The popularity and savings potential of consumer-driven health plans have been overblown, according to a new report from United Benefit Advisors, an independent employee benefits organization headquartered in Indianapolis.
Consumer-driven plans are high-deductible health plans that typically are paired with health savings accounts or health reimbursement accounts. They are touted as a lower-cost alternative that encourages people to save for health care and shop wisely for medical services.
But in its 2012 health plan survey, United Benefit Advisors found that traditional preferred provider organization (PPO) plans with high deductibles saved more money than consumer-driven plans. A PPO with a deductible of $2,000 to $2,999 cost $7,811 a year per employee, while a consumer-driven health plan with the same deductible cost $8,859 per worker, according to the firm's analysis.
Consumer-directed health plan (CDHP) costs were higher because employers often fund their workers' health savings accounts. Funding the accounts not only costs employers that money, but it removes the incentive for employees to spend wisely.
United Benefit Advisors said studies show that 80 percent of employees will have less than $700 in annual health care costs. "So by funding the first $1,000 of an insurance plan, most employees will never see the cost of their health care, and therefore, not make better decisions," the company said in a press release.
"Employers are turning to CDHPs as a cost-cutting solution against the relentless upward spiral of health care costs," United Benefit Advisors CEO Thom Mangan said in a press statement. "However, our research shows that small- to midsize businesses in particular, who may be considering these plans may first want to consider increasing the deductible on the plans they already have to achieve the same initial savings. Or, prior to implementing a CDHP plan, employers should build a culture of health and wellness in their workplace that drives employee behavior towards quality, low cost medical care and prescription drugs."
Although almost 60 percent of the 11,711 employer surveyed said they planned to offer a consumer-driven health plan in the next five years, PPOs remain the dominant player. Almost 62 percent of U.S. workers with employer-sponsored health insurance were enrolled in PPO plans.