- With the continuing rise in healthcare costs, employers are looking to alternatives such as CDH plans to cut premium costs and increase employee's’ financial responsibility for their healthcare spending.
CDHs are an employer health insurance strategy which puts more responsibility on the employee for their healthcare spending. They often include a high deductible health plan that is paired with a health savings account (HSA) or a health reimbursement arrangement (HRA).
For example, in an integrated HRA, the employee is liable for more out of pocket expenses upfront, which are then reimbursed later with payments by the employer.
These plans are attractive to employers primarily as a method to reduce their premiums. It also enables them to segue from offering lower deductible health plans, and transition decisions on healthcare spending directly to the employee.
As a recent study indicated, although employers and brokers are aware of the need for these policies and the value of CDHs, there remains a lack of implementation and awareness as to how to best roll them out successfully within an organization.
Recent statistics put the number of CDH policies in the 2016 market at 60 million, a formidable number with an 11 percent compound annual growth rate.
Of the participants in the Alegeus survey, 86 percent of brokers and 74 percent of employers said that CDHs are a major component of their future health benefits strategies, and a key way they are looking to address skyrocketing healthcare costs.
“To maximize the impact CDH programs can have, brokers and employers must be supported to ensure that benefit designs and communication strategies are effective and CDH programs deliver on their promise of cost savings, greater control over healthcare spending, and greater employee satisfaction – rather than a mechanism to purely shift costs,” said the report.
Prior studies of individuals enrolled in CDHs show they have higher out-of-pocket costs and seek fewer medical services than when they are using traditional health plans.
For both employers and brokers, the rising cost of healthcare was still the biggest factor driving them to seek CDH adoption. Employers cited a motivation for being able to provide healthcare benefits to employees, with brokers being motivated by a product with high rates of customer retention and commission.
Both groups also expressed a very high degree of knowledge about CDH benefits, with two-thirds of brokers and almost half of employers placing themselves in that high knowledge category. This was despite both groups also stating they could benefit from more comprehensive product knowledge and best practice insights for greater CDH integration and use.
The utilization of technology to drive employee adoption of CDHs was also cited as a critical component for success. An example of user friendly technology could include self-service portals for beneficiaries, either through apps or through a personalized online account portal.
The importance of working with the right payer in offering a CDH was also cited as key by both groups. More than 75 percent of brokers stated that the correct choice of insurer is critical to the success of a CDH benefits strategy.
Finally, over half of employers reported they need support from insurers to address organizational issues vital for driving employee participation in CDHs. This includes payer support for training of their benefits department on messaging, communication planning and development of marketing materials.
“While brokers and employers understand the strategic value and impact account-based benefit programs bring to the market, they still need significant support to maximize adoption and realize the full value consumer directed healthcare can deliver,” said the report.