Directed Health Plans Gain
Consumer-directed health plans have slowly been gaining appeal among employers and employees alike as a way to fight rising health care costs.
CDHPs include high deductibles and are generally paired with a tax-exempt health savings account or health reimbursement to help pay for out of pocket expenses.
The Internal Revenue Service has announced new 2013 limits on contribution and out-of-pocket spending for health savings accounts and high-deductible health plans.
The HSAs contribution limit has been raised to $3,250 for individuals and $6,450 for families. In addition, CDHP minimum deductibles have gone up to $1,250 for individuals, $2,500 for families and out of pocket amounts will now be $6,250 for individuals and $12,500 for families.
According to the Kaiser Family Foundation/Health Research & Educational Trust’s 2011 health benefits survey, CDHPs jumped from 4% of employees in 2006 to 17% in 2011.
While there’s no single panacea to rising health care costs, a recent Cigna study found that workers engaged in health-smart habits offered in CDHPs, reduced their health risks and lowered their total medical costs an average of $9,700 per employee over five years.
According to the study, when compared to customers in traditional PPO and HMO plans, those in a CDHP improved their health risk profile by 10% in the first year and sought preventive care, such as annual office visits and mammograms, more frequently. In addition, CDHP medical cost inflation was 16% lower than traditional plans during the first year and cost reductions were achieved without employers shifting out-of-pocket health expenses to their employees. CDHP customers were also more savvy consumers of health care and were twice as likely to use online cost and quality information to help select a doctor or review potential medical cost than those enrolled in traditional plans.
“Each year the evidence increasingly shows that properly designed consumer-driven health plans can lower health risks, reduce medical costs and drive engagement,” said Cigna Chief Medical Officer Alan Muney. “The data once again shows that the combination of incentives, easy to engage health programs and consumer decision support tools can improve health while reducing costs.”
A recent Rand Corp. study would seem to support the assertion, as it projected that an increase in market share of CDHPs to 50% could reduce annual health care spending by about $57 billion.