consumer driven health plan research presented by: anne elmlinger and greg kline mathew greenwald...

Consumer Driven Consumer Driven Health Plan ResearchHealth Plan Research

Presented by:Presented by:

Anne Elmlinger Anne Elmlinger and and

Greg KlineGreg Kline

Mathew Greenwald & Associates, Inc.Mathew Greenwald & Associates, Inc.

2

Table of Contents

Methodology

What’s happening in the market?

Why are employers/consumers choosing/not choosing CDHP?

How is CDHP performing in the market?

- Changing consumer behavior

- Controlling cost

- Use of accounts as long-term savings vehicles

- Customer satisfaction and loyalty

What kind of market growth should we expect in the future?

3

Methodology

• Mathew Greenwald & Associates keeps a database of the results from publicly released Consumer Driven Health Care research. Currently this houses data from nearly 50 studies.

• Cumulatively, these studies provide a richer picture, since each one by itself has limitations.

• The presentation draws from some, but not all of the studies in our database. The studies included represent the most current data on a topic, and/or may be based on the largest sample sizes. Preference was also given to studies for which we had detailed information about the methodology and results.

• A complete list of all of the studies included in this presentation, including specific methodologies, can be found on page 50.

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5

What’s happening in the market? (Highlights)

As of January 2006, nearly 3.2 million lives have an HSA eligible plan, almost triple the number from March 2005 (1 million)

Source: AHIP, 2006

In the small group market, 33% of enrollment in HSA eligible plans was from small companies that previously did not offer coverage

Source: AHIP, 2006

In 2006, half of all HSA eligible enrollees in the individual market with incomes under $15,000 were previously uninsured

Source: eHealthInsurance, 2006

CDHP enrollment has increased to 6% of large employers in the health care market, up 2% from 2005

Source: Deloitte, 2006

6

Enrollment in CDHP • In January 2006, health plans report having almost 3.2 million

people with HSA eligible plans, compared with about one million in March, 2005.

438,000

1,031,000

3,168,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

Sept. 2004 March 2005 Jan. 2006


Source: AHIP, 2006 Census Study

Covered Lives in HSA-Eligible Plans

7

Enrollment in CDHP by Market

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2004 2005 2006

Other*

Large-group market

Small-group market

Individual market

Source: AHIP, 2006 Census Study


Range (000’s)

Growth Rate

Individual 346-855 247%

Small-Group

79-510 645%

Large-Group

13-679 5223%

*Other includes those who did not break down their membership by market category.

(#’s in thousands)

438

1,031

3,168

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Market Profile - Premiums

$3,157

$1,121

$1,914

$5,690

$3,951

$2,507

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

Age 20-29 Age 30-54 Age 55-64

Single Policy Family Policy

Small-Group

Large-Group

Single Policy $2,772 $2,745

Family Policy $6,995 $6,715

Individual Market Average Premium by Age:

Source: AHIP Census Study, 2006


Group Market Average PremiumBy Group Size

9

$1,754

$2,378$2,143

$3,494

$4,311

$4,760

$0

$1,000

$2,000

$3,000

$4,000

$5,000

Individual Market Small Group Market Large Group Market

Single Policy Family Policy

2006 Market Profile - Deductibles


Source: AHIP Census Study, 2006

Average Annual Deductibles

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Average Age : 40 overall36 for individual enrollees41 for family enrollees(AHIP) 50% are 40 and older, including dependants

Gender: 62% Male38% Female

Annual Income: 20050-$15,000 5.8%$15,001 - $35,000 16.3$35,001 - $50,000 20.2$50,001 - $75,000 20.2$75,001 - $99,000 15.6$100,000+ 21.9

Source: eHealthInsurance, 2005

Demographic Profile (Individual Market)


• Percentage of new CDHP enrollees in the individual market previously uninsured: 31% (AHIP).• Percentage of new HSA eligibles in the individual market with incomes under $15,000 previously uninsured: 50% (eHealthInsurance)

• Percentage of new purchases in the individual market that were HSA-eligible products: 23%.

