CDHPs, wellness gain momentum
Employers are increasingly looking to consumer-driven health plans (CDHP) and wellness programs as a way to contain healthcare costs, according to United Benefit Advisors’ (UBA) 2008 United Benefit Advisors Health Plan Survey.
CDHPs increased 43% from 2007 and now comprise nearly 13% of employer-offered health plans. The percentage of employees enrolled in CDHPs rose from 6% in 2007 to 11.2% in 2008. (See Figure 6 on PDF.) In the survey, UBA defined CDHPs as eligible high-deductible health plans with a health savings account (HSA) or health reimbursement account (HRA).
Bill Stafford, vice president of member services at Indianapolis–based UBA, says properly educating members about healthcare decisions and choices is important to CDHP. “I think people are realizing there are huge dollars to be gained, but, to some extent, some people might be missing the boat because they are not recognizing the value of the education process. We’re not going to shift healthcare costs and healthcare behaviors in one year. I think [consumer-driven health] is one way of allowing consumers to get more and more information that they need that will impact behaviors long-term. We won’t see those long-term impacts from year to year,” says Stafford.
Frank Hone, founder and CEO of Healthcentric Partners, a communications consulting and healthcare consumerism training company based in Port Washington, NY, says the findings are part of an ongoing trend. Since CDHPs were introduced in 2002, they have seen steady growth. The findings show that there is momentum for consumers taking charge of their healthcare, but education about consumerism in healthcare is still lacking.
“I think that the main idea is that CDHPs are a first step toward a broader national strategy toward healthcare consumerism, and they are a good step because they address the financial issues, but until the market has better data on price and quality and more transparency in those areas, it is going to be hard to push too much to force consumers to be as good shoppers for healthcare as they are for other products and services. But the trends are definitely there,” Hone says.
UBA found that first-year CDHP premiums decreased by 7.9%, compared to an overall increase of 7.4% when factoring in all plans.
Stafford says that finding is not surprising because CDHPs put more costs onto the member, with the employer chipping in money in an HSA or HRA.
Stafford adds that most of the savings in CDHPs are due to the movement to high-deductible plans and don’t take into account employer contributions to HSAs or HRAs.
Employers are shifting rising healthcare costs onto employees by implementing HSAs and HRAs. Employers chipped in an average of $1,209 for HRAs and $642 for HSAs in 2008, according to the survey. (See Figure 7 on PDF.)
CDHPs increased in popularity, especially in the Northeast. CDHP enrollment rose by 90% in that region, and slightly more than 14% of employers in the Northeast now offer consumer-driven plans. (See Figure 8 on PDF.)
“To see that shift in one year caught us by surprise,” says Stafford.
PPOs remain popular
Preferred provider organizations (PPO) remain the most popular health plans. (See Figure 9 on PDF.) More than half of all employer-offered plans are PPOs, and more than 60% of employees are enrolled in them.
In contrast, HMOs saw their numbers slip, now representing slightly more than 21% of employer plans with about 13% of employees enrolled.
Stafford says the move away from HMOs and toward CDHPs is a migration from limiting options to giving consumers healthcare choices.
PPOs and CDHPs are more attractive to consumers than HMOs because there is more flexibility, according to Stafford.
“As long you can make an informed choice, you’re going to be better off. The HMOs did just the opposite of that. It removed virtually all the choice from the menu,” says Stafford, adding that he expects to see continued growth in CDHPs. “I think [employers] are taking their fiduciary roles fairly seriously.”
PPOs remain the comfortable health insurance offering, Hone says, but he thinks CDHPs will gain a greater share of the market.
“I think PPOs have a very solid place in the health insurance framework and it will take a bit of time for that to subside, but I would envision CDHPs to continue to grow in favor as healthcare consumerism becomes more important and individuals are willing to take a larger component of risk about their own health,” he says.
Hone says employers must go beyond the 30-day open enrollment healthcare education process and educate employees about their healthcare choices, how health insurance dollars affect business, and how an educated consumer helps the bottom line of the business, as well as the employee’s health.
“That part of a shared commitment is really important for employees to move off the idea of getting everything paid for and getting into an era of price and value shopping for their healthcare, which really coincides well with the national trend toward healthcare consumerism,” Hone says.
With the greater movement toward prevention, employers are increasingly providing employee wellness programs. Nearly 10% of employers are offering wellness programs this year, compared to 7.4% in 2007, the survey found.
Rather than making major plan design changes as a way to save money, Stafford says employers are viewing wellness and disease management programs as options for containing costs.
The movement to wellness programs did not experience as much of a jump as from 2006 to 2007, but there was still an increase of more than 30% from 2007.
“I think you will continue to see growth there, because employers are seeing hard dollar returns implementing those programs over a three- to five-year period,” says Stafford.
Of those wellness programs, more than three-fourths of employers provide health risk assessments, one-third present seminars and workshops, and more than one-third offer on-site or telephone coaching to high-risk employees. (See Figure 10 on PDF.) More than half of employers with wellness programs give employees incentives for participating.
The move toward wellness programs will likely continue, since companies view prevention programs as cost-effective alternatives to future chronic care. Stafford says the biggest challenge is getting people to improve their health and not partake in unhealthy lifestyles. “If you are not changing behaviors, we’re going to keep getting the results we’re getting. I think employers are finally agreeing,” says Stafford about the wellness movement. “So much of our overall healthcare dollars are spent on items that are behavior-based that we can’t continue to ignore that ... We still have well over 50% of our healthcare dollars going to behavior issues that can be easily changed.”
Jaan Sidorov, MD, MHSA, FACP, an independent consultant who owns and operates Sidorov Health Solutions in Harrisburg, PA, says research shows wellness programs decrease healthcare costs, lower absenteeism, and improve presenteeism. With the current state of the economy, some companies may cut wellness programs, but Sidorov says he believes employers will ultimately understand that wellness programs are an important way to control costs and improve productivity. “The worst-case scenario, with the economy being the way it is, is there will be a downgrade, but in testimony to its resiliency, I don’t think it’s going to go away. I don’t think it’s the first thing people will toss out the window,” he says.
Costs on the rise
Healthcare costs continue to rise. The average annual health plan cost per employee is $7,327, with employees picking up $3,210 of the costs and the employers forking over the remaining $4,117. The average monthly premiums for all plans were $370 for single coverage and $901 for family. (See Figure 11 on PDF.) The average employee share of monthly premiums is nearly 28% for single people and 46% for family plans. (See Figure 12 on PDF.) Regarding wellness programs and incentives, more than half of respondents said they use gift certificates and health club dues payment as incentives. (See Figure 13 on PDF.)
The survey included responses from 18,019 health plans sponsored by 12,860 employers who employ more than 1.9 million people and insure about 4.4 million people. The survey included nearly 10% more respondents than the 2007 survey.