Consumer-Directed Health Plans On the Rise

Two reports published this month show that consumer-directed health plans (CDHPs) are making significant inroads into companies' benefit strategies. CDHPs are high-deductible plans with an employee-controlled spending account, which may be either a health reimbursement arrangement or a health savings account (HSA).

Thirteen percent of companies that provide health benefits now offer this option, according to a survey from the Kaiser Family Foundation and the Health Research and Educational Trust. That's up from 7 percent in 2006.

Preliminary results from Mercer's annual health benefits survey indicate that 19 percent of employers taking action to slow cost increases in 2009 will add a CDHP to their offerings.

The number of Americans covered by CDHPs is rising. A recent study by America's Insurance Plans, a Washington, D.C.-based trade organization, looked at the distribution of high deductible plans with HSAs. About 6.1 million people were covered by such plans in January 2008, a sharp increase from 4.5 million just 12 months earlier.

There's no question that the potential for cost savings is a primary driver of the increasing popularity of consumer-directed plans. CDHPs are significantly less expensive than traditional health plans such as HMOs and PPOs, according to Mercer. Although the firm emphasizes that its 2008 study is still incomplete, companies in its current sample that offer a CDHP expect a cost increase of 4.5 percent for 2009, on average, compared with 6.5 percent among companies that don't offer a CDHP.

Holding the line on health-care expenses was certainly top-of-mind for respondents in a new Business Finance poll conducted as part of a webcast that presented a buyers' guide to HSAs. Seventy-two percent said that controlling costs is their company's biggest health-care challenge. The need to design a competitive offering that appeals to employees is also key, cited by just over one-quarter of participants.

Interestingly, though, cost is not the primary factor in choosing an HSA administrator. Respondents were more likely to cite the administrator's reputation (43 percent) and its ability to provide claims payment that integrates with their current systems (31 percent).

Here are the complete results of the Business Finance poll: