[Ccarc] Health plans....yours may be changing soon

[Tom Murray]

Consumer-Directed Health Plans Gain Traction Among Employers

		March 13, 2008: 10:35 AM EST





  NEW YORK -(Dow Jones)- Consumer-directed health plans are gaining traction
among America's largest employers - and their workers - as evidence emerges
about the potential costs savings, according to a survey released Thursday.  Around half of large U.S. employers - 47% - now offer a CDHP, up from 39% last
year. By 2009, 54% of companies plan to offer a CDHP, according to study by
consulting firm Watson Wyatt and the National Business Group on Health, or NBGH,
a nonprofit association of nearly 300 large employers, including General Motors
Corp. (GM) and Wal-Mart Stores Inc. (WMT).  CDHPs are aimed at lowering insurance premiums for individuals and employers
by giving consumers more control over - and a bigger stake in - health spending.
CDHPs pair a high-deductible health plan with personal health savings accounts -
typically a health savings account, or HSA - that can be used to fund medical
expenses not covered under the plan on a tax-free basis. The Bush administration
says such arrangements can make health care more affordable for American
families.  Enrollment in CDHPs is increasing as a larger number of employers offer these
types of plans and employees becomes more comfortable with these relatively new
products. Around 15% of workers at employers that offer CDHPs are currently
enrolled in such plans, up from 10% in 2007, according to the WW/NBGH survey.
The survey involved 435 companies employing about 8.4 million workers in the
U.S.  Faced with inflation-topping health-care cost increases, American employers
are looking for ways to reduce medical expenses. Overall, companies with a CDHP
saw healthcare costs increase by 5.5% over the past two years - a lower rate
than the 7% increase experienced by companies without a CDHP. Enrollment rates
in CDHPs "are strongly linked" to lower health-care cost trends, according to
the study. Employers with at least half of their workforce enrolled in a CDHP
had a two-year median cost trend of 3.6%, almost half that of companies without
a CDHP. The survey didn't examine the cost-benefits to employees.  "A CDHP offers a way for companies to control costs while increasing employee
accountability for health care decisions," said Ted Nussbaum, Watson Wyatt's
director of group and health care consulting in North America.  The study's authors note that the slowdown in cost increases is likely to be
more pronounced during the first few years of adoption of a CDHP and might not
reflect a sustainable trend. Educating workers about their health-care options
and dedicating more resources to wellness programs that nip health problems in
the bud before they develop into costly chronic conditions is another important
factor.  Companies with more than 20% or more of their workers enrolled in CDHPs are
more likely to offer employees to manage their own health than businesses who
don't offer these plans. Such tools include side-by-side plan and healthcare-
provider comparisons and personalized reminders for preventive procedures, such
as annual physicals.  "Actively involving more workers in their health care and giving them the
resources to make educated decisions can be a challenge, but it should be
embraced. The end result can be a mutually beneficial system for both companies
and their workers," says NBGH President Helen Darling.   Counting The Cost  CDHPs have lower premiums than traditional types of plans, but enrollees have
to pay more out-of-pocket before their insurance kicks in. Employees can offset
these out-pocket expense with funds saved in their HSAs. Health status, income
and any employer contributions are important factors to consider when deciding
whether a CDHP is the right choice.  For instance, such arrangements tend to favor the young and healthy, those who
receive employer contributions to their HSAs or those who can afford to cover
out-of-pocket medical expense while fully funding their HSAs. HSAs are less
favorable for lower-income unhealthy people because out-of-pocket expenses
increase with the amount of health-care services you use, and the tax advantages
aren't as great for people in lower brackets. In this scenario, paying more up
front in premiums is likely to be a more cost-effective option, financial
advisors say.  Typically, employers offer CDHPs as an option alongside traditional types of
insurance plans, such as preferred-provider organizations, PPO, and health
maintenance plans, HMOs. Only 6% of companies report 100% enrollment in a CDHP,
but that number is expected to rise to 9% in 2009.  -By Victoria E. Knight, Dow Jones Newswires; 201-938-2438; victoria.knight@
dowjones.com


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