Consumer-Driven Health Plans Gain Ground

Thirteen percent of the privately insured U.S. population was enrolled in a consumer-driven health plan (CDHP) in 2015, according to a report by the Employee Benefits Research Institute. Sixty-three percent of those enrolled in CDHPs had an HSA; 13% had an HRA, and 24% had the option of an HSA-eligible health plan, but had not opened an HSA.

Study Reveals Leading Healthcare Benefit Trends

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The Healthcare Treds Institute issued a massive survey of employee benefit trends. The good news is that employers are looking to insurance brokers and benefit consultants to help them evaluate health benefit designs and distribution models. Forty percent of employers say they will depend on insurance brokers to learn about new health benefit models, such as defined contribution plans and private exchanges, and 31% will depend on benefit consultants. Nearly 40% rely on insurance brokers to learn about health benefit designs and platforms.

“The ACA has created a dynamic marketplace in which brokers have a front row seat navigating in this new era,” according to the study. Human resource professionals have new responsibilities due to the ACA. Thirty percent are looking for help from benefit consultants. However, 30% are researching independently compared to 26% in the previous year. Employers gave the following answers to this question, “What partners would you depend on to help you learn about new health benefit designs and distribution models?”

  • Insurance broker 39.7%
  • Will research independently 30.8%
  • Benefit consultant 30.8%
  • Insurance carrier 24.4%
  • TPA 19.2%
  • None 15.4%
  • Trade Association 11.5%
  • Payroll company 10.3%
  • Other 5.1%

What Benefits Employers Are Offering

About 40% of employers offer three or more health plan options, which are usually a PPO, an HDHP, and an HMO. Employees are choosing HDHPs (39%) over HMOs (35%). The following is a breakdown of benefits that employers offer:

  • PPO 59.5%
  • Flexible spending account (FSA)59.5%
  • Health savings account (HSA) 52.1%
  • High deductible health plan (HDHP) 38.8%
  • HMO 34.7%
  • Self-insured plan 22.3%
  • Health-reimbursement arrangement (HRA) 15.7%
  • Catastrophic insurance 8.3%
  • Dental plan 73.6%
  • Vision plan 67.8%
  • Prescription drug coverage 67.8%
  • Mental health coverage 52.1%

How Healthcare Reform Has Affected Employee Benefit Packages

Forty-nine percent say that healthcare reform will increase employee cost-sharing; 39.6% say it will increase premium contributions, and 3.6% say it will shift their company towards a defined contribution plan. Employee cost-sharing has risen every year for 10 years. Employers and the medical industry have had to deal with other ACA implications, such as the employer mandate and new compliance, which has caused an increase in capital and human resources. Employers have done the following in response to health reform:

  • Increased employee cost sharing 49%
  • Has had no effect 30%
  • Enhanced wellness/preventive health programs 23%
  • Increased employee engagement in their health 19%
  • Increased employee engagement in reducing healthcare costs 18%
  • Adopted new wellness/preventive health programs 17%
  • Reduced covered benefits 15%
  • Added HDHPs/CDHPs 14%
  • Stopped offering healthcare benefits 9%
  • Shifted to a defined-contribution plan

The Cadillac Tax

The impending 2018 Cadillac Tax is a prevalent challenge for employers. The ACA 40% excise tax will be imposed on the portion of group health plan premiums that exceed specified thresholds. The concern may be more regional since it could be triggered in parts of the country where healthcare costs are high and less likely to be triggered in parts of the U.S. with below average healthcare costs. Thirty-five percent of employers are very concerned about the 2018 Cadillac Tax; 25% are somewhat concerned; and 30% are not concerned. Sixty-one percent are making no changes to their benefits in light of the impending Cadillac tax while 18% have changed plans to avoid the Cadillac Tax. Recent news reports along with lobbying efforts may be influencing the 61% of companies who have a wait and see approach about the Cadillac Tax.

Defined Contribution Plans

Employers continue to learn more about defined contribution plans and private exchanges with about 35% saying they are familiar with them. This is an increase of about 5% over last year. Twenty-eight percent say that exchanges help employees understand the value of their benefits. Twenty-five percent say that a defined-contribution plan would help employees understand the value of their benefits and make more cost-conscious benefit decisions.

