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AIS's Health Business Daily
Featured Story Sept. 25, 2009
Open-Enrollment Preview: Growth in Consumer-Directed Health Plans Is Likely, but Not as Much as in Recent Years Reprinted from INSIDE CONSUMER-DIRECTED CARE, a newsletter with timely news and insightful analysis of benefit design, contracts, market strategies and financial results. By Angela Maas, Managing Editor, With companies still struggling to keep health insurance costs in check, more employers may be offering consumer-directed health plans (CDHPs), including health savings accounts (HSAs), during the upcoming open-enrollment season, say multiple industry insiders. While health reform could have some bearing on these plans, experts say it is unlikely to have any major impact.
Some sources queried by ICDC pointed to potential health reform changes that may impact CDHPs. According to James G. Knight, M.D., CEO of Consumer Directed Health Care, Inc., “If there are significant negative changes to the laws regarding HSAs, I would expect little additional market penetration unless health plans begin to see the light and price these products in ways that reflect the reduced insured payout inherent to this kind of coverage. In that case, there could be a big increase. Unfortunately, I have only heard of large increases in HSA premiums, not reductions.”
“Regarding open enrollment, the health care reform debate shouldn’t have any impact on the growth of CDH plans,” says Red Gillen, a senior analyst with consulting firm Celent. “In the absence of any health plan design guidance from the government in the next few months, employers will continue to seek out low-cost plans, which typically equate to CDH plans — in other words, continued strong growth for the plans.”
Some observers say they expect to see growth among CDHPs but not necessarily growth equaling that of the past couple of years. “I expect to continue to see healthy growth, especially with HSA products,” says Carlton Doty, vice president and research director at Forrester Research. He adds that “30% to 40% growth is a likely trend year over year. But this will still vary by region, with some HMO-dominated markets continuing to see slow growth.”
According to Alexander Domaszewicz, a principal at Mercer Inc., “There’s been a big boost in companies adding CDHPs or expanding their focus on existing CDHP options. This should correspond to large enrollment increases for 2010 — not like the early days of doubling membership year over year, but a very healthy boost.”
Chad Wilkins, CEO of OptumHealth Financial Services, tells ICDC that his company “expects to see continued growth in CDHPs and HSAs because they are helping employers provide meaningful health coverage and encouraging employees to better understand the costs associated with their health care choices.” He notes that OptumHealth Bank is still seeing an uptick in HSAs. The company, he says, now has “more than 475,000 HSA accounts with more than $820 million in total balances.”
ICDC sister publication Health Plan Week (HPW) reports that several benefits consultants and brokers say employer clients who had been undecided about CDHPs have decided to offer them as a way to reduce coverage costs. Linda Rose Koehler, a health insurance specialist with California-based Herzog Insurance Agency, tells HPW some employer clients that have switched to a high-deductible plan that includes an HSA or health reimbursement arrangement (HRA) have reduced premiums by as much as 50%. “Overall, the employee actually gets a better plan…because the out-of-pocket maximum is usually less than the old $30 copayment plan, with hidden copays everywhere and high out-of-pocket maximums,” she explains. Jay Savan, an employee benefits consultant with Towers Perrin, says some large-employer clients that had previously considered launching a CDHP within the next three to five years will implement one in 2010. “Business conditions — and senior management — are now pressing them to move forward with implementation,” he says. Helen Darling, president of the National Business Group on Health, says NBGH members, which are typically very large employers, consider account-based health plans as among the most effective strategies to control their own coverage costs and hold down cost increases for employees. However, she says, it’s likely that employers will contribute smaller amounts this year to employee health accounts.
“Every year, CDH continues to evolve and to grow,” maintains a longtime industry insider who asked not to be identified. He points to companies such as Johnson & Johnson that have replaced their traditional benefit designs with HRAs and HSAs for both their current employees and retirees. Such companies, he says, have realized that CDH offers “a better financial model for the administration of health care benefits.” Many people, he explains, “confuse health insurance with health care. Health insurance is a financial model for risk sharing.” A CDH model “is a better financial model for risk sharing” and “leads to better prices than a managed care model,” he contends. The only potential problem that could dampen the growth of CDHPs is overregulation, he says. |
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