Uncovering the Potential in Consumer-Directed Health Plans

6/17/2015

We have emphasized the value of flexible spending accounts, health reimbursement arrangements and health savings accounts for many years. As these consumer-directed health plan (CDHP) options continue to become more widespread, trends show that they are producing positive results.

Lower Health Care Risk
Surveys conducted by a major insurance carrier show that when employers moved to CDHP offerings from PPO and HMO plans, plan participants improved their health-risk profile by 10% in the first year.

Lower Overall Medical Costs
In CDHPs, the medical-cost trend was 16% lower than in traditional plans during the first year. Over five years combined, cost savings for those enrolled in CDHPs averaged $9,700 per employee. These reductions in cost were achieved without employers shifting out-of-pocket health expenses to their employees.

Enrollment in HRAs and HSAs is on the upswing, growing by approximately 14% in 2011. Surveys by the Kaiser Family Foundation show that more than 17% of workers participating in employer-sponsored plans currently have HSAs or HRAs, up from just 4% in 2006. The Health Affairs journal estimates that if half of all employer group enrollees were in CDHPs, 7% of all health care spending, or $57 billion, could be saved annually. Other studies project that the savings could exceed 9% of total U.S. health care spending.

Increased Cost Consciousness
According to a recent analysis by the Employee Benefit Research Institute, a private, nonpartisan, nonprofit research institute based in Washington, D.C., individuals participating in CDHPs are more likely than those with traditional coverage to show cost-conscious behaviors. According to the 2011 survey, those in a high-deductible health plan with an HSA or HRA were more likely to do the following:

  • check whether their plan would cover care
  • ask for a generic drug instead of a brand-name drug
  • talk to their doctor about treatment options and costs
  • talk to their doctor about prescription drug options and costs
  • develop a budget to manage health care expenses
  • check the price of a service before getting care
  • use an online cost-tracking tool

Many are concerned about the viability of CDHPs, given the recent Supreme Court decision upholding the Affordable Care Act. Unless the Act can be modified, HSA contributions will not be taken into account when determining if a group plan meets the 85% medical-loss-ratio threshold. It is important that legislators on both sides of the aisle know that CDHPs achieve positive results. With the ability to increase awareness, lower health care risk and control costs, CDHPs need to be preserved and promoted.

For More Information
Contact ASR/Physicians Care at (616) 957-1751 or (800) 968-2449 for more information.

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