Consumer-directed health plans can help lower health risks

June 1, 2007

A number of cost-evaluation studies have emerged showing consumer-directed health plan (CDHP) members use less care. Meanwhile, others suggest that members are less satisfied with these plans and that they tend to choose unwise ways of saving money, such as skipping preventive care.

A number of cost-evaluation studies have emerged showing consumer-directed health plan (CDHP) members use less care than non-CDHP participants. Specifically, such studies have shown that CDHP members have fewer in-patient hospital admissions and fewer outpatient, primary-care and emergency-room visits. Meanwhile, some surveys, including one released in 2006 by the Kaiser Family Foundation, suggest that members are less than completely satisfied with these plans and that they tend to choose unwise ways of saving money, such as skipping preventive care.

An analysis of the most credible CDHP studies, conducted by Aon Consulting, reinforces the idea that CDHPs represent a significant upside opportunity to rein in medical costs, increase member "ownership" of personal health, generate higher than average satisfaction scores and improve adherence to preventive and chronic disease-management care.

The caveat to this conclusion is the notion that CDHPs consist simply of high-deductible coverage combined with a Health Savings Account (HSA) or Health Reimbursement Arrangement (HRA). Aon's study concluded that while CDHPs vary widely by insurer, successful models offer a combination of:

Although this may be a valid point, but in certain instances, such as in the case of Aon, savings traced to cost shifting were factored out by measuring the total cost of healthcare –the employee and employer portion. Similarly, adverse selection was eliminated as an issue by evaluating CDHP participants in a total-replacement CDHP program; by adjusting for the illness burden between CDHP and non-CDHP participants; and/or by tracking the same CDHP participants before and after CDHP to detect changes in behavior.

Our analysis, therefore, reflects the impact of CDHPs on all age groups, education levels and health conditions.

Our review of CDHP cost-savings studies and available client data prompted three conclusions:

I. CDHPs with integrated health-improvement programs, consumer-support tools and management services achieve success in motivating and modifying the behaviors of members.

The CDHP studied in greatest depth includes an integrated, wellness-incentive program designed specifically to provide incentives at the member level to reduce health-risk factors. It consists of three components:

To facilitate member acceptance and engagement with the health plan, successful CDHP models also are designed to reduce paperwork and facilitate the process of effectively "shopping" for healthcare services: