Consumer-directed health plans, designed to slow health-care cost increases by making consumers more aware of the cost of health-care services by having them accept higher deductibles, combined with savings accounts through which they pay for routine health-care costs, have been growing in popularity among employers in the past few years.
But it remains to be seen whether these plans are meeting employees' needs, although behavior does seem to be changing when it comes to the use of health-care services and prescription medications.
While CDHPs are focused on helping individuals make better health-care decisions, "employees are far from engaged in consumerism at this point," noted a survey from benefits consultant Towers Perrin. "In order for the process to work, employers need to take the right approach--one that effectively aligns the interests of employers and employees to manage the demand for and use of health care," according to the study, "Making Health-Care Consumerism Work: Aligning Employer and Employee Interests." The survey of more than 1,000 U.S. employees who participate in company-sponsored health-care plans, along with more than 120 managers and executives, at midsize and large companies in a range of industries, found that communication--not in frequency, but in content and tone--plays a key role in the success or failure of consumer-directed health plans.
"What's clearly missing is communication that builds a shared understanding between employers and employees when these plans are implemented," the survey noted. "Employers' overriding focus on costs may help explain employees' growing resistance to company messages about health care overall and consumerism in particular. Successful consumerism strategies require sustained communication efforts and a range of educational tools and information that responds directly to employees' health-information needs, concerns and preferences."
Jay Savan, health and welfare group leader at Towers Perrin in St. Louis, notes that satisfaction levels with consumer-directed health-care plans are "volatile, and largely based on how the employer initiates the health plan. If employees are educated as to why the change is being made and the company makes it clear that it is concerned about their health and the overall competitiveness of the company, it is far more likely to have a successful result.
"A well-designed plan, along with education about how the program works and cost and quality data to help individuals choose doctors and hospitals, takes away the intimidation factor and generally leads to greater satisfaction levels," says Savan. "Once employees get beyond the idea of a high-deductible plan, they realize that these plans create an equity-based financial model whose long-term investment is their health."
Sander Domaszewicz, head of the consumerism group at Mercer Health & Benefits in Newport Beach, Calif., agrees. "Employee satisfaction rates with consumer-directed health plans are based largely on the capabilities and types of plans offered. Employers that offer these plans as an option and provide plans with lower deductibles generally have better acceptance rates. As you force people to enroll in these programs, the level of satisfaction tends to go down," he notes.
BIG EMPLOYERS BITE
According to the survey, "Consumerism at Work in the Marketplace," released in late January by Mercer Health & Benefits, "When a consumer-directed health plan was offered as a choice, versus full replacement of benefits, 16 percent of eligible employees selected it."
Still, CDHPs remain concentrated among the largest employers, the survey notes.
"Two years after the creation of health savings accounts--which allow employees to set aside money to pay for their health-care expenditures tax-free--just 2 percent of all employers with 10 or more employees offered a consumer-directed health plan, and just 1 percent of all covered employees were enrolled in such a plan in 2005."
While the number of employees enrolled in CDHPs remains small, "the enrollment pattern seems typical for a new insurance product--a few early adopters in the first year, with a gradual increase in the number of employees willing to enroll," says Domaszewicz. "Within five years, every health-care program will likely have some of these elements to get individuals engaged in the health-care process," he adds.
At Apogee Enterprises Inc., a manufacturer of glass products and services in Minneapolis, implementing a consumer-driven health plan for employees two years ago was not a foregone conclusion.
In the end, the company could have done a better job of educating its 4,500 emloyees about the plan, says Tracy Thompson, the firm's benefits director. (Read about Apogee's experience on page 69.)
Scott Keyes, a senior consultant in the group and health-care practice at Watson Wyatt Worldwide in Stamford, Conn., adds, "Success depends on what employers are trying to do with these plans. If you're simply trying to cut costs, rather than focusing on employees' roles in managing their health, you're less likely to have high acceptance rates. We're finding that large employers are typically seeing uptake rates of 5 percent to 10 percent, and employer-funded accounts have higher acceptance rates than nonfunded accounts on a 2-to-1 ratio."
A recent survey released by Cigna HealthCare of Bloomfield, Conn., notes that, "given greater choice and control, and the right incentives and actionable decision support, individuals are becoming more involved in their health care and health-care decision-making, while not compromising needed care."
According to the study of 42,200 first-time users of CDHPs, these consumers generated an 8 percent reduction in medical costs and made positive changes in their behavior, such as increasing their use of medications to treat chronic illnesses.
"The majority of employers we serve are offering these plans as an option, rather than full replacement of other benefits plans," notes Jake Biscoglio, assistant vice president and head of product development in the consumerism division at Cigna HealthCare. "Employers are receiving positive feedback from employees, but there is still a need for better communication. We urge clients to have a proactive communication strategy, which leads to higher satisfaction rates and increased enrollment, maximizing the value of the plan."
MINDY R. TORAN
is a writer living in Pennsylvania.
April 15, 2006
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