Consumer-driven health plans (CDHPs) have been billed as the least expensive health insurance option for employers — and the most likely to drive employees to make better decisions about their health. But new research shows that’s not necessarily true.
In the past, we’ve reported on studies that pump up the proposed benefits of CDHPs, which are high-deductible health plans paired with tax-advantaged accounts like health savings accounts (HSAs) or health reimbursement accounts (HRAs).
The logic behind CDHPs lowering health plan costs is simple: The plans carry a high deductible that must be satisfied in the event of a hospitalization. As a result, they get employees to become better health care “consumers” — because if they lead a healthier life they avoid health issues requiring them to fork over the high deductible.
Also a result of the high deductible: CDHPs carry cheaper premiums for employers and employees.
That all seems to make sense, right?
Research: PPOs with high deductibles are cheaper
Enter new research — one of the largest independent surveys of its kind — by United Benefit Advisors (UBA), an independent employee benefits organization.
It says preferred provider organization (PPO) plans coupled with a high deductible actually outperform CDHPs when it comes to lowering health care costs.
UBA surveyed 11,711 employers and concluded that while a high deductible does impact employees’ health choices — it only does so if it’s not paid for out of an HSA or HRA (which are tied to CDHPs).
UBA’s logic, too, seems to make a lot of sense. It concluded that when employers offer to pay for some or all of an employee’s deductible through a CDHP, the employee doesn’t feel the impact of his or her poor decisions. Therefore, they continue making them.
But when you add an up-front deductible greater than $1,000 to a plan that employees have to pay for out of their own pocket, you start to impact their behavior, UBA claims.
According to UBA’s survey findings, the greatest savings of a PPO over a CDHP was achieved with a deductible in the $2,000 to $2,999 range. In that range, the PPO cost per employee was $7,811, more than $1,000 cheaper than the $8,859 total cost to insure an employee in a CDHP.
In addition, it found that among the plans used by the employers that were surveyed, PPOs returned a lower average cost per employee than CDHPs at nearly every deductible range (UBA provided a chart to illustrate its findings).
Hard to sell?
One thing UBA failed to mention, however, is that PPOs coupled with a high deductible are likely to be a harder sell to employees than CDHPs that provide assistance with paying a deductible.
So if you’re going to consider a high-deductible PPO, you may also have to prepare for a dip in morale — employees may view it as an attack on their wallets.
One way to stem any backlash, however, may be to attempt to gain buy-in by explaining how the drop in premiums from adding the high deductible will help make up for the added up-front cost to receive care — especially for employees who maintain good health, and therefore require less care.