Sources: AHIP Census Study, 2006; eHealthInsurance.com, 2006

11

Demographic Profile

Source: EBRI/Commonwealth, 2005

Comprehensive HSA-eligible CDHP

Gender

Male 49% 55% 58%

Female 51 45 42

Age

21-34 29% 17% 21%

35-44 25 24 31

45-54 26 33 33

55-64 19 26 15

Education

High school graduate or less 32% 8% 5%

Some college, trade, business school 33 37 29

College graduate, some college 23 38 46

Graduate degree 11 17 21

Firm Size

Self employed with no employees 2% 9% 8%

2-49 15 31 38

50-199 9 9 8

200-499 10 7 5

500 or more 55 37 36


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More Demographics

Health Status

• 73% of APWU CDHP enrollees under age 65 report “excellent” or “very good” health status compared 58% of those enrolled in their PPO.

Source: GAO, 2005

• Those enrolled in CDHPs (57%) and HDHPs (48%) are more likely to report “excellent” or ‘very good” health, compared to 45% enrolled in traditional plans


Full Replacement

• Two-thirds of employers who offer an HDHP/HSA, plan to do so as an option rather than a replacement for an existing plan.

Source: Council of Insurance Agents, 2005


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Why are employers/consumers choosing/not choosing CDHP?

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82% of employers are not offering CDHP’s because they are concerned about product complexity and the education curve


59% of employers find CDHP’s to be at least somewhat effective at controlling health care cost increases.

Source: Watson Wyatt, 2006

51% believe that the pricing structure of HSA eligible plans are unattractive to employees.


The decision to offer or enroll in CDHP’s

80% of employers find CDHP’s to be at least somewhat effective at increasing employee involvement in health care decision making

Source: Watson Wyatt, 2006

Why employers are offering

CDHP’s Why employers are not offering

CDHP’s

Employers Reasons for Offering/Not Offering CDHP (Highlights)

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Why employers are offering CDHP’s

Main reason for offering CDHP to your employees

Source: AON, 2006

48%

38%

11%

2%0%

10%

20%

30%

40%

50%

60%

Introduceconsumerism forlong-term change

Control health plancosts

Expand employeechoices

Provide a vehiclefor retiree medical

savings


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Reasons employers offer CDHP

• 59% find CDHP’s to be at least somewhat effective at controlling health care cost increases Watson

• 40% said CDHP’s offer “the most effective” approach for managing health care costs and maintaining quality care Deloitte

• 48% said that the plans would make employees better consumers of health care AON

• 80% find CDHP’s to be at least somewhat effective at increasing employee involvement in health care decision making Watson

Sources: Watson Wyatt, 2006Deloitte, 2006AON Consulting, 2006


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Reasons employers do not offer CDHP

82% Concerns about product complexity, the education curve

51% Pricing structure is unattractive to employees

37% Inability to carve out prescription drugs

26% Plan sponsor can not control how contributions to employee accounts are spent

21% Difficulty coordinating HSA with existing HRA or FSA

21% Concerns that HSA’s many not yield retiree health savings originally forecasted

Source: Council of Insurance Agents , 2005


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Reasons employers do not offer CDHP

• 62% believe biggest hurdle is employee resistance and/or entitlement to coverage

• 13% said that employee attraction and retention were the primary obstacles to change

• Only 16% believe that these plans will be “very effective” in controlling health care costs

• 42% are neither tracking nor measuring the financial effectiveness of the programs



Source: Kaiser/HRET, 2005

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Why employers are not offering CDHP

Source: AON, 2006

The CDHP concept is too new 30%

Do not believe enough employees will enroll to make it worth offering

20%

Currently satisfied with traditional plan designs

16%

Do not want to expose employees to potentially high claims costs

13%

CDHP will siphon off healthy employees from traditional plans

13%

Main reason employer is not planning to offer a CDHP to employees


20

82%

29%

13%16%14%

17% 18%

28%

0%

15%

30%

45%

60%

75%

90%

Did not like high out-of-pocket costs

More familiar with planselected

Too much trouble tomanage/open

accounts

Did not have money toput into account

Traditional

HDHP

Why consumers are not enrolling

Reasons for not taking CDHP or HDHP



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Why consumers are not enrolling in CDHP

