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CDHPs Can Succeed with Right Incentives

More employers are betting that health plans with higher deductibles will take some of the sting out of soaring health care costs.

New research by the Employee Benefit Research Institute (EBRI) found that 8.4 million American adults, or 7 percent, now are covered by private consumer-driven health plans (CDHPs) with health savings accounts (HSAs) or health reimbursement arrangement (HRA), according to a report by CCH. Another 7.4 million are covered by high-deductible health plans without HSAs or HRAs, the report said.

Still, traditional plans continue to dominate the employee benefits scene. EBRI noted that 78 percent of Americans with private insurance in 2011 were covered by so-called “traditional” plans that had deductibles of less than $1,000 for an individual and $2,000 for a family, according to a report by the Kansas City Star.

The EBRI study noted a number of positive behaviors exhibited by people covered by CDHPs, including being more cost-conscious and more likely to check whether their plan covered specific medical expenses.

Wellness programs, however, were no more attractive to those under CDHPs than those in traditional plans. CDHP-covered respondents who had access to wellness plans said they did not participate because they could handle lifestyle changes on their own (60 percent), didn’t have time (52 percent) or were already healthy (45 percent), according to the CCH report. However, 66 percent said they’d join up if the company sweetened the employer HSA contribution.

The apparent lack of enthusiasm for wellness can present a big challenge for employers with high-deductible options. While a beefier HSA would help workers pay for health care expenses that are already incurred, a CDHP expert notes that companies with high-deductible coverage must be proactive in helping employees improve their lifestyles to avoid future health-related costs.

Dr. Michael Parkinson, the senior medical director of health and productivity for UPMC Health Plan, said CDHPs work best when supported by a “health incentive account.” Parkinson noted in an interview with SmartBusiness in Pittsburgh that companies would contribute money to this incentive account when employees displayed good behaviors, such as getting a flu shot or for preventive doctor visits. Workers could use this account to further cut their out-of-pocket medical expenses.

“The high-deductible component encourages employees to be active consumers of health care, while the healthy lifestyles reward component gives the opportunity to earn financial rewards for activities that have been designed to improve their health,” Parkinson said.