Consumer-Driven Health Plans Overtake HMOs

In 2011, consumer-driven plans beat out HMOs for first time; a quarter of companies may move to healthcare exchanges.

doctor with shopping cartConsumer-driven health plans took a leap forward last year when, for the first time, more companies offered such plans than offer HMOs, according to a survey of nearly 2,000 companies by Aon Hewitt. Meanwhile, in a possible sighting of the next big trend in corporate health coverage, the survey shows that more than a quarter of companies say they may take a defined-contribution approach to healthcare within the next few years by giving employees a set amount of money to buy insurance on a private healthcare exchange.

Fifty-eight percent of the companies surveyed by Aon Hewitt offered some type of consumer-driven health plan (CDHP) last year, up from 41% the previous year, while just 38% offered an HMO, down from 41%. Preferred provider organizations (PPOs) are still more common than either CDHPs or HMOS and were offered by 79% of employers.

“They want employees to be comfortable if they have catastrophic issues,” Fay says, and notes that providing voluntary benefits is more common at companies that offer only a CDHP to employees. But she questions whether the extra coverage is necessary, arguing that consumer driven plans provide “a fair amount of protection.

“Based on survey data we have, the annual out-of-pocket max for an individual for consumer-driven plans is running between $2,000 and $4,000,” Fay says, noting that that range is consistent with the out-of-pocket maximums for traditional PPOs.

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