Benefits December 4, 2006

Report: Employee Enthusiasm Lags for CDHPs

December 4, 2006 (PLANSPONSOR.com) - Contrary to reports that consumer driven health plans are fast becoming a more popular health care option for employees, a new study shows that such plans have been slow to catch on.
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The study by the Center for Studying Health System Change (HSC) found that much of the success of these plans so far may be due to workers not being given any other option than CDHPs. Such is the case for 40% of the nation’s 2.7 million workers enrolled in the plans. In fact, nearly one fifth (19%) of workers that have several heath care options that include preferred provider organizations (PPOs), health maintenance organizations (HMOs), and CDHPs actually opt for CDHPs.

By comparison, enrollment rates for preferred provider organizations and health maintenance organizations at companies with numerous health care options were 55% for PPOs, 40% for HMOs and 34% for POSs, according to data that HSC used from the Kaiser Family Foundation.

A Matter of Cost

The study report also said that once employer contributions to the HSA or HRA were factored in, there was no difference between the cost of these plans and other health coverage for employers. However, workers potentially stand to pay higher out-of-pocket expenses if they need care, with deductibles in CDHPs standing at more than five times greater than in PPO plans and more than 20 times greater than in HMO plans.

Average monthly employer contributions for consumer directed health plans were $297 for single coverage, including any savings account contribution; $288 for HMO coverage; $303 for preferred provider coverage; and $307 for point-of-service plans, the study found.

However, the average monthly cost-sharing for employees is larger in CDHPs than in other plans, the report said. The average in-network deductible in CDHPs when offered as a choice to workers in 2006 was $1,459 for single coverage, compared with $30 for HMOs, $261 for preferred provider plans and $94 for point-of-service plans, it said.

The study was conducted using a sample of 2,112 companies with three or more workers. For the full issue brief, Behind the Slow Growth of Employer-Based Consumer-Directed Health Plans, go here .

Another report released in mid-November also found that while CDHPs are gaining traction among employers, worker participation in such plans was coming in at 3% for HSAs and 5% for HRAs (See Employers Boost CDHP Offering, Worker Participation Lags ).

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