Main reason employees do not enroll in CDHP

Source: AON, 2006

66%

7% 7% 4%

0%

10%

20%

30%

40%

50%

60%

70%

Fear of highdeductible/ out-of-

pocket costs

Still favor traditionalplan design over

CDHP

Lack of knowledge,awareness of CDHPs

CDHP's viewed as toocomplicated


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Why consumers are enrolling

17%

56%

34%

49%

64%

24%31%

45%

52%53%

10%

24%

0%

10%

20%

30%

40%

50%

60%

70%

Lower out of pocket costs Good network of docs andhospitals

Cost of premium Easy access to care

Traditional

CDHP

HDHP


Main reasons for enrolling in your health plan


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24

Consumer behavior – Health information (Highlights)


58% of CDHP consumers talked to their doctors about a less expensive Rx substitute vs. 32% of those using traditional plans.

Source: McKinsey, 2005

55% of CDHP consumers talked to an MD about treatment opinions and cost vs. 43% of those with traditional plans.


47% of CDHP consumers asked a doctor or pharmacist about the cost of an Rx vs. 27% of those in traditional plans


HSA eligibles were more likely to use the nurse hotline (18%) than were consumers with traditional plans (8%).

Source: BCBSA, 2005

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Consumer behavior - Health information

10%

3%

44%

9%6%

11%

26%27%

32%

6%7%11%

58%

47%

0%

10%

20%

30%

40%

50%

60%

70%

Talked to MDabout lessexpensivesubstitute

Asked MD orpharmacist

about cost ofRx

Talked topharmacistabout lessexpensivesubstitute

Waited to getRx filled until

could pay

Did not fill Rxbecause

thought issuewould resolve

itself

Asked MD toprescribe a

brand insteadof a generic

Did not fill Rxbecause found

non-Rxsubstitute

Traditional

CDHP



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Consumer behavior - Health information

Source: BCBSA, 2005

8%

3%

20%18%

15%14%18%

9%

33%

27%

0%

10%

20%

30%

40%

Information oncost of Rx

Wellnessprograms

Information oncost of MD visit

Nurse hotline Online costtracking tool

Non-CDHP

HSA eligible


Percentage who used the following resources:

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Consumer behavior – Health information


27%23%

14%

44%

32%

19%

43%49%

55%60%

0%

20%

40%

60%

80%

Checked if planwould cover

care

Talked to MDabout treatment

options, cost

Asked MD torecommend

less costly Rx

Checked costof service

Checked qualityrating of MD or

hospital

Traditional

CDHP/ HDHP

Percentage who took each action


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Consumer behavior - Utilization

• Consumers who moved to a CDHP used less health care (measured by total cost of claims) with an 8% drop in claims dollars over the prior year, compared to those who stayed in a traditional plan who had a 4% increase in claims dollars.

• Costs dropped most for moderate and heavy users• Change occurred across all service types• Inpatient facility costs dropped 5% • Outpatient facility costs dropped 12%

• CDHP consumers had a higher usage of preventive care than those in traditional plans.

• Overall, pharmacy utilization expense was 5% higher for CDHP vs. traditional.• Reduced usage of medications for discretionary purchases (migraines,

indigestion)• Increased usage of medications for chronic conditions

– Usage of medications to control diabetes was up 18%– Usage of medications to control cholesterol was up 23%– Usage of medications to prevent heart attacks was up 18%

• Behavior changes continued after meeting the deductible.

Source: CIGNA, 2006


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27%

36%31%

44%

51%55%

0%

20%

40%

60%

Total with health issues Only those with highblood pressure

Only those with diabetes

Traditional

CDHP/ HDHP

Percentage who very carefully follow the treatment regimens


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16%

20%

26%

Traditional CDHP HDHP

15%

20%

26%


17%

35%

31%


Did not fill prescription due to cost

Skipped doses to make prescription last

Delayed/avoided care when sick due to cost


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Controlling cost (Highlights)

In the individual market, CDHP rates were down 19% for single coverage and 4% for family coverage between June 2004 and January 2005

Source: e-HealthInsurance, 2005

Despite lower premiums, total employer costs for HRAs is higher than for traditional plans due to the contributions to the accounts. Total employer costs for HSAs are lower than for traditional plans.


