Benefits March 15, 2007

Best Health Cost Cutters Offer a CDHP and Other Programs

March 15, 2007 (PLANSPONSOR.com) - Employers who offer consumer directed health plans (CDHP) as well as other potential cost-saving programs are finding the most success in keeping their health coverage expenses in line.
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That was a key conclusion of a new survey conducted by Watson Wyatt Worldwide and the National Business Group on Health, according to a news release.

According to the survey, companies most effective at controlling costs have fielded programs that involve quality, health improvement and productivity, data and evidence, and the appropriate use of health care services. For instance, best performers are 17% more likely to offer compelling financial incentives to encourage employee education and participation and 11% more likely to effectively deliver health care information.

Overall, according to the news release, a quarter of respondents experienced median health care cost increases of 2.5% in the last two years, compared with an 11% average for the poorest performers and an overall average of 8%.

In the survey of 573 large companies, the number of companies offering a CDHP increased from 33% to 38% in the last year. Forty percent of employers now offer or plan to offer an HSA, and 26% offer or plan to offer an HRA, the news release said.

“Curbing health care cost increases is a puzzle for employers, and consumer-directed health plans are only one piece,” said Ted Nussbaum, Watson Wyatt’s director of group and health care consulting in North America in the news release. “Employers can offer these plans, but it takes more than that to get employees to enroll. Filling in the missing pieces of quality, health management and education will not only help employers solve the puzzle, but also make these plans more attractive to employees.”

Even though employers are finding the greatest cost-cutting success by offering a CDHP and other programs, employee enrollment in CDHPs remains low at 8%, an increase of only 1% from 2006. Employers with 10% or more of their covered population in a CDHP are holding health care cost increases to a lower level – 6.5% average – than other employers.

Some employers are also driving enrollment by offering CDHPs as their only option. Currently, 5% are offering CDHPs on a total replacement basis and another 4% will do so in 2008, according to the news release.

The percentage of companies offering a CDHP has included:

  • 2002, 2%.
  • 2003, 5%.
  • 2004, 11%.
  • 2005, 21%.
  • 2006, 33%.
  • 2007, 38%.

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