The Rise of Consumer Driven Health Plans

Tim Hayden

It’s been 10 years since the concept of Consumer Driven Health Plans (CDHPs) first grabbed hold of the conversation in the group employee benefits industry. After a lot of chatter back in 2003 and 2004, consumer driven health had moved to the backburner, at least in terms of industry buzz. A lot of people moved on to the next thing.

Fast-forward to 2013 and, lo and behold, CDHPs are gaining in popularity and growing at a faster pace than ever before. The interest is largely driven by economics—as prices continue to rise, more employers are accepting CDHP as an option they think employees would be interested in and/or willing to accept. Perhaps most importantly, CDHPs are gaining in popularity because they’re working. Consider this information from CIGNA:

  • The annual cost-growth trend for CDHPs was 13% lower than for traditional plans.
  • CDHP customers were twice as likely to complete a health risk assessment, and those with a chronic illness were up to 25% more likely to participate in a disease-management program than those enrolled in a traditional plan.
  • CDHP customers are savvy about healthcare. They were more likely to choose generic medications compared with those in a traditional plan.
  • CDHP customers received higher levels of care. They had consistent or higher compliance with more than 300 evidenced-based medical best practices than did their counterparts in traditional plans.
  • Those in a CDHP also sought preventive care, such as annual office visits and mammograms, more frequently than did traditional plan enrollees.

Today’s reality fits with what was predicted for CDHPs when the concept was first introduced. However, as we all learned, it took us a while to get past the conceptual change. That shouldn’t be surprising; there needed to be a mindset shift before this plan model could be embraced, primarily because of its higher deductible structure.

To help employees with cost sharing, CDHPs have been associated with Health Reimbursement Accounts (HRAs) and Health Savings Accounts (HSAs). HSAs and HRAs have triggered a focus on how to finance health insurance premiums. Before, employers had a choice between either really rich benefits or heavily utilizing an HMO model, basically two extremes that were either wasteful or insufficient. In the decade since CDHPs were first imagined, everyone has learned a lot. Now, driven by employers’ financial concerns, employees are beginning to understand the need to share costs.

A significant aspect that fuels the success of CDHPs is the employer’s commitment to educating the workforce. Employers need to over-communicate in order to properly equip their employees with the knowledge to make smart decisions about benefit utilization. Employers must provide a proper employee education and communications when first offering a CDHP, and—importantly—they need to offer education at other points along the way, not just during open enrollment but throughout the plan year. It’s imperative people understand the high deductible plan and don’t fear it. The more information employees have, the more comfortable they become with the concept. Benefits managers need to remember that employees who go into a CDHP may still not fully understand it and it is therefore important to deliver ongoing education.

We expect CDHPs to continue to grow in popularity. The mindset about higher deductible plans has shifted and figures to continue to shift as employees learn more about the cost of healthcare (a byproduct of the introduction of the Affordable Care Act). In conjunction with this, these health plans will become more popular as premium cost structures continue to become more expensive.

You may not have guessed that this day would ever come, but the future looks bright for CDHPs.


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©2015 Corporate Synergies Group, LLC. No part of this material may be republished or distributed without prior written consent.