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Consumer Directed Health Plans Becoming Mainstream

MBGH attended the recent Memphis meeting presenting the results of the Annual Mercer National Survey of Employer-Sponsored Health Plans 2011.

Although I had read the results when they were released in November 2011, at this meeting, I was particularly struck by the news about how employers are using Consumer Directed Health Plans (CDHPs) as shown by these survey results:

  • 2011 saw the biggest year-over-year increase in CDHP offerings AND enrollment since 2007 for large employers (500+ employees). The percent of employers offering CDHPs went from 23% in 2010 to 32% in 2011 and enrollment increased from 10% to 13% of covered employees during that time period. From 2008 to 2010, the percent of employers offering CDHPs had hovered around 20-23% and enrollment grew only slightly from 7% to 10% over those 3 years.
  • For both large employers (500+ employees) and smaller employers (50-499 employees), CDHPs with HSAs cost significantly less than other medical plan types. 20% less for large employers and 12% less for PPOs for smaller employers. And, this even includes the employer's account contribution!
  • Full-replacement CDHPs in large employers (500+ employees) are becoming more common with 21% of the HRA-based CDHP sponsors and 10% of the HSA-based CDHP sponsors offering no other plan in 2011. Compared to 14% and 7% respectively in 2009.
  • Costs are lower in full-replacement CDHPs ($7,744) than traditional PPOs ($9,511) and even high-deductible PPOs ($7,901).
  • Finally, about 1/4 of employees of large employers (500+ employees) select a CDHP when they have a choice of another plan.

So, it seems CDHPs are becoming more main-stream nationally and will, more than likely, see continued growth as employers seeks ways to control their costs. But what are some of the broad implications of more employers offering CDHPs and more employees enrolling in these plans? Consider these:

  • More people will need to become wise shoppers. They will need information on both the cost and quality of health care services, because they are on the hook for the cost while they are in their high deductible phase.
  • Right now, we have significant information in Memphis on quality for hospitals through The Leapfrog Group Annual Hospital Survey and some information on physician quality from the Healthy Memphis Common Table. Health plans are also increasing the amount of quality information they give their enrollees, but such information is very difficult to find for physicians, especially specialists.
  • There is little to no information on cost, the actual cost to the patient. In a CDHP, employees don't pay co-pays or co-insurance, they pay the full cost while in their high deductible phase. So cost matters to them! But without the ability to find out what a procedure, a test, a service will cost them, they are flying blind!
  • Recent research by Shoshana Sofar of Baruch College shows that when "shopping" for care, people want to see the cost and quality of providers at the same time. We are even further away from being able to do that in Memphis right now.
  • And, of course, how we pay for care, impacts our ability to know on the front end what care costs. For example, in the traditional fee-for-service model we have in Memphis, you don't know the cost until you know all the services that you received. You only know on the back end. But if we move toward bundled payment, it is possible to know what a service will cost on the front-end because all the routine services have been priced as a package.

MBGH is working with Healthy Memphis Common Table, Memphis Medical Society, the health plans, hospitals and others to begin to fill these gaps so that people in the Mid-South will have access to the information they need to be wise shoppers. So, stay tuned!

 

Posted by Cristie Travis at 2:51 PM

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