by Patti Dunham, MA, MBA SPHR
To talk about the health care crisis and what we are doing about it is old news. We have seen the reports and see that although health care cost increases are declining, they are still double the cost of living index and are still unmanageable for today's companies. The introduction of consumerism into our health care has been a common theme over the past five years but is it working? Is it too early to tell?
With Health Reimbursement Arrangements (HRA) and Health Savings Accounts (HSA) relatively young in their career, it has been difficult to effectively analyze these programs and make any conclusions on their impact on the benefits arena. Limited history and still modest enrollment makes it difficult to obtain valuable data to make informed decisions for our plans and for our employees. However, this month, Aetna released the broadest study to date of consumer driven health care plans (CDHP). The study reviewed four years of data on 1.6 million Aetna members and offers a unique view of 134,000 HRA members, 18,000 HSA members, and 1.45 million "other plan" members in Aetna programs.
A key finding from the Aetna study shows that full replacement plans have shown the most significant savings to companies, experiencing an average medical cost trend of 1% over 3 years. Employers who offered the consumer driven plan as one of multiple options experienced an average medical cost trend of 6.7% over the same 3 years. A significant savings when we see increases in premiums for all health care plans (Kaiser Family Foundation 2006 report) from 13.9% in 2003, to 9.2% in 2005, to 7.7% in 2006.
One of the largest concerns for those considering consumer directed programs is that it will drive employees away from health care services, especially preventative services. The feeling being that if it is going to cost them their own money, they will forego services. However, the Aetna study reports that preventative care for members was maintained or improved as compared with other plan members. The study showed that first year HSA members received cervical cancer screenings at a 13.8% higher rate than PPO members, discounting the notion that individuals are not seeking preventative care. Supporting this finding, McKinsey & Company (June 2005 Consumer Directed Health Plan Report) found that individuals with HRAs were 30% more likely to get an annual check up. Consumers appear to agree, at least from these surveys, that if they catch a health care concern early, it will save them money in the long run - driving the type of behavior we would like to see in terms of prevention.
Another concern for employers is the level of maintenance care for those with chronic conditions. Again, both studies show support that care is being maintained. The McKinsey study reported that HRA patients were 20% more likely to follow treatment regimens for chronic disease care; while the Aetna study reported a 6% higher usage of inhaled steroids among asthmatics (chronic care treatment) for HRA and HSA patients compared with a similar non-CDHP population.
From these studies, our fears finally appear to be lessened in that care is not necessarily being avoided due to the increased 'cost' to participants in consumer directed health care plans. A 2005 Blue Cross Blue Shield Association health survey further supports the findings reporting that consumers with all types of health coverage were equally likely to defer care - 22% of HSA participants, 25% non-CDHP enrollees. These statistics show a similar percentage of individuals who try and 'wait it out'; regardless of the type of coverage they enroll in.
Finally, for a comprehensive review we must look at the level of consumerism being engaged in with these plans. One way to view this is in terms of drug utilization. The Aetna study shows that generic drug utilization for HRA members was 4.5% higher than PPO members. Pointing to, what would appear consumerism in drug choice as well with higher usage of generic brand alternatives.
So, are our pleas to be more cost conscious working? Do our employees finally understand that it is in everyone's best interest to review quality and price when making health care decisions? From these data sources, it appears so. CDHPs are providing lower cost plan alternatives with consumer responsibility without jeopardizing care. 20-30% lower than average premiums for HAS qualified plans in the overall market (Kaiser Family Foundation 2006 Health Survey) and better consumer decision in terms of preventative care, chronic care maintenance, and generic drug usage appear to be a good choice for employers with this first wave of data, however, it must be taken and observed over time and with a note of caution. We all know there is no "one" solution to the health care crisis. While consumer driven health care plans offer promise, we cannot rely solely on these plans. Employers need to engage employees and provide them with information, tools, and wellness programs with or without a consumer directed health care plan to make better and more informed decisions.
One of the biggest challenges for employers is to get healthcare consumers to be true consumers and use these new 'savings' vehicles appropriately for health care spending. Consumer directed health care plans appear to be driving this level of consumerism to some degree. The McKinsey & Company report found that HRA and HSA enrollees appear more likely to make careful, value-conscious healthcare decisions. Consumers with HRAs were 50% more likely to ask about overall health care costs, and twice as likely to inquire about drug costs. However, after 20 years of PPO co-payments, it remains a challenge as employees truly do not have a grasp on the cost of health care services. In 2005, Great West Health Care sponsored a health care spending study which drove this point home. In this survey, it is reported that participants were able to guess the price of a roundtrip plane ticket within $37, the price of a new car within $300, and an average four day hospital stay within $8,000. Our lack of awareness with health care spending is astonishing and must be something that we need to continue to focus on with our employees, with or without a CDHP.
A modest push to arm our employees with the tools to take control of their own health with wellness programs and initiatives snowballed into consumer driven or consumer directed health plans. Benefit managers and insurance companies continue to work to come up with the magical plan design and programs that will make it click with consumers and empower them with the tools to help reduce out of sight health care costs. However, with all of the tools it is important to note that we must still rely on data and information to help our employees and our companies make better health care decisions and to get the most of our health care dollar. Surveys are a great source of data and have provided much wanted information on the value and success of consumer directed health care plans, however, it is just the beginning. As we preach to our employees, information is valuable and more information is priceless. Use data such as this as only part of your information gathering. External surveys as well as internal surveys, and market literature will allow you to make more informed choices for your organization and arm yourself and your employees with the tools to make the best decision in health care.
Patti Dunham is a Sr. Human Resources Consultant with Strategic Human Resources, Inc. If you have any questions or would like to share your experience with consumer driven healthcare plans, contact her at:
Patti@StrategicHRinc.com.
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