CDHPs Remain Popular But Waning as Sole Option, Says Large Employer Survey

 "The consumer behavior aspect is a bit unrealized," says one group executive.

There aren't too many holy grails in healthcare, probably none. But there are many hopefuls and consumer-directed health plans (CDHP) are one.

CDHPs were created to bend the cost curve and they remain popular with fully and self-insured employers alike (FI and SI). But results from the 2022 Business Group on Health employer survey indicate that CDHP dynamics are changing. This article explores the reasons for this shift in the second of two articles on the Business Group's annual findings.

CDHP relevance among business group members

CDHPs remain the plan design of choice among large, SI employers. The Business Group reports that median CDHP enrollment was 50% in 2021 and that CDHPs "continue to be the highest enrolled plan for a majority of employers” at 53%.

But paired with this popularity is a decline in CDHPs as the sole coverage option. The Business Group findings show that "the last several years have seen a move away from full replacement." The primary reason for this is the 2019 repeal of the Affordable Care Act (ACA) excise tax, designed to discourage employers from offering high-cost Cadillac plans. CDHPs offered employers an alternative and their uptake predictably grew. Among the Business Group employers, CDHP full replacement increased from 17% in 2012 to a high of 39% in 2018. A steady decline with the tax repeal will result in only 14% of the Business Group members expecting to offer CDHP as their only option in 2022.

"Employees who might have swung the pendulum further toward CDHP now have more choice," says Ellen Kelsay, Business Group on Health's President and CEO. PPOs now rank a relatively close second in plan design, representing 41% of large, SI employer enrollment.

The broader landscape is comparable but not equal

In 2020, 64% the Business Group's large, SI employers offered only CDHPs. This year is called out to compare those survey results to the most recent findings from the Kaiser Family Foundation (KFF). In that survey, which includes all employer types (small, large, SI and FI), 68% offered CDHPs as their sole option.

The comparison is important to gauge benefit design popularity across the landscape, how SI trends influence other employers and payers, and vice versa. Kelsay notes, "When you are a large innovative employer that makes some change, other employers are keen to learn from that—especially smaller employers. Health plans watch, too," she adds. "There seems to be an interest in not only plan design, but vendor choice. Plans pay attention for when it makes sense for them to pivot."

HSA a vital part of the strategy

Health Savings Accounts (HSA) are an important part of CDHP plan design, with these related findings from the Business Group survey.

• HSA dominates HRA in CDHP pairings. Among responding employers, 97% offered HSAs in 2021, compared to 22% for HRAs. HSAs dominate in the KFF 2020 survey as well (20% versus 8%) but overall employers that offer either option is lower (26%).
   
• Employer HSA contribution. The median 2021 contribution was $600 for employees, $500 for spouses/partners among the Business Group respondents. KFF 2020 results, again across all employer types, averaged $550 and $1,018.
   
• Contribution strategy. Some 57% of the Business Group 2021 respondents make predefined HSA contributions that may be wage-based, matched, or seeded. Of those contributions, 26% were based on employee health improvement program participation. The 2020 KFF survey did not contain this information.

The latter is important, as consumer engagement is a critical aspect of overall CDHP success—and one that has been mixed.

If you build it they will come, sort of

Consumers play a vital role in CDHP actual outcomes versus plan design potential. In 2008 and pre-ACA, The Innovator's Prescription identified the combination of HSAs with high-deductible health plans as "one of the most important reforms to be made in health care . . . a necessary element of the new disruptive value network that major employers will need to orchestrate." The authors predicted 90% CDHP substitution by 2016, which has not clearly come to pass. Consumer behavior is a significant component.

"The consumer behavior aspect is a bit unrealized," observes Kelsay. "There was a lot of optimism about CDHP. The hope was that it would create more informed healthcare consumers who, because of the high deductible, would think twice about using the ER, getting a scan, or choosing brand over generic. But there are the practicalities of how we use services, the urgency of choice. In these scenarios, lining up the information to make good decisions isn't necessarily the answer. This plus the impact of high-deductible plans on people who live paycheck to paycheck and the unintended consequences of delayed care has made things hard."

But it's more than consumer behavior. It's system behavior. Jason Hwang, MD, one of The Innovator's Prescription's authors, commented in 2019:

“While HSA adoption has increased a lot, it hasn’t quite been exponential. . . the reluctance of the system to move beyond a volume-based fee for service model (the tyranny of the visit!) has precluded value and outcomes-based offerings that are ideal for HSAs and informed consumers."

Health Affairs had a similar prognosis in 2020, noting that today's innovators, "Walmart, Amazon, and Google, are hardly the streamlined outsiders evoked in the Innovators Prescription. If their services and products appear cheap, it’s because customers are paying with their data as well as with their dollars". Amazon, along with Berkshire Hathaway and JPMorgan Chase, was one of the employer behemoths that formed Haven to deliver better, more affordable care to employees. Three years after it launched, Haven is no more with Harvard Business Review author John S. Toussaint citing "insufficient market power…[the healthcare system's] perverse incentives, [and] poor timing [COVID]" as the primary factors.

Toussaint advocates a public option and notes, "If large corporations want to self-insure, they would still be able to do so but at a substantially higher cost." Like so many healthcare reform discussions, the role of self-insured employers, CDHP, and the broader implications of benefit design ends where it began—with concerns over cost, quality, and access.