There's little doubt that consumer-driven health plans (CDHPs) are gaining in popularity, on the premise that such high-deductible plans can offer employers significant cost savings over traditional health care models. Trouble is, those savings may take years to materialize. "CDHPs are perhaps at a tipping point," says Richard Ostuw, an Employee Benefit Research Institute (EBRI) fellow. "The level of enrollment has grown significantly relative to previous years, but is still modest in absolute terms." That suggests skepticism by workers and employers, he says.
Just 12.5 million individuals have a CDHP, according to the American Association of Preferred Provider organizations. "Enrollment, however, grew an impressive 25% in 2007 over 2006," AAPPO says. While growth should continue at that rate, savings are expected to be restrained by two factors: slow acceptance of the health savings accounts (HSAs) and health reimbursement accounts (HRAs) that make up CDHPs and the large initial contributions by corporations to attract new participants.
"It's no secret that shifting more costs to the employee will save employers money in the long run," says Bruce Pyenson, a principal at Milliman Inc. "But these other factors will keep costs high for now." In some cases, employers are willing to spend more than they could be expected to save just to entice workers to sign up for the low-cost coverage--with the expectation of widespread acceptance down the road. In one case, for example, an employer offering a $3,000 deductible policy to families as part of an HSA, contributed $1,500 to the employee's interest-bearing HSA account and stopped deducting $150 a month from the participants' paychecks.
It's not all bad news. Some pioneers report seeing modest gains. A Watson Wyatt survey of 453 companies with 8.4 million employees showed that companies offering a CDHP option held overall health insurance cost increases to 5.5% in 2006 and 2007, compared with a 7% rise reported by companies without such an option.
It's probably too early to predict the success--or failure--of CDHPs long term. "Attitudes will change only if the substance and perception are positive," says Ostuw. "But if there are no changes in employers' and workers' attitudes and behaviors, they will remain a niche type product, or decline."