Consumer-driven plans creating cost-conscious consumers
Consumer-driven plans creating cost-conscious consumers
But many CDHP members are unaware of price, quality information
Consumer-directed health plan (CDHP) enrollees are more cost-conscious, but for many it’s not their insurers or employers that are educating them about healthcare. Instead, they are finding healthcare cost and quality information on their own.
The Employee Benefit Research Institute’s (EBRI) 2008 EBRI Consumer Engagement in Health Care Survey found that CDHPs continue to grow, but the movement has been slow. An estimated 9.8 million adults, or 3% of the total number enrolled in health insurance plans, were enrolled in CDHPs in 2008, which was an increase from 2% in 2007.
Those who question CDHPs point to the relatively small percentages as proof that they’re not catching on, but Paul Fronstin, director of the EBRI health research and education program in Washington, DC, says CDHPs don’t enjoy lofty numbers simply because they have not been around that long.
Employers began offering health reimbursement accounts (HRA) in 2001 and health savings accounts (HSA) in 2005. Large employers didn’t start providing HSAs until 2006. By 2007, 7% of employers with 10–499 employees and 11% of employers with 500 or more employees offered HRA- or HSA-eligible plans, Fronstin says.
Fronstin notes that although CDHP penetration is still relatively low, HMOs also took time to gain momentum. “Going from zero to that number in such a short period of time is actually significant, and that is how markets grow over time,” he says.
The survey found that whether members understood CDHPs depended on the individual’s plan type. Fifty-nine percent of CDHP members were “extremely or very familiar” with CDHPs, compared to only 10% of high-deductible health plan (HDHP) members and 8% of traditional plans. (See Figure 10 on p. 11.)
The theory behind CDHPs is that transferring more costs to members will lead them to become better healthcare consumers and take better care of themselves. That premise appears to be well founded. Those in CDHPs and HDHPs exhibited more cost-conscious behavior in their healthcare decision-making than those in traditional health insurance plans, according to EBRI.
CDHP and traditional enrollees were more likely than HDHP enrollees to report that they had used information about quality of doctors in their healthcare decision-making, and CDHP members were more likely to find information on the cost and quality of doctors from sources other than their health plan.
Those in CDHPs and HDHPs were more likely to consider costs when making healthcare decisions, and they were also more likely to ask their doctor to recommend a less costly prescription drug. When comparing cost and quality information, respondents said they received more health quality information for their healthcare decision-making.
Although CDHP members showed more interest in obtaining information about cost and quality, EBRI reported that more respondents in traditional plans said their health insurer provided cost and quality information than those in CDHPs and HDHPs. (See Figure 11 on p. 11.)
Fronstin says those findings could be misleading. CDHP respondents were healthier, more likely to exercise, and less likely to smoke. Because CDHP members are healthier, they may not have as much experience with the healthcare system. This means CDHP members will need less information and may not even know it exists, he adds.
Another potential problem for health plans is that many CDHP members don’t realize that preventive screenings are often exempt from a deductible (the health plan picks up the full cost). The idea behind this growing trend for procedures such as mammograms and colonoscopies is that if members do not have to pay for the preventive services, they are more likely to maintain regular screenings.
However, 56% of adults in CDHPs reported that their deductible applied to all medical care. Worse, 71% of those in CDHPs with coverage through the individual market said their deductible applied to all healthcare services. (See Figure 12 on p. 11.)
Fronstin says these findings could show that people in CDHPs and HDHPs do not realize preventive services are excluded from deductibles, which is a result of health insurers and employers not providing adequate education about the plans. “[That lack of education] has some serious implications, because if they don’t know that the plan covers preventive services, they are not going to get preventive services and that defeats the purpose of providing rich preventive benefits,” he says.
Kathy Campbell, director of CDHPs at Aetna in Hartford, CT, says covering preventive care, including waiving copays for certain prescriptions, pays off in the long run.
“We cover preventive care at 100%. We strongly encourage that because that is a short-term cost that has longer-term benefit,” says Campbell.
Another concern about HDHPs and CDHPs is that members may delay care because of the added cost burden. The survey found that is not the case when comparing CDHPs with traditional insurance, “mostly because more traditional plan enrollees reported access issues due to costs.” HDHP enrollees, on the other hand, were more likely to claim they delayed or avoided healthcare services because of costs. (See Figure 13 on p. 12.)
Getting members and employees the necessary healthcare information is what employers and health plans hope to accomplish with CDHPs, but the study shows that implementation has been lacking. One company trying to change that is Compass Professional Health Services (PHS) in Dallas, whose goal is to lower employer and individual healthcare costs while improving quality.
