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AIS's Health Business Daily
Featured Story November 6, 2008 Rate Hikes, Poor Economy Will Prompt Employers to Adopt Consumer-Directed Strategy in 2009, Insurers Say Reprinted from INSIDE CONSUMER-DIRECTED CARE, a biweekly newsletter with timely news and insightful analysis of benefit design, contracts, market strategies and financial results. By Steve Davis, Managing Editor, (sdavis@aispub.com) As the sinking U.S. economy forces employers to trim their employment and drop or reduce health coverage, health insurers anticipate commercial enrollment could suffer a severe blow in 2009. However, insurers contacted by ICDC predict that enrollment in consumer-directed health (CDH) plans will continue to grow next year as employers turn to less costly coverage options. And as employees take on greater financial responsibility for their health, insurers say they are building or enhancing tools to help them make smarter financial decisions. BlueCross BlueShield of Tennessee says it expects to see a substantial CDH enrollment gain in 2009. As of Aug. 1, the insurer says approximately 75,000 members were covered by its health savings account (HSA)-qualified products, and another 11,000 were enrolled in its health reimbursement arrangement (HRA)-based plans. Paul Kulpa, the health plan's CDH plan product manager, tells ICDC that a number of its employer clients, including several large ones, are rolling out new account-based CDH plans or are moving to a full-replacement strategy during this fall's open-enrollment season. CIGNA Corp. says the medical cost for its CDH plan book of business is 12% less than costs for its more traditional plans in the first year. "And these cost savings compound in subsequent years," says Will Giaconia, the insurer's director of consumer-driven plans. He adds that a growing number of CIGNA's clients are replacing their more traditional coverage options with CDH plans. About 10% of its CDH clients have moved to a full-replacement strategy. As of July 1, 675,000 lives were covered by CIGNA's HRA-based plan, and 148,000 were enrolled in an HSA plan. The CDH enrollment gains that Medical Mutual of Ohio (MMO) expects in the year ahead will be driven, at least in part, by premium increases for more traditional health coverage options, says Aaron Graham, director of product development. The sinking economy, he asserts, will have less of an effect on enrollment than will rising premiums. Blue Cross and Blue Shield of Louisiana anticipates a modest CDH enrollment increase for the year ahead in both its risk-based and self-funded business. Spokesperson John Maginnis tells ICDC that workplace wellness programs and consumerism will be "two major and interrelated trends" in 2009 and beyond. "More employers are turning to [CDH] plans, and we expect continued growth in 2009 for our group high-deductible health plan membership." Maginnis adds that the company intends to place greater emphasis on the over-65 market and to pursue the development of ancillary products for individual and group markets. Employers Still Have a Place for HRAs Steve Resnick, president of Florida-based Self Insured Plans, says his employer clients are shifting away from HRA-based plans to HSA-qualified plans, which he calls "grossly underpriced" when compared to HRA-based plans. Employers, he adds, are using the significant premium savings from the first year to fund most, if not all, of the deductible in their employee-owned HSAs. "However, upon renewal, employer contributions are reduced or eliminated, resulting in a horrible cost shift to a high-deductible plan," he tells ICDC. MMO's Graham, however, says employers are still interested in HRA-based plans. George Stadtlander, chief underwriter and vice president of individual and small group, agrees, adding that "HRAs will always be appealing because, although regulated, they have more flexibility in design compared to HSAs, which are a narrower scope and more highly specified, thus reducing opportunities for innovation." Aetna Inc., says that there is still "significant interest" in its HRA-based plans, which offer more plan-design flexibility than HSA-qualified plans. The insurer adds that it expects steady growth in its HSA-based plans. As of July 1, 888,000 Aetna members were enrolled in an HRA-based plan and 438,000 were covered by an HSA-qualified plan. CIGNA says it continues to experience "strong interest and growth" in its HRA plans, particularly among its national-employer clients. Kulpa says that two years ago, it looked as though HSAs would surpass HRAs in popularity among employers. "Now I am not so sure," he says. "In the past, we have had a relatively small membership in HRA plans, but as we talk to employers and brokers in the market, we came to realize that there are significant numbers of third parties or other entities administering HRAs for employers." As of Jan. 1, the insurer will begin to administer HRAs itself. Plans Launch, Enhance Consumer Tools As a growing segment of their members are asked to take on greater financial responsibility over their health care decisions, health plans say they are enhancing or building tools to help them make better educated decisions. Last month, the Tennessee Blues plan rolled out an online physician quality and cost information tool. The new service will be added to the insurer's existing arsenal of medical and dental cost estimators, drug cost calculators, health plan comparison tools and personal health records. Aetna says its HSA
Savings Calculator helps enrollees determine the potential savings and
tax advantages associated with an HSA. The calculator gives users the
"ability to model various scenarios using different percentages
of the HSA to reimburse medical expenses and model different rate-of-return
options with an expanded interest percentage range," according
to Kathy Campbell, head of consumer-directed health plans at Aetna.
The insurer also offers tools that provide hospital cost information
for more than 30 common procedures as well as information about rates
charged by physicians.
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