Five percent of employers offer defined-contribution plans (not on a private exchange) while same offer defined-contribution plans on a private exchange. Also, 7% are considering offering a defined contribution plans on a private exchange while 53% have not explored defined contribution plans.

Fifty-five percent of employers who are considering a defined-contribution plan, say they would explore the option for 2017 or 2018. This suggests that near-term adoption will be gradual. But the adoption curve may steepen as the benefits of defined-contribution plans become better known.

Private Exchanges

Employers want private exchanges to provide many solutions including health spending accounts (62%), carrier integration (58%), COBRA compliance (56%), automation of premium payments (51%), and payroll integration (50%). Employers choose private exchanges to control costs and increase employee choices, which is why employers say, most often, that they are looking for health spending accounts. Incorporating consumer directed healthcare coverage, such as HDHPs, HSAs and HRAs, helps private exchanges create a competitive marketplace that promotes cost-savings for employees and employers.

To succeed a private exchange needs to provide broad choices and help participants in the selection process. Sixty-two percent of employers say that it is somewhat important to very important to have health-spending accounts in an insurance exchange. Also considered somewhat important to very important are carrier integration (59%), COBRA compliance (56.4%), and premium payment automation (53%). Employers say they would choose the following offerings in an exchange:

  • Plan and cost comparison tools 80%
  • Online capabilities 69%
  • Combined benefit enrollment 47%
  • A help line 47%
  • Transparency solutions for treatment cost comparisons 45%
  • Mobile applications 45%
  • Progressive cost tracking tools 35%
  • Consolidated employer billing 35%
  • Integrated consumer healthcare accounts 30%
  • Financial account options 28%

Employers rank several exchange features as important, such as being a private exchange instead of a public exchange (83%), having a large selection of plan choices at targeted benefit levels (58%), and being provided by their broker or benefit consultant (55%). These findings indicate that broad choice is more important than who runs the exchange (broker versus carrier).

Wellness

Wellness programs continue to gain interest as 35% of employers have initiatives in place compared to 30% last year. Another 22% are considering implementing a program. Sixty-five percent are considering adopting a wellness program in 2017, and 16% are considering adopting one by the end of 2016.

Fifty-five percent of those offering wellness programs, offer an employee-assistance program (EAP); 53% offer flu shots or vaccinations; and 37% offer a smoking cessation program. The disease management tools that most employers offer are for diabetes (30%) and depression or other mental health (30%). Fifty-four percent of employees are not offering disease management tools. But 30% are providing services for diabetes and mental health conditions. To promote positive health outcomes, 44% of employers offer at least one wellness program; 31% offer biometric screening; and 20% offer a disease management program.

Forty-four percent have at least one wellness initiative in their workplace. Employers that are interested in offering wellness plans should consider how it would affect productivity, absenteeism, turnover, retention, and recruitment, according to the survey authors. Including these factors in the ROI discussion can help demonstrate additional savings a company could achieve.

When it comes to wellness incentives, HSA and HRA contributions (18%) and premium reductions (16%) are most popular. Companies are split on whether to offer wellness incentives with 58% not providing rewards to employees and 42% offering some type of incentive in varying monetary amounts to participate. The value of the incentives remains relatively modest. Companies interested in wellness incentives can use the ACA as a guide. Eighteen percent offer $250 or more of incentives to employees for health-related tasks. Common values of incentives are $101 to 250 and $1 to $50. For more information, visit www.HealthcareTrendsInstitute.

Survey: People with consumer-driven health plans do more price comparisons

People who have consumer-driven or high-deductible health plans are more likely to ask whether care is covered, seek out generic drugs and talk to their doctors about less-costly care options, according to a survey. The report notes that such plans were designed to steer consumers to more cost efficient care, but “the ability to make informed decisions is highly dependent on the extent to which people have access to useful information.” ThinkAdvisor (1/13)

A Snapshot of Consumer-Driven Health Plans

A recent survey by EBRI and Greenwald & Associates finds the following about consumer driven health plans (CDHPs):

