcare plans (CDHC), low selection rates remain a significant stumbling block among employees offered such plans as one option among many, according to a report released today by The Conference Board, the international business research organization.
One of the principal reasons that consumers shy away from such plans is the lack of a coherent message about participating in them.
"If employees find the information they're offered about Consumer-Driven Healthcare Plans too confusing, the programs will fail," says Jon Gabel, author of The Conference Board report and senior fellow at the National Opinion Research Center. "Employees are unlikely to switch to plans that they don't understand."
To communicate effectively with employees, employers and health plans must present information in a format that minimizes the amount of cognitive analysis required by employees. Early and repeated face-to-face meetings have proven particularly effective in increasing enrollment in Consumer-Driven Healthcare Plans. Improving the quality of information available to employees will require pooling medical claims data from a number of health plans. Quality measures also need to be standardized and developed jointly with providers, healthplans and employers.
A consumer-driven healthcare plan is a high-deductible health plan combined with a tax-advantaged spending account. Of the latter, there are currently two types of plans that meet this definition -- health savings accounts (HSAs) and health reimbursement accounts (HRAs) -- and the basic difference between them is their relative portability. HRAs, which are based on regulatory decisions made by the U.S. Treasury in 2001 and 2002, are owned and funded by employers. On the other hand, HSAs, which were created by the Medicare Prescription Drug Improvement and Modernization Act of 2003, are employee-owned and fully-portable spending accounts. Employer contributions to HSAs are optional.
In 2005, about 2.4 million U.S. (nonfederal) workers, or 3.5 percent of employees with job-based insurance, were enrolled in a consumer-driven healthcare plan. A typical CDHC plan in 2005 had a deductible of approximately $1,900 and an employer contribution of $792 in HRA plans and $553 in HSA plans. Preventive benefits are often carved out or excluded from these plans. In a 2006 study by the Kaiser Family Foundation, 74 percent of workers in HRA plans and 82 percent of workers enrolled in HSAs had these benefits carved out. An examination of the use of healthcare by Consumer-Driven Healthcare Plans participants prior to their enrollment in a consumer-directed plan indicates that they tend to have a lower rate of use than other employees. They are also more highly educated, more highly paid, and more likely to be males.
In the five case studies included in the report, three of the Consumer-Driven Healthcare Plans experienced lower increases in medical claims expenses during the first year of operation. In the second or third year, often as a result of several catastrophic illnesses in the employee population, two of these companies experienced increases in claims expenses that were similar to or higher than those in traditional plans.
"There is little evidence, and much of what does exist is contradictory, as to whether Consumer-Driven Healthcare Plans makes employees better consumers," says Gabel. "To date, there have been no studies of medical records or claims audits to determine if the percentage of medically appropriate care improves under Consumer-Driven Healthcare Plans or if employees are more likely to select high-quality, low-cost providers."
Although most Consumer-Driven Healthcare Plans websites that now exist are improvements over prior information delivery systems, many others are still being developed or lack basic information on quality and cost of care for individual physicians.
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