CDHP Costs Keep Rising but at Much Slower Rate in 2005

January 25, 2006 (PLANSPONSOR.com) - Consumer directed health plans (CDHP) grew at a significantly slower rate in 2005 than other types of health plans, a new survey found.

A news release from the Deloitte Center for Health Solutions found that CDHP costs increased by an average of 2.8% from 2004 to 2005, according to the survey of 152 major US employers. That compares to an 8% increase in total premiums for health maintenance organizations, an 8.5% increase for point-of-service plans and a 7.2% increase for preferred provider organizations. Traditional or indemnity plan costs increased 6.4% last year, according to the survey. The average for all types of plans was 7.3%, the announcement said.

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“Employers are increasingly turning to consumer-driven health plans to reduce costs and help workers and their families make better health care decisions,” said Tommy Thompson, the independent chairman of the Deloitte Center for Health Solutions, in the news release. “Not only do companies protect their bottom lines, they help make employees better health consumers.”

The survey also found that businesses are projecting similar rates of cost growth in 2006, including 2.6% for consumer-driven health plans, 7.4% for health maintenance organizations, 7.3% for point-of-service plans, 7.5% for preferred provider organizations, and 6.6% for traditional or indemnity plans. The average for all types of plans is projected to be 7.1%.

Not surprisingly, 40% employers said consumer-driven health plans offer “the most effective approach for managing costs and maintaining quality care,” while 35% said preferred provider organizations were the most effective. Eighteen percent selected health maintenance organizations, 6% said point-of-service plans, and just 1% said traditional or indemnity plans.

A Deloitte study released in November found that 43% of US companies either have a consumer-driven health plan in place (22%) or will be offering one in the next two years (21%). Another 51% said they are reviewing consumer-driven options and may offer one in the near future if they can be proven to be attractive to employees while saving money.

The survey, held in conjunction with Deloitte Consulting LLP’s Human Capital practice and co-sponsored by The ERISA Industry Committee, was conducted over four weeks in December and early January.

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