The Missing Ingredient

March 30, 2007
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GRAND RAPIDS — Take one part high deductible health insurance plan. Mix in a health savings or health reimbursement account. Add a dollop of chronic disease management and a pinch of wellness programs.

Now, just add consumers, and you’ve got a consumer-driven health care plan.

It’s the last ingredient that appears to be in shortest supply, however, as West Michigan employers inch toward consumer-driven health care. Benefits consultants say while employers are interested in CDHPs, most aren’t ready to pull the plug on traditional benefits.

“Pretty much every employer we work with, locally and nationally, has looked into some form of consumer-driven health plans, being an HRA or Health Savings Account plan, or even in a broader sense, consumer-engaged products like wellness programs and disease management,” said Jon Snead, vice president of AON in Grand Rapids, a top employee benefits consultant firm.

He said a little less than half of his customers are offering CDHPs to their employees.

“The majority that are offering ‘high deductible’ plans are doing it as kind of an option, because it’s such a departure from co-pays or PPO plans. They don’t get a lot of participation,” Snead said.

Jennifer Johnson, benefits consultant for Universal Insurance Services, said she has a couple of clients who jumped into the entire CDHP wellness and prevention scenario, devoting both money and enough time to educate employees. A few clients have abandoned traditional PPO and HMO plans, making a high-deductible plan the only choice, she said.

They’ve made “a huge investment of dollars in wellness, but look at their trend in health care. It’s having a huge effect,” Johnson said. “If your motive is purely to shift costs to the employee, you’re going to be in that trap for the next 20 years. But if you really want to make the movement to consumer-driven health care, you’re going to want to say this is the philosophy, from the top down.”

Just 8 percent of employees chose CDHPs for 2007, up 1 percent from 2006, according to an annual survey conducted by Watson Wyatt Worldwide and the National Business Group on Health of 573 large companies. However, companies with at least 10 percent of coverage-eligible employees enrolled in CDHPs slowed the rise in health care costs to an average 6.5 percent.

The survey showed that 38 percent of companies offered consumer-driven plans for 2007, up from 2 percent in 2002. Five percent said they are presenting a CDHP as the lone health plan; 4 percent said they’ll do that in 2008.

Also, Health Savings Accounts were more popular in the survey than Health Reimbursement Accounts, with 40 percent of employers now offering or planning to offer an HSA, with 26 percent doing the same for an HRA.

The small number of academic studies of CDHPs has generally shown that employees like plans, consumer-driven or otherwise, that have lower shared premium costs. They also seem to indicate that high-deducible plans are favored by healthier individuals, and that when given a choice, those with health issues preferred PPOs. Also impacting CDHP enrollment were particulars such as the provider network, the employer’s policy on sharing premium costs and how well-educated employees are about the program, the studies collectively  imply.

“In West Michigan, the response has been very good,” said Amy Chambers, director of consumer-engaged products for Priority Health, the Grand Rapids-based health plan owned primarily by Spectrum Health. Priority Health first offered HSA and HRA plans in 2005. “I do know that other parts of the country probably adapted a little faster than West Michigan. But we feel we’ve had a real good uptake with the plans, especially in small business, particularly in groups of under 50 employees.

“Jumping into that as a full replacement — those were limited, but we’re seeing that more and more. There’s not a single employer anymore that’s not at least considering a CDHP in the future. There’s only so many years you can play with the co-insurance or deductible.”

Priority Health is preparing to launch a new CHSP product, Chambers said, but she would not reveal the details.

The premium savings can be attractive for employers, said Don Whitford, director of product development and management for Blue Cross Blue Shield, the state’s largest health coverage provider at about 4.8 million members. He said Blue Flexible premiums run about 30 percent less than a traditional PPO plan.

“Our projections for 2006 were that we would have 30,000 (enrolled in CDHPs) in the first year, and we’re at about 84,000 members, so we had pretty substantial growth in a short period of time,” Whitford said. “It’s going to take a while. We think the market is going to continue to grow.”    

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