The CDHP Trickle

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A lack of consumer understanding has contributed to the glacial growth of consumer-driven plans. Can better information from health plans help CDHPs take hold?

The idea behind consumer-driven health plans is to transform members into healthcare consumers through education and place more responsibility on the individual. Supporters hope that the so-called "rugged individualism" of Americans will drive millions to the accounts as a way to take greater control of their care and decrease healthcare costs.

But after decades of managed care and doctors making all of the healthcare decisions, the wave of members to CDHPs has been more like a trickle. Studies show that the percentage of Americans insured in CDHPs is still in the single digits, largely for two reasons: Consumers simply don't understand the tax-free savings accounts that are connected to CDHPs, and few health plans are providing cost and quality information to allow consumers to compare doctors, hospitals, and treatment options.

"It comes back to education," says Duane Olson, manager of HR integration at John Deere in Moline, IL, which has all of its nonbargained employees in HSA-eligible health plans. "It's the combination of education and financial incentive. If you do too little of one and not enough of the other, then you end up with poor results. People don't become good healthcare consumers simply because you put them in [a health savings account], you have to really work with them, provide them the resources, provide them the tools, and make sure it's not about the high deductible. It's about the long-term health."

What's an HSA, anyway?
A key cog in the CDHP wheel is savings accounts. Health savings accounts, health reimbursement accounts, and flexible spending accounts vary in terms of who can deposit money, whether the cash can roll over to the next year, and whether employees can take the money with them to their next job.

Some research indicates that consumers' response has been tepid at best. The 2008 Employee Benefit Research Institute Consumer Engagement in Health Care Survey reported that many people who are in HSA-eligible plans are not enrolled in the accounts. More than one-quarter those respondents said that HSAs are difficult to open/manage, or too complicated, or they simply didn't understand the accounts.

HSA utilization has been slow even for Hartford, CT-based Aetna, the first national full-service health insurer to offer an HSA after Congress approved the Medicare Modernization Act of 2003, which created the accounts. Out of Aetna's 17 million medical members, 1.36 million have an HSA or HRA. Kathy Campbell, Aetna's director of consumer-directed health plans, says the company educates members via electronic postcards and has a 13-minute online video that highlights consumer-driven health plans.

But although critics of consumer-driven plans point to the low percentage of members enrolled in those plans as proof that Americans are not interested, Paul Fronstin, director of the Employee Benefit Research Institute health research and education program in Washington, DC, says the savings accounts have simply not been around long enough to measure success or failure. Fronstin says HMOs were also slow to gain momentum, but ultimately formed a large section of the market. An estimated 9.8 million insured adults are in CDHPs, which constitute 3% of the market. "Going from zero to that number in such a short period of time is actually significant, and that is how markets grow over time," says Frontstin.

HSA utilization has been slow even for the first national, full-service health insurer to announce it was offering an HSA after Congress approved the Medicare Modernization Act of 2003, which created the accounts. Out of Aetna's 17 million medical members, 1.36 million have an HSA or HRA.

So, can CDHPs survive without HSAs? Olson says HSAs provide employee buy-in, which make them critical to consumerism.

"What the HSA allows for is a focused goal for health. We can monetize it. If you eliminate that HSA account, then isn't it more about cost shifting? . . . The HSA provides for a written measurable goal of health and healthcare costs," says Olson.

Whether HSAs or CDHPs gain popularity, employers will continue to explore consumer options to reduce costs as long as healthcare costs outpace inflation. It's the responsibility of health plans and employers to educate members about their benefits and how to reduce costs and choose the best care, says Fronstin.

"I think this whole notion of consumerism and being an informed consumer is a lot bigger than HSAs. Whether HSAs continue or not, we'll continue to see this movement toward consumer engagement," says Fronstin.

Les Masterson

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