CDHPs a Growing Health Care Offering from Employers

March 16, 2006 ( - A growing number of US employers are implementing consumer-driven health plans (CDHP) to help control rising costs, according to a study from Watson Wyatt Worldwide and the National Business Group on Health.

According to a Watson press release, 29% of employers now offer a CDHP with a health savings account (HSA) or health reimbursement account (HRA) arrangement, up from 13% in 2005. An additional 33% of responding employers plan to do so in 2007.

The median employee enrollment in CDHP arrangements in 7%, the release said.

The survey also found that the majority of employers (80%) find CDHPs to be at least somewhat effective at increasing employee involvement in health care decision making. However, only 59% find such plans to be somewhat effective at controlling health care cost increases.

The employers that are most successful at controlling cost increases are implementing a wide variety of programs to encourage consumerism rather than relying solely on CDHP arrangements. According to the survey, best performers are 32% more likely to focus on quality of care (e.g., paying a differential to higher-quality providers) and 24% more likely to have programs that assist employees in managing their own health than their poor-performing counterparts. They are also 23% more likely to use data and hard evidence and 16% more likely to provide incentives and information to use health care services appropriately.

Best-performing companies – those with a median two-year average cost increase in the lowest quartile – are keeping cost increases to just 3% percent over the two-year period. Conversely, poor-performing companies are experiencing an 11.5% increase. The median two-year cost increase for all companies is 8%.

Additional survey findings include:

  • Merely increasing employee accountability or sharing costs with employees does not reduce overall cost increases. In fact, the degree to which organizations have adopted programs that share more costs and financial risks with employees was found to be almost completely unrelated to performance.
  • Relatively few respondents are significantly increasing point-of-care cost sharing (26%), employee premium contributions (24%), deductibles (22%) or employee copayments (21%).
  • Forty-four percent of employers plan to shift from regional to national health plan providers, while 25% will consolidate medical vendors and 10% will change medical vendors.
  • Employers are using incentives to encourage employees to complete health risk appraisals (53%), improve personal health (43%) and use lower-cost providers (21%).

A previous release on the survey said that respondents expect the increases in health care costs to slow (See Increase in Health Care Costs Expected to Decrease ).

The 11th annual Watson Wyatt/National Business Group on Health Survey is based on responses from 585 large employers that collectively employ more than 13 million full-time workers. A copy of the survey report can be purchased from here .