Consumer-Directed Plans Surge as Employers Try to Control Costs

Cora Nucci, August 25, 2010

Consumer-directed health plans (CDHPs) pay. That's the message this month from the GAO, which released a report chock-full of data to back up the claim. With employer health costs projected to ratchet up 9% next year, an obvious move is for payers to offer CDHPs. The really smart ones will excel at marketing these plans to a narrow and profitable demographic.

The evidence, actually a study of studies, shows that high-deductible health plans with a tax-advantaged account, such as a health reimbursement arrangement (HRA), that enrollees can use to pay for healthcare expenses reduce consumer spending on healthcare. 

Businesses are quickly coming to understand the benefits of CDHPs. In fact, 61% of employers said they plan to offer consumer-directed plans in 2011. Employers know that CDHP enrollees are "healthier" than average and that they tend to sip rather than guzzle health services. From the GAO report:

"...of the 21 studies GAO reviewed that assessed the health status of HRA and other CDHP enrollees, 18 found they were healthier than traditional plan enrollees based on utilization of health care services, self-reported health status, or the prevalence of certain diseases or disease indicators."

Here's an overview of the economically pleasing habits of CDHP/HRA enrollees:

  • Their utilization of services was generally lower than PPO groups.
  • The HRA groups spent significantly less than the PPO groups.
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