The Buck Consultants survey analyzed responses from more than 130 USorganizations on CDHC plans – those characterized by a High Deductible Health Plan (HDHP) coupled with either a Health Reimbursement Account (HRA) or a Health Savings Account (HSA).
The idea that makes consumer-driven health plans so successful is that health care costs will decline if employees begin purchasing care with money they can conserve by making wise decisions about prices and services they need.
Cost reduction is the main factor that people switch over to CDHC plans, according to 84.6% of respondents, followed by 56.4% who said educating employees on the health care costs is most important. Slightly less – 51.3% – said they think these plans will reduce the future costs of health care.
However, respondents believe that HSAs and HRAs are able to contain health costs equally as effectively almost half of respondents believe HSAs do a better job at controlling costs than HRAs.
Even though employers favor HSAs nearly three to one over HRAs, about half of the respondents that intend to offer a consumer-driven plan said they see the value in offering HRAs and will consider offering that option.
Twenty percent of employers offer a CDHC plan with an HSA option, and 19% of employers offer a CDHC plan that includes an HRA. Employers that do not offer either type of CDHC plan say that if they added options to their health plan, 39% would opt for HSAs, 14% for HRAs and 47% would offer both.
Some employers do not offer consumer-driven healthcare because:
- Interested, but not ready to implement, 62%
- Unproven cost management, 16.9%
- Employees adverse to high deductible, 7%
- Requires too much education, 7%
- Potential employee relations concerns, 4.2%
- Bound by collective bargaining, 2.8%
The authors of the survey also looked at participation rates for CDHC options and found a link between higher participation rates (above the 14% average) and employee salary, with the highest rate of enrollment experienced by firms with high average salaries. Companies with average annual salaries less than $40,000 have not achieved a CDHC participation rate greater than 5%, and all companies with average salaries more than $60,000 exceeded a 20% participation rate.
The survey found that even companies that strongly support the plans rally only a 17% participation rate.
One way employers can draw higher participation rates is by pre-funding the HSA account at the start of the year and cover the administration fees. Seventy-six percent of survey respondents contribute to employees’ HSAs.
The survey found that HSAs are more attractive (52%) to employees than HRAs (23%), which Robert Burnett, principal in Buck’s Health and Welfare consulting practice, attributes to employees’ ability to invest funds held in HSAs and the fact that employees can roll over their balances when they leave employment.