  • 13% of the privately insured population are enrolled in a CDHP; 11% are enrolled in a high-deductible health plan (HDHP); and 76% are enrolled in more traditional coverage.
  • 26 million people with private insurance are enrolled in a CDHP—a health plan associated with a health savings account (HSA) or health reimbursement arrangement (HRA), or an HSA-eligible health plan.
  • 63% of people in CDHPs have opened an HSA, 13% are in an HRA, and 24% are in an HSA-eligible health plan, but have not opened an HSA.
  • People in a CDHP or an HDHP are more likely to have cost-conscious behaviors compared to those in traditional plans. They are more likely to have checked whether the plan would cover care; asked for a generic drug; talked to their doctors about prescription options and costs; asked a doctor to recommend a less costly drug; talked to their doctors about other treatment options and costs; developed a budget to manage health care expenses; and used an online cost-tracking tool provided by the health plan.
  • People in a CDHP are more likely to have talked to friends, family, or colleagues about the plans; attended a meeting where health plan choices were explained; and consulted with their employer’s HR staff about health plan choices.
  • People in an HDHP are more likely to have visited the health plan’s website to learn about their plans; talked to friends, family, or colleagues about the plans; used other websites to learn about their choices; and consulted with an insurance broker to understand their plan choices.
  • CDHP enrollees are more likely to take advantage of wellness programs, such as health-risk assessments, and health-promotion programs, and biometric screenings.
  • Financial incentives mattered more to CDHP enrollees than to traditional-plan enrollees.

Health Insurance and Workplace Wellness

  • There has been a steady increase of high-deductible health plans (HDHPs) and consumer-directed health plans (CDHPs) over the past two years – nearly two in three employers offer one of these types of plans along with a health savings account (HSA).
  • 57% of employed adults say their employers should play an active role in their employees’ health. Sixty-eight percent say that they should pay lower health insurance premiums for participating in wellness programs.
  • About two in five of employers that increased health insurance options also added other benefits or a workplace wellness program. About two in five said the change was due to pressure from employees.
  • When it comes to wellness, employees are most likely to take advantage of preventative screenings and vaccinations (46%), health risk appraisals (38%), health goals/biometrics monitoring (36%), healthy food options (30%), and ergonomic workstations (30%).
  • Employers that report a positive effect on healthcare costs are more likely to offer screenings (69% vs. 57%), website links to employee services (53% vs. 39%), and wellness initiatives (48% vs. 37%).
  • 65% of the employers that offer wellness programs say they have complete leadership commitment and support, but only 45% say they have integrated health promotion into their organization’s culture.

Survey: Most employers plan to keep health plans, and CDHPs dominate

Most employers surveyed say they are committed to offering health plans to employees not only because of the Affordable Care Act’s mandate but also because health benefits are valuable recruitment and retention tools, says Andrew Mariotti, a senior researcher at the Society for Human Resource Management. Even employers not subject to the ACA mandate overwhelmingly plan to keep coverage. Consumer-directed health plans have overtaken preferred provider and health maintenance organizations as the dominant plan model, says Beth Umland, director of employer research for health and benefits at Mercer. Employee Benefit News (11/20)

Preparing Workers for Open Enrollment

A report by AON Hewitt reveals how employee benefits will change during this year’s open enrollment. The report also gives tips to respond to the changes. Aon Hewitt finds that employees will see the following changes as they enroll in benefits for 2015:

  • • Rising health care costs – Most employers plan to subsidize employees’ health coverage at a similar rate as this year, but as health care costs continue to rise, employees are likely to see higher premiums and out-of-pocket costs. Half of employers increased participants’ deductibles or copays in 2014, and 39% are planning to do so in the next three-to-five years. Employees who cover spouses and other dependents through their employers’ plans may see an even steeper cost increase. Twenty-two percent of employers have reduced subsidies for covered dependents while 18% added a surcharge for adult dependents with access to other health coverage. An additional half of employers surveyed are exploring such approaches over the next few years.
  • Greater likelihood of seeing consumer-driven health plan (CDHPs) options – CDHPs are the second most popular plan choice offered by employers, surpassing HMOs. Fifteen percent of companies offer a CDHP as the only health plan option, and another 42% are considering doing so in the next three to five years. Many employers are also offering a wide range of voluntary benefits, such as critical illness coverage, to help minimize out-of-pocket costs.
  • Programs and incentives that promote healthy behaviors – Most employers are focusing more on health and wellness programs. Seventy-five percent of employers offer health risk questionnaires; 68% offer disease and condition management programs; and 71% offer biometric screenings (e.g., for blood pressure and cholesterol). More companies offer incentives for completing these screenings or participating in certain programs, such as lower medical plan premium. Twenty percent of employers require employees to complete these activities to get expanded health plan choices with additional levels of coverage. In addition, more than a third of employers are tying incentives to outcomes, such as quitting tobacco use, lowering blood pressure, or improving body mass index.
  • • More transparency on costs and health plan choices – Almost all employers are offering health care cost estimators that allow employees to evaluate two or more health care plans at a time, factoring in monthly premiums, co-payments, deductibles, and coinsurance payments. More employers are also providing decision-support tools that enable employees to model out-of-pocket costs based on anticipated health plan use or prior claims information.
  • New ways to select and purchase health care benefits – A small, but growing number of employers are offering group-based health benefits to active employees through private health exchanges. Private health exchanges create a new competitive market for health insurance that provide employees with more health plan options at different coverage levels and price points. Aon Hewitt’s data shows that while just 5% of employers allow employees to purchase benefits through a private health exchange today, 33% said it will be their preferred approach in the next three-to-five years.

