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Falling petals - Health experts contend the bloom may be off the CDH rose
By: Chris Silva
If the current buzz around consumer-driven health plans is any indication, the honeymoon might be over for the previously anointed "next big thing" in U.S. health care.
Statistics show CDHP usage rates still are far below that of traditional health plans like PPOs and HMOs, and consumers that are enrolled in the plans don't like them very much. Some health experts continue to champion CDH's great potential and say more aggressive and comprehensive employee education efforts will boost usage and satisfaction. However, a growing number of others feel CDHPs are destined to become little more than a niche product used by a small percentage of Americans.
"Even though we have this great new product, [only] a third of employers will be offering it this year," remarks William Boyles, publisher of the Consumer Driven Market Report. "This is not a silver bullet. I do not think of this as a mainstream product over the next two to three years."
Jon Gabel, a senior fellow at National Organization for Research and Computing at the University of Chicago, agrees, citing research from the Center for Studying Health System Change showing four in 10 workers reported the only reason they enrolled in a CDHP in 2006 was because they had no other choice - it was the only plan their employer offered. HSC found that when given a choice, only one in five would select a CDHP.
"Despite the buzz," says Gabel, "CDHPs have barely gained a toehold among Americans with employer-sponsored insurance."
Gabel doesn't see a huge future for the CDHP marketplace. "I think they're going to grow, but the question is if they're going to be a mainstream product - 15% to 20% of the market - or a niche product. And at this point, I would have to say niche."
Many industry experts are fearful that if the model doesn't begin gaining public trust and interest within the next two years, then it could fall by the wayside and open the way for other concepts, such as universal health care, which is beginning to make inroads at the state and national level.
However, employers and consultants who pitch CDHPs need to be more engaged with employees and understand their audience, they say. "The marketplace has changed underneath us, and we need to change with it," says David Saltzman, consumerism consultant with Humana. "The worst thing to do is not communicate."
Crafting talking points
The viability of CDHPs relies on communication, proponents argue. As all benefit managers know, employees don't like cost-shifting strategies. Adding in the complexity of HSAs only adds to an already difficult communications challenge.
"There is a huge communications challenge surrounding consumer-driven health care and HSAs," says Dennis Triplett, president of UMB Healthcare Services, based in Kansas City, Mo. "It's a challenge for employers to relay to employees, and it's a challenge for employees to understand. It's something I am very concerned about."
Results from a recent employer poll provide a ray of light for others to follow. A survey of Sheboygan, Wis.-based HSA Bank's employer groups found employers who spent 90 minutes or more talking to their workers about HSAs saw a 21% increase in acceptance of the accounts.
The question then becomes: What should employers be talking about to achieve employee buy-in? For one thing, says Carl Mowery, director of compensation and benefits for consulting company SMART, employees need to see the link between managing their money and managing their health.
"Employers need to realize that the only way to control health care costs is to create a healthy workplace population," he says.
One employer that has made the connection is Logan Aluminum, based in Russellville, Ky. The company offers only an HRA and HSA to its 1,000 workers and pays an average $200 per employee in annual wellness incentives. Logan also employs the services of a health coach as well as a benefits/HSA coach who spends half an hour annually with each person to address employee-specific questions and issues. The company has maintained a 65% retention rate for the past 10 years.
"Treat health care costs and employee health as a business problem, not an employee problem," suggests Howard Leach, head of benefits at Logan Aluminum. "To solve a business problem, you need employees working on your side."
Experts also say employers should be talking up the tax benefits of HSAs. Federal law now allows workers to contribute more tax-deductible money - up to $2,850 for single coverage and $5,650 for families - into HSAs.
"With the passage of the bill, you now have the ability to switch out of [flexible spending accounts], and the ability to move dollars from an IRA to an HRA," explains Triplett.
By communicating such tax advantages effectively, "I think HSAs are here to stay," he says.
Legislative tweaks
Michael Critelli, chairman and CEO of Pitney Bowes, believes even more legislation like the recent HSA tax relief package would propel greater CDHP growth. He says the expansion of CDHPs is handcuffed by archaic rules.
Pitney Bowes offers an HSA to its employees, but they haven't been very popular because workers using them are considered as having a tax break. Therefore, they cannot utilize the company's vast network of on-site medical clinics, which are typically staffed with physicians and nurse practitioners to provide primary care services to employees.
Workers with traditional health insurance don't have to worry about the "double-dipping" in tax breaks, Critelli explains.
"HSAs are a good first step," he asserts. "But what we need now is to see improvements made in the next versions."
See-through pricing
Some health leaders say that if CDHPs are to succeed, then price transparency has to improve.
BlueCross BlueShield of Minnesota, for example, has created a new pricing Web site that compares the costs of medical procedures charged by all hospitals in Minnesota and Louisiana. Healthcare Facts, on the Web at http://www.healthcarefacts.org, provides consumer-friendly information on hospital prices in a format similar to a nutrition label. Additional information tools and technologies are under development to engage consumers in "best fit" health care options, based on their individual needs and preferences.
"Meaningful transparency is the key to the kingdom," says MaryAnn Stump, chief innovation officer at BCBS of Minnesota.
"[Employees] become customers rather recipients of health care. I think this is absolutely the right way to go."
BCBS of Minnesota is currently working on expanding Healthcare Facts to other states, with Nebraska next on the list, Stump says.
Future forecast
Despite recent whispers that the CDH movement may be losing steam, some future projections show otherwise. According to Information Strategies, Inc., a consulting company based in Richfield, N.J., CDHPs make up 20% of the market, with that number expected to grow to 50% by 2010.
ISI, which publishes an annual market report on HSA usage, projects that HSA participation alone will grow to more than 20% by 2010. HRA participation will approach 15% by 2010, "but will lose traction to HSAs due to the ability to save unused monies tax- free," according to ISI President JoAnn Laing.
FSAs will continue to maintain their 10% portion of the marketplace, Laing predicts. If only the present were as encouraging.
A Wall Street Journal/Harris Interactive survey conducted in December 2006 found that only 5% of respondents would enroll in an HSA, compared to 79% who indicated they would not.
Further research from Vimo shows that even workers in high-deductible health plans are not enrolling in HSAs. The California-based company that runs a Web portal for health care products and services reports that out of roughly 3.1 million members in HDHPs, only 820,000 created an HSA account.
What's more, the average HSA account balance is $1,180, while the average deductible in an HDHP is $2,378 for single coverage.
Mowery, however, remains confident that the future will bring better returns.
"I think we'll see an impact in 2008," he says. "We have clients who are looking at HSAs more seriously now. I would be surprised if we didn't see a larger than normal increase with adoption of HSAs." |
