|Consumer-Driven Health Plans Generate Modest Savings For Employers
Consumer-driven health plans (CDHPs) generate modest savings for employers, according to an analysis by Milliman Inc.
Working in concert with the National Business Group on
Health (NBGH) and six of its member firms, Milliman completed a
quantitative analysis of employer programs that offer their employees a
choice of CDHPs or non-CDHPs.
The programs covered approximately 225,000 members with more than 30,000 enrolled in a CDHP.
The actual CDHP penetration of the six employers ranged from 4.4 percent to 76 percent.
"While many insurers and a growing number of employers
promote CDHPs, our study sought to determine how well they work," said
co-author Jack Burke. "When offered as a new choice, CDHPs deliver cost
and savings results that are modestly better than would be expected
based on typical risk- and benefit- adjustment factors. This contrasts
with the more dramatic savings that CDHPs appear to bring if certain
adjustments are not taken into account. We believe that until members
can truly compare and shop for providers’ quality and cost, CDHP
savings are likely to remain limited to thereduced utilization expected
from high-deductible plans," Burke added.
"As with most earlier healthcare benefit innovations
such as HMOs, younger and healthier people tend to be the first to
choose CDHPs, but this will likely change as the market accepts the
CDHP concept," said Bruce Pyenson, who contributed to the report.
"The Milliman research demonstrates that during this
early era of movement to consumer-driven health plans, the design of
the plan is very important and, as is true of all new options, when
people have choice, they often do not change. Inertia is a powerful
force in health benefits: people who are engaged in ongoing care are
the least likely to change plans. Not surprisingly, as happened in the
movement to HMOs in the 1980s and 1990s, often the
‘healthiest’ and youngest employees select the new plans.
"Among the six employers studied that offered
multi-choice plans, Milliman documented savings from as high as 12
percent and as low as no savings after adjusting for a number of key
factors," said Helen Darling, president of the NBGH. "Some of our
employers did not move to CDHPs primarily to save money in the
immediate term, either for themselves or their employees. Rather, they
offered CDHPs to change how employees thought about their healthcare
and how they would behave when their money was at stake. This is a
strategy, not a tactic."
Address: Milliman Inc., 1301 Fifth Ave., Suite 3500, Seattle, WA 98101; (206) 624-7940, www.milliman.com.