Consumer health plans lag

Consumer health plans lag – Benefits

Len Strazewski

Employers are still fretting about rising health care costs and one of the top prospects for controlling costs–consumer-driven health plans–isn’t getting much respect.

One of the most promising health insurance plan designs touted for its ability to control costs isn’t gaining mass recognition or acceptance, according to a recent survey of California health care consumers.

Consumer-driven or directed health plans (CDHPs) allow employees to accept more risk and control over health care decisions in return for some cost benefits and more flexible coverage. Most are built around a flexible savings account or similar health savings account over which a participant has more discretion. Although the plans have been available for nearly five years, they have not been widely accepted by employers or employees.

California Health Decision, an independent nonprofit organization based in Orange, Calif., surveyed 800 Californians selected in random digital telephone dialing. Among this group, 85 percent had never heard of CDHPs. After hearing a description of the health plans, still only about 14 percent said they had heard of the concept.

Once respondents agreed that they understood the concept of CDHP, they didn’t necessarily like the idea. About 47 percent said they found the idea appealing but almost the same number–46 percent–found the concept not at all appealing or not very appealing.

Some features tested better than others. A majority of respondents (86 percent) said a feature that allowed participants to roll over unused health savings accounts funds was appealing. About 83 percent liked the idea of continuing their health savings account after leaving a job. Flexibility to use the funds for uncovered dental or vision expenses was also popular, cited positively by 80 percent of respondents.

However, unlike employers, cost control may not be as important to plan participants, according to the survey. Only 35 percent of California respondents found “lower premiums but higher deductibles” appealing, the survey found.

The survey also indicated that individual consumers aren’t comfortable with their employer’s ability to make decisions about health care coverage–an opinion that bodes ill for future cost control.

“Specifically, employees do not trust their employers to look out for their best interests. They have a general fear that they will lose something and their employers will gain something, if CDHPs are instituted,” California Health Decisions concludes.

Cost Control is King

A separate 2002 survey of 3,000 employee benefits specialists released early this year conducted by the International Society of Employee Benefit Specialists in Brookfield, Wis. and the human capital advisory services practice of Deloitte & Touche, shows the need to control rising health and welfare costs gets top priority among employers for the fourth consecutive year.

Nearly 86 percent of respondents identified controlling those costs among their top-five priorities, which also included compliance with new HIPAA privacy regulations, increasing employee use of self-service technology, evaluating and expanding Internet and intranet use for benefits administration, and providing retirement and financial planning tools.

Respondents cited cost control as the key driver in employee benefits policy last year and into 2003. About 67 percent of respondents said cost control was their key objective, an increase of five percent over the previous year.

“The survey finding re-emphasizes how critical cost management remains for employers,” says Richard Kleinert, principal in Deloitte & Touche’s human capital advisory services practice. “Clearly, cost control is still king and has even increased from last year’s survey.”

Administrative technology remains a high but secondary priority for employers–even though technology may help control costs, Kleinert also said.

“Technology can play an important role in both cost management and reduction and employee attraction and retention,” Kleinert also adds, “simultaneously offering both enhanced services and an alternative way to save on health care costs rather than directly passing these costs to employees.”

Len Strazewski can be reached at LenStrazewski@compuserve.com

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