The Rise of Consumerism

Recent research reveals employees with health savings accounts are slowly becoming better consumers when it comes to buying medical care. Here's what HR can do to ride that wave to a healthier workforce.

Monday, December 30, 2013
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The health savings account and high-deductible, consumer-driven health-plan concepts are nothing new, as HSAs first hit the employer healthcare market a decade ago.

And, while HSA popularity got off to a slow start, some recent studies suggest that HSAs not only are picking up steam with employers, but they also are starting to transform plan members into better healthcare consumers -- a benefit of HSAs and consumer-driven healthcare touted by vendors who offer them.

In terms of growth, the latest annual census by America's Health Insurance Plans, the Washington-based national trade association representing the health-insurance industry, finds nearly 15.5 million people were covered by HSA/high-deductible health plans as of January 2013, an increase of two million from the January 2012 AHIP census.

In addition, the 18th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care reports that 53 percent of respondents offered an HSA/HDHP to employees in 2013, with another 14 percent indicating they will add an HSA/HDHP option during 2014.


According to a survey conducted by New York-based Buck Consultants, a human resource and benefits consulting firm and Xerox subsidiary, there is emerging evidence that "consumerism" finally is gaining ground and encouraging employees with HSAs to take a more active role in managing their own health issues. The survey polled more than 23,000 members of BenefitWallet, a Xerox HSA product.

The Buck survey found that employees who contribute to HSAs generally become more engaged in managing their health after enrolling. For example, among the most telling findings, 51 percent of respondents set aside more money for potential medical costs than before they had HSAs. Twenty-nine percent have more discussions with their doctors about the cost of care and 13 percent more actively manage their chronic disease.

"In fact, respondents indicated greater engagement with each of 11 health-management activities we measured," says Atlanta-based Travis Klavohn, director of consumer health solutions at BenefitWallet. "Best of all, these results are consistent across the three surveys we conducted over a five-year period."
Since HSA members are responsible for a greater portion of their health costs, they also expect plan-provided tools and resources to help them make informed, rational decisions, Klavohn adds. When ranking important HSA product features, 44 percent of respondents ranked the ability to view claims on the HSA site as most important. They ranked paying medical claims on the HSA member portal second at 35 percent.

"Our data shows that HSA members are making wiser healthcare decisions," Klavohn says. "They are evaluating costs more closely before receiving care, shopping for lower priced drugs and choosing less costly services. And they attribute that changed behavior to owning an HSA."

Sander Domaszewicz, a principal in Mercer's Health Care practice, says offering employees proper tools and resources to help them manage their HSA spending is critical to achieving the goal of increasing their willingness to think about medical care cost and quality. He cited a 2008 Blue Cross Blue Shield Association survey that found employees who were HSA-eligible (with an account versus no account) reported that participants chose a lower cost treatment option 36 percent of the time, while 23 percent in non-CDHC traditional health plans did the same. When it came to asking their doctor about treatment costs, 52 percent with HSAs did so, while 33 percent did so in non-CDHC plans.

"If you give employees the tools and resources to make the best choices and don't just throw them to the wolves, they are much more willing to engage and be better healthcare consumers," he says, adding that the personal financial situation and the account portion contributed by the employer also are important. "No two HSA plans are the same, and you can have a wide variety of funding scenarios, which also can have an impact."

Domaszewicz says the best practice for HR leaders is to offer both the insurance coverage portion and the HSA financial account, because both are required for real success.

"You need both," he says. "And you need to wrap the best possible tools and resources into the mix so employees will take on that extra accountability."

Helen Darling, president of the National Business Group on Health (NBGH) in Washington, D.C, which represents 300 large employers' perspective on national health policy issues, says the general financial impact of great recession on household income is one key factor in driving the move to HSA/CDHPs. With employee household incomes at their lowest point since 2000, people in general are paying more attention to what things cost, and that is bleeding into the HSA growth, because HSAs are less costly for employees in an immediate way.

"More people are choosing consumer-directed plans because they cost less in paycheck deductions," she says. "There is no question that people are behaving differently and seeking more direct knowledge of what things cost. With consumer-driven plans, they can do the same for their medical care."

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Darling says HSAs, which belong to the individual employee, saw an upward turn about six years ago. At that time, more employers offered health reimbursement arrangement (HRA) accounts because they were employer-owned.

She explains that the main reason employers shied away from HSAs back then was their portability, which meant any cash contributed by the employer would leave with the employee should they change jobs. Today, as one way to both control costs and be more flexible, employers are willing to take the "small leap of faith" required by HSAs.

"Once they get over the idea of giving money away and start encouraging employees to be more cost-conscious, employers can see how they can reap the overall benefit, because of the behavior changes a consumer-driven plan can bring," she says.

At the same time, she adds, employees are voicing a clear demand for transparency and the best possible data so they can make informed choices. Darling adds that even the health plans that were initially slow to move to HSAs have come up with increasingly robust transparency tools delivered via all of today's platforms, such as personal computers, tablets and smart phones.

Ruth Hunt, a principal and health engagement leader with Buck Consultants, says that as employers are cutting benefits and increasing deductibles, it's critical to provide members access to data. But she says the trend is moving away from computers and more to mobile devices as the means to get the proper data critical to making more informed healthcare decisions.

"It may seem intuitive that employees want access to price and quality health information and want it online," she says. "But what's really interesting is in five years of doing our survey, not only has the price and quality data demand increased, today mobile access is the fastest growing feature of importance for employees."

Hunt says that with today's younger workforce, more employers are offering HSAs because they can be a powerful recruiting tool as millennials want more control of their healthcare spending than older workers, especially the idea of portability that HSAs offer, because younger workers expect to change jobs more than older workers.

"For the past 60 years, benefits have been employer-centric, but in the future they will be more employee-centric," Hunt says. "Employers have already been moving from a paternalistic role on the retirement side. They are moving that way with healthcare too, and HSAs are proving an effective strategy to meet that challenge."

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