By far, consumer-driven health plans (CDHPs) are the fastest growing health care option among employers. And new research offers some pretty compelling evidence on why this type of plan option may just surpass traditional plans in the near future.
Last year alone, CDHPs grew by 26%, according to the Seventh Annual Cigna Choice Fund Experience Study.
The Cigna study was a massive project that looked at the health claims experiences of more than 2.5 million customers who were enrolled in either a CDHP, or a more traditional PPO or HMO plan.
CDHPs are typically coupled with a tax-advantaged options like a health savings account or a health reimbursement arrangement, and generally have significantly lower premium costs (for both employers and employees) than PPOs and HMOs. However, they also carry higher deductibles that must be satisfied in the event of a hospitalization or other catastrophic medical event.
Employees as ‘consumers’
CDHPs are meant to lower health costs by getting employees to become better healthcare “consumers” by helping them lead healthier lifestyles and make smarter decisions about health care spending.
After all, if employees can stay healthy and avoid the types of health issues that would require them to satisfy the plan’s deductible, then the plan is far cheaper for them than traditional plan options.
When CDHPs were first introduced many employers were skeptical — and had trouble getting buy-in from their employees because of the high deductible.
Now, however, there’s some solid evidence out there that CDHPs work as advertised.
Example: The Cigna study found that when employers offered a CDHP as their only health care option, employees improved their health risk profile (risks for developing diseases or medical conditions as determined using tests and questionnaires) by 6% compared to workers who were enrolled in a PPO or an HMO.
Some of the other highlights of the Cigna study:
- The annual total medical cost increase for CDHPs was 13% lower on average than the increase in traditional plans
- CDHP participants were twice as likely to complete a health risk assessment than traditional plan participants
- CDHP participants with a chronic illness were 25% more likely to participate in a disease-management program than traditional plan participants
- CDHP participants were 59% more likely to find cost and procedure info to help them review potential medical costs, and
- CDHP participants used the emergency room at a 6% lower rate than participants in PPOs and HMOs.
Individuals enrolled in CDHPs were also more likely to use generic medications and participate in preventive care activities — such as annual doctor’s visits and mammograms — than those enrolled in PPOs and HMOs.
What makes CDHPs so effective? According to David M. Cordani, Cigna’s president, “CDHP customers are more engaged with their health and health spending, they spend less to receive the same levels of recommended care and are more satisfied with their health care experience.”
Getting the most out of a CDHP
To get the most out of this plan option, employers must be willing to commit a significant amount of their time, energy and resources to make the plan work for their firm.
Here are three ways to get the most out of a CDHP:
1. Avoid sticker shock by helping with the deductible. One of the biggest worries employees have regarding CDHPs is the cost of the deductible. Because these plans are coupled with tax-advantaged options like health savings accounts and health reimbursement arrangements, it’s always a good idea to put some money into these accounts to help employees in the event the deductible has to be satisfied. And you may also want to consider plans that offer incentives such as a deductible discount for employees who complete things like health risk assessments and biometric screenings.
2. Offer frequent, year-round education. Because CDHPs are geared toward making employees better health care “consumers,” education is a must. More than any other plan option out there, consumer-driven plans depend on year-round employee education. The more data you can put at employees’ fingertips (e.g., showing employees how to compare the costs for common procedures among different providers or what types of common medications offer generic alternatives), the better the results you’re likely to see.
3. Personalize your communications with workers. Personalization is the key. Cigna’s research shows that CDHP participants want health care info that’s targeted toward their individual needs. So you may want to survey staffers on how they’d most like to receive info and updates. And it might also be worthwhile to offer different types of communications to different employee demographics, depending on what the surveys reveal.