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Message
From An Actuary
Diane Luedtke,
FSA
Consumer-driven
health plans (CDHPs) are increasingly prevalent in terms
of both benefit offerings and participation. As actuaries,
we are often asked whether CDHPs bring about lower utilization
and health care costs. And further, even if these plans
can successfully lower costs, is it at the expense of
foregoing necessary care? Now that CDHPs have been available
in some form for almost ten years, enough data has emerged
to draw some conclusions.
Questions
regarding cost and care are important ones for employers
considering introduction of CDHPs. We have attempted
to answer some of these questions in an independent
and unbiased fashion by conducting a review of existing
studies and publications.
Contacts
Tim Luedtke, FSA, MAAA, CFA
Principal & Consulting Actuary
Diane Luedtke, FSA
Principal & Consulting Actuary
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Cutting Costs,
Not Care
Success of Consumer-Driven
Health Plans
Diane
Luedtke, FSA
The growing popularity
of consumer-driven health plans (CDHPs) indicates greater acceptance
of these programs as a health care cost management strategy.
Employers are increasingly turning to CDHPs to lower benefit
costs by actively engaging consumers to help control unnecessary
utilization. The premise of consumer-driven health is that participants
will become better health care consumers if given the proper
financial incentives and information tools. CDHPs are high-deductible
health plans paired with an account, in the form of a health
savings account (HSA) or health reimbursement arrangement (HRA),
which can be used to help offset out-of-pocket expenses.
The Results Are In!
Numerous studies tout the positive results of CDHP experience.
While it's easy to find published and advertised results cited
in the media and elsewhere, deciphering which studies are credible
and reliable can be complicated. Many market participant studies
may be biased toward illustrating success of the plans. To address
this issue, an American Academy of Actuaries work group performed
a comprehensive review of several experience studies. From their
independent analysis, the group selected those studies they
considered best in terms of study design, methodology, detail
and relevance. The selected studies examined actual multiyear
experience covering hundreds of thousands of plan members. The
studies meeting the selection criteria include national studies
performed in 2008 by Aetna, CIGNA, and UnitedHealth - three
of the largest health care providers in the country.1
The full report can be found through the American Academy of
Actuaries at http://www.actuary.org/pdf/health/cdhp_may09.pdf
Key Findings:
First Year Costs Fall.
. . All studies showed a favorable effect on
first year costs under a CDHP. Plan trends ranged from -4% to
-15%. When compared to trend rates of 8% to 9% experienced under
traditional plans, total first year savings could be as high
as 12% to 20%.
Future Cost Increases Are Lower Too
. . . Subsequent year savings showed trend
rates 3% to 5% lower than traditional PPO plans.
Employees Seek Necessary Care
. . . All studies demonstrated CDHP participants
did not forego necessary care. In fact, they received the same
or higher levels of care as those in traditional plans.
Fears of CDHP as a Cost-Shifting
Method Prove to be Without Merit . . . Most
employers choose CDHPs for their potential utilization savings
rather than cost-shifting potential. CIGNA's study showed that
the cost share for members with HRA plan designs was about the
same as for the traditional plan designs from which the members
migrated. Both CIGNA and Aetna demonstrated that regardless
of member claim level (low, medium or high), members fare the
same or better than when enrolled in traditional plans.
Consumer
Behavior Changing. . .
Preventive Care
- All of the studies showed significantly
higher use of preventive services for CDHP participants. Reasons
for this included the practice of most plans providing preventive
care at no charge and increased messaging to participants.
Recommended Chronic Care
- The three studies reported participants
received the same (Aetna) or higher (CIGNA, UnitedHealth)
levels of care compared to traditional plan participants for
chronic conditions such as diabetes and hypertension.
Prescription Drug Utilization
- Generally the studies showed greater generic
substitution under consumer-driven plans than under traditional
plans, helping to drive down costs.
Consumerism Works . . . Why Wait, Learn
More
Many perceive consumer-driven plans simply as high-deductible
plans which shift cost to the employees. This overlooks the
intrinsic value of the account feature and its ability to induce
greater employee financial responsibility. The studies reviewed demonstrate that CDHPs have a positive
effect on first-year and ongoing costs. Savings were achieved
without sacrificing health. And, employees' share of total cost
was comparable to that under traditional plans. Recently released
updates to the Aetna and CIGNA studies reinforce these findings.2,3
The success of any individual plan depends upon overall
plan design and suitability for the group, employer objectives
and employee communication. Employers considering introduction
of a consumer-driven option should contact us at Navigator
Benefit Solutions LLC to ensure proper plan design and employee
communication.
1
Making an Impact - Aetna Health Fund (Aetna - 2008); CIGNA Choice
Fund: Two Year Experience Study, 2005-2006 (CIGNA - March 2008);
Uniprise - 2008 CDHP Results Discussion (UnitedHealth - March
2008)
2 http://www.aetna.com/news/newsReleases/2009/0310_AHF_Results.html.
3 http://newsroom.cigna.com/images/56/825638_ChoiceFund_Study.pdf. |
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