Employees with CDHPs Have Lower Prescription Adherence

Research published in the American Journal of Managed Care looks at how workers with chronic conditions were affected when their Mid-Western employer adopted a consumer-directed health plan (CDHP) with a health savings account (HSA) for all workers. During the first year after implementation, enrollees with hypertension, dyslipidemia, and diabetes had significantly less medication utilization and lower adherence rates. These reductions abated, yet remained, after two years among hypertension and dyslipidemia patients. Adherence was significantly lower in patients with depression after two years. There were no statistically significant effects on enrollees with asthma/chronic obstructive pulmonary disease. For more information, visit http://www.ajmc.com.

CDHPs May Become the Most Popular Plan Type

Consumer Driven Health Plans (CDHPs) could become the most common plan type offered in the next three to five years, according to a study by Aon Hewitt. CDHPs are now the second most prevalent plan offered by employers after PPOs.

Fifty-six percent of employers offer CDHPs, and another 30% are considering offering one in the next three to five years. While 10% of employers offer CDHPs as the only plan option, another 44% are considering doing so in the next three to five years. In 2012, employers reported a cost trend of 4% for CDHPs compared to 6% for PPOs, 7% for HMOs, and 6% for exclusive provider networks.

Employers are using a variety of tactics to encourage enrollment, including subsidizing premiums at a higher level than they do for other plan options (44%), making the high-deductible plan the default plan option (22%), and covering preventive medicines before the deductible applies (44%).

A growing number of employers are considering offering voluntary benefits to address consumers’ fears that they will not be able to afford a catastrophic illness with a CDHP. While just 9% of employers offer voluntary benefits with a CDHP, another 44% are considering adding this type of coverage in the next three to five years.

Seventy-eight percent of CDHP consumers are satisfied with their plan and 89% say they will re-enroll, according to recent Aon Hewitt’s research. Sixty percent of employees who were enrolled in CDHPs say they have made positive health changes. Twenty-eight have gotten routine preventative care more often, 23% have sought lower-cost health care options, and 19% have researched health costs more frequently. For more information, visit www.aonhewitt.com.

Consumer-Driven Health Plans Have Break-Out Year

CDHP enrollment has had a breakout year after steady increases over the past decade. More than 12% of commercial enrollment was in consumer-driven plans as of January 2013, according to the latest census of MCOs from HealthLeaders-InterStudy.

Sheri Sellmeyer, a vice president at HealthLeaders said, “National players, such as UnitedHealth Group, Aetna, and WellPoint, are driving CDHP enrollment, but so are regional insurers. The percentage of commercial enrollment in consumer-driven plans varies on a state-by-state level. One extreme is Utah, where an important regional player and a national plan are heavily marketing CDHP, which makes up almost 21% of commercial enrollment.”

“The growth of CDHPs across the country will drive patients to influence physician prescribing as more people become motivated to own their healthcare. While some will seek lower cost care and generics, patients with chronic diseases may actually demonstrate additional adherence and compliance, as those medications are often built into CDHP benefit design. For pharmaceutical companies, understanding where each brand falls within the patient priority set will be vital to forecasting the impact of CDHP,” said John Jaeger a vice president at PharmaStrat. For more information, visit www.hl-isy.com.

Last Updated 09/22/2021

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