CDHP Use Surpasses HMO Use by Employers

September 17, 2012 (PLANSPONSOR.com) Consumer-driven health plans (CDHPs) have surpassed health maintenance organizations (HMOs) to become the second-most common plan design offered by U.S. employers, according to a survey from Aon Hewitt.

Preferred provider organizations (PPOs) continue to be the most widely offered plans, with 79% of employers offering these plans in 2011. Aon Hewitt’s survey of nearly 2,000 U.S. employers representing 20 million U.S. employees and their dependents found 58% of employers offered a CDHP and 38% offered HMO plans.  

Among employers that offer CDHPs, health savings accounts (HSAs) outpace health reimbursement arrangements (HRAs) by two to one (34% versus 18%). However, Aon Hewitt’s survey shows a higher number of employees enrolling in HRAs, with 43% of employees enrolling in HRAs compared with 28% in HSAs.   

Aon analysts said this reflects the fact that HRA plan designs are popular among large employers embarking on full replacement CDHP strategies, as they offer more design flexibility to the employer than HSA designs. HSAs, on the other hand, are typically offered as one of several plan options available for employees to choose between and therefore generate lower enrollments.  

Maureen Fay, senior vice president and head of Aon Hewitt’s CDHP working group, said employers are exploring ways to manage health care costs by changing underlying behavior patterns and that CDHPs provide them with a vehicle “for educating and motivating employees to actively engage in understanding and managing their health.”

Despite an increase in prevalence, Aon Hewitt’s survey found that enrollment in CDHPs lags behind PPO and point of service (POS) plans. The average enrollment in a PPO plan was 69% in 2011 and average enrollment in a POS plan was 49%. Forty-three percent enrolled in a high-deductible CDHP with an HRA and 28% enrolled in a high-deductible CDHP with an HSA.  

To encourage employees to enroll in CDHPs, employers are using a variety of tactics, including subsidizing premiums at a higher level than other plan options (36%), covering preventive medications before the deductible (34%) and contributing employer funds to the HSA (30%) and HRA (22%).  

A growing number of employers are also considering using voluntary/elective benefits to supplement these plans, such as critical illness, hospital indemnity and accident insurance policies. Of those currently using this tactic, more than one-quarter (26%) can attribute a significant-to-moderate increase in CDHP enrollment due to the availability of voluntary or supplemental medical benefits.  

While just 6% of employers use voluntary/elective benefits today to complement the CDHP and encourage enrollment, 42% report they are considering this approach in the next few years, according to the survey.

«