Membership in Consumer-Directed Health Plans Grows 25% in 2007

Enrollment in Consumer-Directed Health Plans (CDHPs) continues to grow, spurring employers to offer more health care information tools to employees in order to leverage the true value of these products, according to a study commissioned by the American Association of Preferred Provider Organizations (AAPPO) from the consulting firm Mercer, Inc.
In 2007, the number of Americans enrolled in a CDHP grew a staggering 25 percent, to 12.5 million from 10 million in 2006. Virtually all CDHPs – 97 percent – are built on a preferred provider organization (PPO) network, up 2 percent from 2006. News release (html). Full report (pdf).

Aetna Research Identifies Four Keys To Success For Consumer-Directed Health Plans

Aetna has released the results of a five-year study of health care claims and utilization for members of its Aetna HealthFund® consumer-directed plans. The study of 1.6 million Aetna members (205,000 in an Aetna HealthFund plan) showed that employers who offered an Aetna HealthFund plan lowered their health care trend and saved money through all four years with the plan, across all Aetna products they offered. And, when compared to a control-matched preferred provider organization (PPO) population, the Aetna HealthFund members:

• spend 20 percent more on preventive care;
• maintain their utilization of drug therapies for chronic conditions, their access to breast and cervical cancer screenings, and their levels of diabetic testing;
• use generic drugs more frequently; and
• are twice as likely to explore online information.

In addition, 52 percent of HRA members and 95 percent of HSA members carried over some or all of their fund into the next year. Press release (html)

Listening to Consumers: Values-Focused Health Benefits and Education

Listening to Consumers: Values-Focused Health Benefits and Education
By Lois A. Vitt, Institute for Socio-Financial Studies (ISFS), and Ray Werntz, EBRI Fellow
EBRI Issue Brief No. 313. January 2008.

This report on how employers can provide useful information to employees in conjunction with
consumer-directed health plans concludes: “Consumer values can provide essential insights into consumer thinking about health-related behaviors
and financial decision-making. They also can provide a blueprint for health care businesses and policymakers
working to make the U.S. health care system more responsive to consumers. Should health education
initiatives prove ineffective, the “consumer-driven health movement” could well be doomed, especially if it
relies upon fully educated health consumers taking self-initiated actions. The perceived ineffectiveness of
education in 401(k) plans resulted in legislation to add “defaults” to these plans so that they no longer relied
upon positive employee action. In the health arena, the default approach is exactly what the consumer-driven
health model seeks to move away from.”  Full report (pdf)

DOL Plugs HIPAAf Loophole Regarding Wellness Incentives

Last month, the Department of Labor’s Employee Benefits Security Administration issued a letter outlining regulatory guidelines for wellness programs.  See DOL News Release (html) Field Assistance Bulletin (html)  The impact of these changes is summarized by Human Resource Executive as follows:  “The loophole comes into play because while the Health Insurance Portability and Accountability Act does not allow employers to charge different premiums for different employees (thin vs. overweight, for example) in employer-paid health plans, supplemental coverages could circumvent HIPAA.  Some employers have used supplemental coverages to offer “discounts” or “credits” to employees following specific “healthier” paths — for example quitting smoking or losing weight.Currently, there are exceptions from strict HIPAA regulations for wellness programs — permitting financial incentives of up to 20 percent of the cost of coverage per employee. But the supplemental coverages, which are not part of HIPAA restrictions, could be used to as a way around that number while, at the same time, penalizing those who can’t meet certain criteria.”  The new rules effectively plug that loophole.

New Consumer-Driven Health Plans May Contain Fatal Flaw

A relatively new health plan model that its advocates hope will control rising health spending could fail if key consumer education initiatives prove ineffective, according to a study published today by the nonpartisan Employee Benefit Research Institute (EBRI).
The study, in the January 2008 EBRI Issue Brief, examines the model generally known as consumer-driven health plans and concludes: “Should health education initiatives prove ineffective, the ‘consumer-driven health movement’ could well be doomed, especially if it relies upon fully educated health consumers taking self-initiated actions.”

The Issue Brief was written by Lois A. Vitt, founding director of the Institute for Socio-Financial Studies in Middleburg, VA, and Ray Werntz, an EBRI Fellow. Executive Summary (html).  Full report (pdf).

Enrollment in High-Cost Health Plans Will Dominate the US Healthcare Market by 2020, Predicts Booz Allen

A new analysis by the management consulting firm Booz Allen Hamilton projects that up to 60 percent of the privately insured in the US – 120 million people – will be enrolled in some form of high-cost health plan by 2020. As these plans become increasingly pervasive, more consumers will assume greater responsibility for the cost of their healthcare, sparking an emerging crisis in the middle class as many are forced to make tradeoffs between medical care and other critical financial needs.

Healthcare Consumerism—Trends in Consumer Cost-Sharing (Full report).

Use Of Preventive & Chronic Illness Services in CDHPs

John W. Rowe, Tina Brown-Stevenson, Roberta L. Downey, and Joseph P. Newhouse. The Effect Of Consumer-Directed Health Plans On The Use Of Preventive And Chronic Illness Services. Health Affairs, January/February 2008; 27(1): 113-120.

We compared use of preventive, cancer screening, and diabetic monitoring services among 17,411 people who were continuously enrolled in a consumer-directed health plan (CDHP) for three years with a matched group of 128,444 people who were enrolled in a preferred provider organization (PPO). In the CDHPs, preventive and screening services were free. Levels and trends in use were similar between the two groups over the three years of follow-up. These results support varying the degree of cost sharing for services depending on the effect of the service on future health status and costs. Abstract.