In 2006, cost increases for all plan types among large groups averaged 7.1%, but were just 2.6% for CDHP



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Controlling cost


7.3%

2.8%

7.2%6.4%

8.5%8.0%

7.1%6.6%

7.5%

2.6%

7.3%7.4%

0.0%

5.0%

10.0%

HMO POS PPO Traditional CDHP Average

2005

2006

Premium Increases Over Prior Year By Product: 2005 - 2006 (Large group market)


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Controlling cost

AGE 2004 2005

18-24 $73.39 $65.54

25-34 $88.00 $79.44

35-44 $129.01 $110.02

45-64 $222.05 $187.07

$277

$138

$264

$112

$0

$50

$100

$150

$200

$250

$300

Individual Family

2004 Jan- Dec

2005 Jan- Jun

19%

4.8%

Change in CDHP Rates: By Single/Family, By Age Group

Source: e-HealthInsurance, 2005


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Controlling cost

$3,872

$7,538

$2,850

$7,337

$4,024

$10,880

$3,413

$8,167$8,530

$3,503

$7,909

$2,700

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

Single Family Single Family

HRA HSA All Plans

-----------Total Premium ------------ ----Total Employer Contribution ----



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Satisfaction and loyalty (Highlights)

In 2003-2004, 67% of people with CDHP said they were satisfied overall, compared with 76% of people with PPO plans and 53% of people with other new plans.

Source: GAO FEHBP, 2005

44% of CDHP consumers are as satisfied or more satisfied with CDHP vs. their previous plan, which typically had more benefits.


68% of HSA eligibles are satisfied with the performance of their health insurer, compared with 56% who have non-CDHP plans.

Source: BCBSA, 2005

42% of HSA-eligibles are much more or somewhat satisfied overall, compared to 20% of those with non-CDHP plans.

Source: BCBSA, 2005

42% of people with CDHP plans said they were extremely or very satisfied overall, compared with 33% with HDHP and 63% with non-CDHP. Source: EBRI/Commonwealth, 2005


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Satisfaction and loyalty: Consumer

86%

59%

87%

67%

76%

87%93%

74%77%

53%

85%

67%

0%

20%

40%

60%

80%

100%

Overall Access to care Claims processing Customer service

Other new plans* CDHP PPO plans

Percentage satisfied by plan type

Source: GAO FEHBP, 2005


* Other new plans includes those who changed to a new plan (not CDHP)

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• 44% of CDHP consumers are as satisfied or more satisfied with CDHP vs. previous plan, which typically had more generous benefits.

• 80% indicated they did not have sufficient information on prices, doctor’s charges

• Satisfaction did not vary by health status, but did vary by employer. McKinsey suggests this was partly due to differences in how plans/employers helped consumers handle increased responsibility



38



63%

73% 73% 72%

42%

33%

60% 60%

52%

12%

42%

69% 69%

63%

18%

0%

20%

40%

60%

80%

Overall Easy access todoctors

Choice of doctors Quality of care Cost paid out-of-pocket

non-CDHP

HDHP

CDHP

Satisfaction with Plan% Extremely/ Very Satisfied


39


Source: BCBSA, 2005

69% 71%

42%35% 37%

56% 55% 55% 57%

20%16% 15%

67%68%

0%

20%

40%

60%

80%

Performanceof insurer

Responsivecustomerservice

Info. fromhealth plan

Access topreventive

care,wellness

Overall Valuereceived

Being incharge of

health care

HSA eligibles Traditional

Change in Satisfaction Over Prior

Year: Much more/Somewhat more satisfied

Satisfaction with Plan


40


51%

61%

22%

30%34%

46%

0%

10%

20%

30%

40%

50%

60%

70%

Likely to recommend plan Intention to renew

non-CDHP

HDHP

CDHP

% Extremely/ Very Likely



41

Satisfaction and loyalty: Employer

53%

24%

13%

5%

0%

20%

40%

60%

Most importantobjectives met

Too soon to tell Neutral Objectives not met

Source: Mercer, 2005


Has CDHP met your company’s objectives?