The company does this through collecting myriad healthcare information on price and quality and provid-ing it to consumers and employers so they can make wiser healthcare decisions. That information is coupled with the company’s Health Pros, nurse case managers and experienced healthcare administrators who provide expertise and guidance for individuals to make the best healthcare decisions.
Comparable healthcare costs are not available to average consumers, and they need the help of healthcare experts, says Scott Schoenvogel, CEO of Compass PHS.
“It’s very difficult to put all this information into the hands of the healthcare consumer and then expect them to use that to lower costs in healthcare,” Schoenvogel says. “That’s where our support teams and advocates come in and do that kind of work to make those changes happen.”
HSAs and HRAs
Enrollment in HSA- and HRA-eligible plans is growing, but the market penetration is still relatively low and most people are unfamiliar with them, according to the survey.
Those who were enrolled in plans with HSAs but did not open a savings account pointed to financial difficulties and confusion as reasons why they were not interested in HSAs.
Twenty-eight percent said they did not have the money to fund the account, 22% reported the tax benefits were not attractive enough, 17% thought it was too much trouble to open and manage the account, and 10% suggested that HSAs were too complex or beyond their understanding.
Difficulties with individual market
Fronstin says most of those in HDHPs are in the individual insurance market: 24% in HDHPs, 16% in CDHPs, and 7% in traditional insurance. Having so many individual insurance members in HDHPs affects those plans.
“I think that’s going to be a constant struggle with HDHPs,” says Fronstin. “When you think about that group, they are disproportionately people in the individual market, which means they are disproportionately people who are unhealthy and paying a lot of out of pocket and probably a lot for their premiums because of their health status. It’s going to be very difficult to satisfy that group without changing the plan structure.”
Positives and negatives
A negative reported in the survey was that those in CDHPs and HDHPs were less likely than those in traditional plans to recommend their health plan to a friend or coworker and less likely to stay with their current health plan if given the opportunity to switch.
Fronstin says dissatisfaction with HDHPs and CDHPs could be because the plans are not as established as traditional plans such as PPOs and HMOs; CDHPs are so new that people might find them confusing. “Your confusion level is going to drive your satisfaction level,” he says.
On the plus side, there were nearly across-the-board increases between 2006 and 2007 in the percentage of CDHP enrollees who said:
- Their health plan was easy to understand
- The plan encourages healthier lifestyles
- The plan provides information to help choose providers
- The plan protects members against expensive illnesses
Other survey findings included that people choose their health plans for different reasons, CDHP members make more money, HDHP members are not satisfied, and respondents supported cost-sharing. These findings are detailed below:
- CDHP and HDHP members were more apt to delay care or put off filling a prescription than those in traditional plans. (See Figure 14 on p. 12.)
- When asked why they chose their health plan, nearly half of CDHP members pointed to lower premium costs, whereas nearly half cited cost savings and the ability to roll over HSA funds. The most popular choice for those in traditional plans and HDHPs was the physicians and hospitals in the network. (See Figure 15 on p. 13.)
- Those in CDHPs were wealthier than those in traditional plans. Forty percent of CDHP members were in households with incomes of $100,000 or more in 2008, an increase from 22% in 2005. Only 14% of adults with CDHPs lived in households earning less than $50,000, a drop from 33% in 2005. There was little change in income distribution of adults in traditional plans from 2005. (See Figure 16 on p. 13.)
- The survey found no difference between the level of satisfaction with quality of care when comparing CDHP enrollees with traditional insurance. However, those with HDHPs were not satisfied. (See Figure 17 on p. 14.) “Differences in out-of-pocket costs may explain a significant portion of the difference in overall satisfaction rates between traditional plans, HDHP, and CDHP enrollees,” EBRI wrote.
- Those in CDHPs were more likely than those with traditional coverage to have a choice of health plan, which differs from 2005 and 2006, when traditional coverage members were more likely to have more choice. This is a result of more large employers entering the CDHP market and traditional plans consolidating options, says Fronstin.
- Survey respondents across the board showed support for reduced cost-sharing programs such as health promotion programs, scientifically proven effective care, and networks of medical providers with records of high-quality care.
- The survey also found that those with CDHPs were more likely to support lower cost sharing for active patients, members who follow treatment regimens, less invasive procedures, and high-quality doctors (See Figure 18 on p. 14.)
Regardless of whether CDHPs gain popularity and more people open HSAs, Fronstin says healthcare consumerism will survive. Greater consumerism means health insurers and employers need to educate employees about their benefits and how to reduce costs and choose the best care.
As long as healthcare costs outpace inflation, employers will look for options such as CDHPs to reduce costs, says Fronstin. “Whether HSAs continue or not, we’ll continue to see this movement toward consumer engagement,” he says.
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