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The Myth of Consumer-Directed Health Plans

Saturday, May 1, 2010
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Consumer-directed healthcare plans are not offering the cost-reduction savings they seemed to promise.

A recent survey from Towers Watson reveals that the cost trends for such plans are rising at the same level as other types of health insurance at companies where the CDHPs have been in place for a few years.

Meanwhile, a survey conducted late last year by Segal/Sibson Consulting found that healthcare-cost trends for CDHPs were slightly higher than for preferred-provider-organization health plans.

The findings illustrate the fact that even high-deductible health plans, which are designed to save companies money and encourage employees to be more careful with their healthcare dollars, are subject to the same price pressures as other types of plans, says Ted Nussbaum, a principal at New York-based Towers Watson.

"The cost of healthcare delivery is simply too high," he says, adding that the recently signed healthcare-reform bill doesn't do enough to address this.

The survey, conducted jointly by Towers Watson and the National Business Group on Health, found median healthcare costs are expected to increase by 6.5 percent this year, down slightly from 7 percent in 2009. The survey queried 507 U.S. employers with at least 1,000 employees.

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Although CDHPs are designed to sensitize employees to the true cost of healthcare, this isn't working out as well in practice as hoped, says Nussbaum.

"Companies have created an infrastructure to encourage employees to identify and address their health risks, but employees aren't engaged enough to make the return-on-investment as good as it could be," he says.

About two-thirds (67 percent) of respondents said employees' poor health habits are a top challenge to maintaining affordable healthcare coverage, and more than half (58 percent) said the biggest obstacle to changing such habits is the lack of employee engagement.

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