42

Satisfaction and loyalty: Employer

How satisfied are each of the following constituencies with your CDHP?


51%

71%

59%

69%

33%26%

33%

17%15%

3%9%

13%

0%

20%

40%

60%

80%

Employees/theirdependents

Senior Management Middle Management HR Department

Satisfied Neutral Dissatisfied


43

Using the savings account (Highlights)

About half of consumers with single coverage spend less than half of their HRA funds each year, with 36% spending the entire balance.

Source: GAO, 2006

About 40% of those with a rollover option are able to rollover at least $500 at year’s end.


Each year, employers contribute an average of $550 for HSAs and $790 for HRAs with single coverage.



44

Using the savings account


$792

$1,556

$553

$1,185

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

Single Family

HRA HSA

Average Annual Employer Contribution


45


36%

14%

23%27%

58%

19% 20%

4%

0%

20%

40%

60%

80%

100% 51 to 99% 1 to 50% 0%

Single coverageFamily coverage

Source: GAO, 2006

Average Share of HRA Funds Spent by Enrollees, 2004


46



$100 to $49913%

$500 to $74913%

Nothing 28%

Don't know10%

$750 or more27%

<$1009%

Amount Rolled Over from Prior Year (Among CDHP owners with 1+ years in plan)


47

What kind of market growth should we expect in the

future?

48

The future of CDHP’s

43% of US companies either have a CDHP in place or will offer one in the next two years (21%). 51% said they are reviewing CDHP options and may offer it in the future.


Of those considering offering a CDHP in 2007 or beyond, 28% plan to offer an HRA and 54% plan to offer an HAS; 18% plan to offer both.


36% of health care insurance executives believe HSA’s/HDHP’s will be the fastest growing new product in the next year.

Source: American Re HealthCare, 2006

The future of CDHP’s

49

List of sources

50

Index of Studies

NOTE: This list includes all studies used in this presentation.

Sponsor Sample size Study methodology Date of releaseAHIP Census Study "almost all" AHIP members AHIP member companies January, 2006

American Re HealthCare 100+ Survey of CEO and CFO executives April, 2006

Aon Consulting/ISCEBS 434 Survey of ISCEBS members and select AON consulting clients

2006

Aon Consulting/ISCEBS 210 Survey of ICEBS Members 2005

Blue Cross Blue Shield Association

1,861 HSA eligible, 196 with HRA, 1,066 non-CDHP

Online survey of adults with health coverage Sep-05

CIGNA Corporation 42,200 Analysis of claims from continuously enrolled members who switched to HRA or HSA

February, 2006

Council of Insurance Agents 77 Survey of Council members - Employee Benefits Market Study

2005

Deloitte Center for Health Solutions

152 Survey of HR Benefit Executives from large US companies

March, 2006

EBRI/Commonwealth Fund 1,204 National; 185 CDHP; 463 HDHP

Online survey of adults with private health insurance December, 2005

eHealthInsurance.com "several thousand" HSA purchasers

HSA-eligible plans sold by eHealthInsurance.com July, 2005

GAO Consumer Directed Health Plan Report

unknown Analysis of HRA account data supplied to GAO by 3 large, multistate insurance carriers

April, 2006

GAO FEHBP unknown CAHPS survey of APWU enrollees 2005

Kaiser Family Foundation/HRET 2,013 Survey of randomly selected public and private employers

May, 2005

McKinsey & Company 2,500 Survey of adults with health coverage, incl.full-replacement CDHPs

March, 2005

Mercer Human Resource Consulting

3,020, 88 with CDHP Survey of employer health plan sponsors, including those with CDHP

February, 2005

Watson Wyatt/National Business Group

585 Survey of mid-size and large companies 2006

51

For more information, contact:

Anne Elmlinger

Mathew Greenwald & Associates, Inc.

(202) 686-2510 ext. 141

[email protected]

or

Greg Kline

Mathew Greenwald & Associates, Inc.

(202) 686-2510 ext. 109

[email protected]

consumer driven health plan research presented by: anne elmlinger and greg kline mathew greenwald...

Documents

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