Benefits January 7, 2003

Continued CDH Option Expansion Seen for 2003

January 7, 2003 (PLANSPONSOR.com) - The number of large employers that offer a consumer-directed health care (CDH) plan should quadruple in 2003, a survey found.
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Citing data from Forrester Research, only 4% of large employers (1,000 employees or more) offered a CDH option to their employees last year, according to a story in INSIDE CONSUMER-DIRECTED CARE. Among large employers that participated in an online survey, 16% planned to offer a CDH plan this year. The percentage is expected to increase to 24% in 2004.

Although more employers are looking toward implementation of a CDH this year, few see high deductibles – a hallmark of many plans – as an attractive feature. The most essential elements of a CDH plan, say large employers, are hospital cost data and an integrated health reimbursement arrangement (HRA) with a rollover provision for unused funds, according to the survey.

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High Deductibles Not Key for Most Employers

According to the report, only 24% of large employers want employees “to shell out big bucks before collecting any benefits.” Among companies with fewer than 1,000 employees, only 10% see high employee deductibles as an essential feature of CDH plans.

Among surveyed employers that offer, or plan to offer, a CDH plan, 44% will stick with plans available through their primary insurance provider. Another 11% of survey respondents suggested they would design their own CDH plan and have their existing insurer administer it. Only 2% said they would offer a plan developed by start-up CDH vendors.

Other survey results included:

  • Small employers expect modest growth. In 2002, 3% of companies with fewer than 1,000 employees offered a CDH plan. Another 5% planned to offer a CDH plan in 2003 or 2004.
  • Low premiums are most essential to small employers. Large employers, by contrast, ranked low premiums as only the seventh most important feature of a CDH plan. Loyalty rewards programs are considered the least important CDH feature.

The report, What Employers Want From Their Health Plans, is based on an online survey of 83 employer-clients of the Institute of Management and Administration, a New York City-based publisher.

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