More Employers Join CDHC Race

May 7, 2007

Implementing Consumer Driven Health Care (CDHC) is comparable to running a marathon. Success requires a long-term commitment, training and preparation. Often, the finish line seems beyond reach for both employees and employers alike.

The start of a CDHC system is not easy. The first time out is like the first training session for a marathon–painful and challenging. However, a common marathoners’ expression applies to CDHC–no pain, no gain. Recent surveys and reports clearly show gains for CDHC.

For example, according to the American Association of Preferred Provider Organizations, about 10 million lives are now covered by a PPO that includes either an HRA or HSA. This survey found 4.5 million enrolled in an HSA-qualified, high-deductible health plan (HDHP), per a recent census issued by America’s Health Insurance Plans. Estimates are that another 5.5 million lives are covered by an HRA-based plan.

CDHC appeals primarily to large employers. Watson Wyatt and the National Business Group on Health released a study that indicated about 38 percent of large employers now have CDHC initiative in place. This is up from 33 percent in 2006 and 21 percent in 2005. Additionally, 40 percent of large employers either offer an HSA-qualified plan or expect to offer one in the near future. Twenty-six percent of employers reported that an HRA-based plan is in place or intend to offer one.

These surveys seem promising for the CDHC plans to cross the finish line. Although industry surveys are finding employers anticipating strong growth, many have found low selection rates as a significant stumbling block among employees, according to a report released by The Conference Board.

The shift to CDHC requires stretching the muscles before the first jog. Employees must stretch the old values of being mere health care beneficiaries to health care consumers through education and changes in spending habits and lifestyle behaviors. This includes increased knowledge about both benefits and medical costs.

Even with expanded information, are CDHC plans truly the answer for everyone? There are many opinions on the topic. Some see CDHC as an uphill battle while others view it as an easy sprint–just depends on what you read. A recent Harvard study found CDHC plans appear to cost more for women more than men. The study found that the median expense for men under age 45 using HDHPs was less than $500 while it amounted to about $1,200 for women. Only one-third of the men in that age group spent more than $1,050 in annual medical costs while it found women did 55 percent of the time

The answer may lie in how the plans are provided. Many companies provide HSA plan options with preventative benefits that are covered before the deductible is satisfied. Providing disease management and access to consumer information tools have helped to increase participation rates. Additionally, communications with employees, including an early launch and repeated face-to-face meetings, have proven to be effective in increasing enrollment in CDHC plans.

Offering a CDHC plan coupled with an HSA or HRA is the key to success. Employers wanting to cross the finish line first can contact Infinisource at 800-779-6384 to review the options available when offering these plans. It’s important to train properly with quality, health management and education while making the plans attractive to employees as well. After all, providing employment-based health coverage is a long race, and not everyone will make it to the finish line.