Consumer-Driven Plans Gaining Favor Among Employers

April 1, 2003 ( - Responding to continued double-digit health care cost increases, the percentage of companies offering consumer-driven health care plans (CDHP) more than doubled in one year.

The one-year increase is up from 11% offering consumer driven plans the previous year, with another 8% saying they will definitely offer a CDHP within the next two years, according to a survey of 300 mid-sized and large corporations by Deloitte & Touche LLP. The company did not specify exactly what percentage of surveyed corporations currently offer CDHPs.

Going forward, 35% are reviewing such plans and may offer one in the near future. Nearly half (45%) of the respondents believe that a CDHP will be part of most employer health plans by 2005.

The reason for the shift is primarily in the cost-benefit analysis. More than half (52%) of the companies surveyed agreed that CDHPs will result in immediate employer cost savings, while slightly more than one third (36%) believe these new plans will reduce the long-term health care cost trend.

Thus far, employees have responded positively to the change. Of the early adopter companies offering a CDHP, more than two-thirds (67%) agree that health care consumerism will be well-received by some of their employees. Evidence of this fact are the 41% of those companies reporting that more than one-fifth of their eligible employees have already signed up for the new CDHP.

Getting Satisfaction

These results support an earlier survey conducted by Mercer Consulting that survey respondents report surprisingly high levels of employee satisfaction with their CDHPs: 45% say the response has been “strongly positive,” and another 40% say it has been “more positive than negative.” None reported a “strongly negative” reaction, and only one respondent said the response was “more negative than positive.” (See Mercer Offers Insights On Consumer-Driven Plans ).

Most (71%) that offered the program did so with all employees in 2002, rather than trying it out with a more select group first. Among employers who offered workers other choices, approximately 15% of eligible employees, on average, enrolled in the CDHP

Defined contribution health plans, also called consumer-driven health plans, are a new concept, and no generally agreed-upon definition of their basic elements exists. The principal idea, however, is to shift responsibility for health insurance choices from the plan sponsor to employees, with the sponsor fixing costs (See Spend Thrifts at Lower Costs ). Among those respondents offering other medical plan choices, about three-fourths (74%) report that the organization’s cost for the CDHP is lower than, or as low as, the cost for any other medical plan offered, while an even larger 85% say the CDHP is their employees’ lowest-cost health plan option.