Employers are increasingly looking to consumer-driven health plans (CDHPs) to cut health care costs that have risen at double-digit rates for the last seven years.
Health savings accounts (HSAs), one of the many plans considered as a consumer-driven health plan model, will be gaining interest as many employers work on their plan renewals for 2006.
Consumer-driven plans got a significant boost in 2003 with the Medicare Prescription Drug Improvement and Modernization Act of 2003. Changes included new tax deductions for those choosing health savings accounts, which allow people to put aside a certain amount of money every year for health care-related expenses.
Who is attracted to HSAs?
- Nearly half of the people who purchased HSA-eligible plans were 40 years old or older.
- The average age of purchasers of HSA-eligible plans is 40, whereas the average age for purchasers of nonHSA-eligible plans is 35.
- HSA-eligible plans are equally attractive to both individuals and families — 51 percent of purchasers are individuals, 49 percent are families.
- HSA-eligible plans are being adopted by people at all income levels. Forty percent of HSA-eligible plans were purchased by people with incomes of $50,000 or below.
- HSAs may play a role in helping uninsured people get health insurance. More than two-thirds of HSA-eligible plan purchasers who were previously uninsured for more than six months had incomes of $50,000 or less.
- Ninety-nine percent of HSA-eligible plans purchased in 2004 included prescription drug benefits.
- The number of HSA-covered lives nearly doubled recently, from 438,000 in 2004 to 1,031,000 in March of 2005 (see chart above).
What does this mean?
According to recent research from McKinsey & Co., consumer-driven health plan members are more than 50 percent more likely to ask about cost than were participants in traditional types of health plans.
Conversely, 80 percent said they didn’t have enough information on the prices doctors charge. So, there is more work to do on providing the needed information and resources to consumers in this area if these plans are going to be able to continue growing and remain cost effective.
Rely on your employee benefits consultant for direction when it comes to consumer-driven health care and the impact it has on you and your employees.
Jessica Galardini is COO of the Chambers of Commerce Service Corp. and executive vice president and COO of HRH Affinity Marketing Group. Reach her at (412) 456-7012.
