When American workers engage in health-smart habits offered in consumer-driven health plans (CDHPs), they reduced their health risks and lowered their total medical costs an average of $9,700 per employee over five years, according to a study of health care claims representing 1.1 million Cigna customers in CDHPs, preferred provider organizations (PPOs) and health maintenance organizations (HMOs).
The Sixth Annual Cigna Choice Fund Experience Study, released in February 2012, showed that individuals enrolled in the insurer's CDHP offering lowered their costs without compromising care by becoming more engaged, informed and active health care consumers. Cigna's CDHP pairs a qualified medical plan with a health savings account (HSA) or health reimbursement arrangement (HRA).
(To learn more about these accounts, see the SHRM Online article Consumer-Driven Decision: Weighing HSAs vs. HRAs.)
According to Cigna's study, when compared to customers in traditional PPO and HMO plans, those in a CDHP:
• Lowered their health risks. CDHP customers reduced their risk of developing or worsening a chronic condition. When employers transitioned fully to offering only a CDHP option, individuals improved their health risk profile by 10 percent in the first year compared to customers in a traditional plan option.
• Reduced total medical costs. CDHP medical cost inflation was 16 percent lower than traditional plans during the first year. Over five years, cumulative cost savings averaged $9,700 per employee enrolled in a CDHP compared to employees who remained in a traditional health plan. Cost reductions were achieved without employers shifting out-of-pocket health expenses to their employees.
• Received higher levels of care. CDHP customers had consistent or higher use of over 400 evidence-based medical best practices than their counterparts in traditional plans. CDHP customers sought preventive care, such as annual office visits and mammograms, more frequently than customers enrolled in a traditional plan.
• Were more engaged in health improvement. Through proper plan design and the use of incentives, CDHP customers were more likely to have completed a health risk assessment and participated in a health coaching program than those enrolled in a traditional plan.
• Were more savvy consumers of health care. CDHP customers enrolled in Cigna's pharmacy management plan were more likely to choose generic medications and had 14 percent lower pharmacy costs compared to those in a traditional plan. In addition, CDHP customers used an emergency room at a 13 percent lower rate than individuals enrolled in HMO and PPO plans.
• More likely to compare cost and quality. CDHP customers were twice as likely to use online cost and quality information to help them select a doctor or to review potential medical costs than customers enrolled in traditional plans.
Insurers are continuing to improve their CDHP offerings, including enhancing online and web-enabled mobile phones to look up what expenses may be paid via their HSA, HRA and flexible spending account (FSA) funds, to compare drug costs and to find a doctor or facility.
“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, Dr. 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.”
Bank of America Sees Record Growth in HSAs
Bank of America reported a record 34 percent growth in health savings accounts (HSAs) it administered in 2011, adding more than 50,000 accounts—far outpacing the growth rate for health reimbursement arrangements (HRAs) and flexible spending accounts (FSAs).
“The use of HSAs is rapidly increasing, based in no small part on the rising cost of health care to employers and employees alike,” said Kevin Crain, head of institutional retirement and benefit services for Bank of America Merrill Lynch. “We see more and more companies, including many of our corporate clients in the large and middle markets, adding consumer-driven health plans to their broader benefit offerings.”
The average annual contribution to Bank of America-administered HSAs in 2011 was $2,016, with employers contributing more than 20 percent of this total average to their employees’ accounts.
Since the beginning of 2010, the average account balance has grown more than 10 percent to $1,600 per account, suggesting that users are saving more in their accounts and carrying balances forward year to year.
Stephen Miller, CEBS, is an online editor/manager for SHRM.
Rand Study: CDHPs Could Save Billions in Spending, SHRM Online Benefits Discipline, May 2012
Boosting HSA Participation, SHRM Online Benefits Discipline, February 2012
Health Accounts Continue to Grow in Numbers, Assets, SHRM Online Benefits Discipline, January 2012
Promoting Health Care Consumerism: A Multifaceted Approach, SHRM Online Benefits Discipline, November 2011
HSAs Viewed as Cost-Saving Option by Employers and Account Holders, SHRM Online Benefits Discipline, November 2011
SHRM Online Benefits Discipline
SHRM Online Health Care Reform Resource Page