Consumer-Driven Health Plans Leap Ahead of HMOs

Consumer-driven health plans (CDHPs) have surpassed HMOs to become the second most common plan design offered by U.S. employers, according to a survey from Aon Hewitt.

The 2011 survey of nearly 2,000 U.S. employers reveals that 58% offered a CDHP and 38% offered HMO plans. PPOs continue to be the most widely offered plans, with 79% of employers offering them in 2011.

Among employers that offer CDHPs, health savings accounts (HSAs) outpace health reimbursement arrangements (HRAs) (34% versus 18%). But, 43% of employees enroll in HRAs compared to 28% who enroll in HSAs. This reflects the fact that HRA plan designs are popular among large employers embarking on full replacement CDHP strategies. HRAs offer more design flexibility to the employer compared to HSAs. HSAs typically they generate lower enrollment because they are offered to employees as one of several plan options.

Maureen Fay, senior vice president and head of Aon Hewitt’s CDHP working group said that, despite an increase in prevalence, CDHP enrollment lags behind enrollment in PPO and POS plans. The average enrollment in a PPO plan was 69% in 2011 followed by POS plans (49%). Forty-three percent enrolled in a high-deductible CDHP with an HRA and 28% enrolled in a high-deductible CDHP with an HSA.

Employers are using a variety of tactics to encourage employees to enroll in these plans including subsidizing premiums at a higher level than other plan options (36%), covering preventive medications before the deductible (34%), and contributing employer funds to the HSA (30%) and HRA (22%).

More employers are also considering voluntary/elective benefits to supplement these plans, such as critical illness, hospital indemnity, and accident insurance policies. Twenty-six percent of those using this tactic report a moderate to significant increase in CDHP enrollment because of the availability of voluntary or supplemental medical benefits. While just 6% of employers use voluntary/elective benefits to complement the CDHP and encourage enrollment, 42% report they are considering this approach in the next few years.

A separate survey of 3,000 employees reveals that employees are willing to try CDHPs and their associated accounts. Employees will continue to choose them because they often come with a lower premium. However, employees find them challenging to understand and use.

Joann Hall Swenson of Aon Hewitt said, “Employees want the most cost-effective plan with the least hassle, but they often are not all that interested in digging into the details of CDHPs, HSAs, and HRAs. Our research and experience tells us that simply giving employees lots of educational information about these plans and accounts is only helpful to the small minority of people who like all the details.” To address this challenge, Aon suggests the following:

• Get the right people into the right plan. Employers need to identify the segments of their population that are most likely to sign up for a CDHP and then tailor the marketing campaign to them. They also need to monitor employees’ experience with the plan to ensure it re-sells itself and encourages consumers to have appropriate health and financial behaviors.
• Explain how employees can benefit from the plan’s key features. They also need to tell employees what very specific about the actions consumers need to take.
• Make it easy for employees and their families to use the plan. This includes removing barriers to care through initiatives like value-based plan designs or full funding of employer contributions to HSA/HRA accounts at the beginning of the year.
• Navigate new tools to help employees select appropriate treatments and providers based on available cost and quality information.
• Offer activities, such as biometric screenings and health risk assessments, to help employees assess their health opportunities and risks.
• Use resources, like health coaches and disease management nurses, to help employees meet their goals of health improvement and maintenance.
• Follow preventive care guidelines.
• Manage chronic conditions by working closely with the employee’s physician and adhering to evidence-based treatment protocols.

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Last Updated 05/25/2022

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