Oct 25, 2011

Start-Up Experiences of Three Different Employers | Consumer-Driven Health Care

One set of researchers looked at just one year's experience for three employers—a nation-wide financial services firm, a national health care provider, and a small manufacturer with about 2,600 employees.

The Small Employer Financial Services Firm

This employer offered the consumer-driven health care plan as one of several options. The decision to offer a consumer-driven health care plan was driven primarily by employee concerns about the availability of physicians, rather than employer concern about cost. While focus groups prior to enrollment indicated employees reacted positively to the consumer-driven health care plan concept, enrollment in the first year was only two percent, although in the next year's enrollment period that doubled. But the plan design of a $1,500 deductible and only a $1,000 personal care account certainly could have discouraged many participants.
In fact, the researchers found employees with salaries of $80,000 or more were more than twice as likely to enroll in the consumer-driven health care plan as other employees. Men and those with family coverage also were slightly more likely to enroll in the plan. Only 46 percent of enrollees used all of their personal care accounts and those who left the plan after only one year used less of their accounts (and hence forfeited their right to rollover the balance into the next year) than those who elected to renew consumer-driven health care coverage. Almost all of those enrolled in the consumer-driven plan re-enrolled the next year.

The Small Manufacturer

The manufacturer, a self-described paternalistic employer, was motivated to adopt consumer-driven health care by cost considerations, but did not want to simply shift costs to employees. While the employer preferred to use the consumer-driven health care as a total replacement, concern about provider access led the employer to offer the new plan along with the existing PPO coverage at one of its two major locations. The consumer-driven health care plan garnered a 12 percent enrollment. Benefit personnel stated that getting employees to understand how the consumer-driven health care plan worked was the major obstacle to enrollment. Consumer-driven health care enrollee demographics did not differ from those enrolled in the preferred provider organization (PPO). Nevertheless, 2002 health expenses for the consumer driven health care enrollees were only $1,492 compared to $2,837 for PPO enrollees—about half of the PPO enrollees' cost. For the next plan year, the company planned to provide a consumer-driven health care plan as a total replacement at its second major site.

The National Health Insurer

One of the nation's largest health insurers used its employees in one of its major locations as an experimental group to launch its consumer-driven health care product. The next year the employer offered the product to all employees. The employer was driven by cost concerns and believed it had exhausted all means of cost control other than involving the consumers in cost control. In the first year, the employer began offering five plan options, including two consumer-driven health care plans, one of which was the lowest cost health plan option. The employer contributed a fixed amount for all employees regardless of the plan chosen, which was less than the full cost of any plan option. Although personal accounts such as "health reimbursement accounts" that permit annual rollovers of unused account balances are generally considered to be a necessary incentive in the consumer-driven health care model, this employer's consumer-driven health care plan did not permit such rollovers. Only 6 percent of employees enrolled in the consumer-driven health care option during the first year.
In the second year coverage was offered to all employees, and the cost of the nonconsumer-driven health care plans was more than $50 per month greater than the consumer-driven health care plan. At that point enrollment in the consumer-driven plan increased to 21 percent for those outside the major location.
In terms of risk selection, there were no age differences in those enrolling in consumer-driven health care and other plans. But as seen with other early plans, enrollees tended to be higher-earning workers. Also, those who worked in actuarial, financial, and other risk decision roles were more likely to enroll than other employees. The consumer-driven health care option had remarkably favorable selection, with its enrollees having prior year total claims of only about 50 percent of nonenrollees' claims. The consumer-driven health care enrollees at the end of their first year in the plan showed a 30 percent decline in their claims from the prior year, even with their already low rate of claims. There was no substantial year-end spending in the accounts. Just 31 percent of consumer-driven option enrollees spent their entire accounts. Only 8 percent of those enrollees exceeded the plan deductible.


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