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Consumer-directed health plans rein in costs

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in Compensation and Benefits,Human Resources

Consumer-directed health plans (CDHPs) are now the second-most prevalent kind of employer-provided health insurance, according to new research by the Aon Hewitt HR consulting firm.

CDHPs now trail only preferred-provider organizations (PPOs), and are more popular than insurance plans based on health maintenance organizations.

CDHPs could surpass PPOs in the next five years, the researchers predict.

What’s driving the CDHP surge? More and more employers are convinced that they’re a way to rein in rising benefits costs.

They believe the economics of CDHPs encourage employees to take more responsibility for their health and wellness because they’re more responsible for how more of their health dollars are spent.

How CDHPs work

Consumer-directed health plans typically combine high-deductible health coverage with a health savings account (HSA) or health reimbursement arrangement (HRA).

Employees covered by CDHPs pay lower premiums for their health coverage; in exchange, they pay high deductibles. Using either an HSA or HRA, they set aside extra money that can be used to help pay deductibles and copays.

Aon Hewitt’s 2013 Health Care Survey of nearly 800 large and mid-size U.S. employers found that 56% of employers currently offer CDHPs as a plan choice, and another 30% are considering offering one in the next three to five years.

While 10% of employers offer CDHPs as the only plan option, another 44% are considering doing so in the next three to five years.

In 2012, employers reported at least a 2 percentage-point lower cost trend for CDHP plans (4%) versus other plans, including PPOs (6%) and HMOs (7%).

Employers use a variety of tactics to encourage employee enrollment in CDHPs. Forty-four percent subsidize CDHP premiums at a higher level than they do for other plan options. In 22% of companies surveyed, a CDHP is the default plan option. In 44% of CDHPs, preventive medicines are fully covered before the deductible applies.

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