The Push for Consumer Driven Health Plans – Is the small market being ignored?

The US Government Accountability Office (GAO) released its findings on a survey of participation in Consumer Driven Health Plans (CDHP) for 2006. They completed this survey due to the increasing interest by insurance carriers, employers, and individuals in this tax advantaged health care option. CDHP’s typically combine a high-deductible health plan (HDHP) with a health reimbursement arrangement (HRA) or a health savings account (HSA). HRA’s and HSA’s are tax-advantaged accounts used to pay enrollees’ health care expenses, and unused balances may accrue for future use with the attempt of giving the enrollee the incentive to purchase health care more prudently. The plans also provide decision support tools to help enrollees become more actively involved in making health care purchasing decisions. Because CDHP’s are relatively new, (approved in 2003) there is interest in the penetration of enrollment.

Enrollment in CDHP’s account for a small but growing share of the 177 million Americans with private health insurance coverage. From January 2005 to January 2006, the number of enrollees covered by a CDHP rose about 3 million to between 5 and 6 million. According to industry officials and experts, the primary factor responsible for the growth of CDHP’s is the rising cost of health care coverage. Several factors are cited to limit the appeal of these plans including lack of comprehensive education provided to potential enrollees. The tools provided by insurance carriers to assist consumers in assessing the price and quality of health care providers and services are inadequate.

I feel that the lack of CDHP penetration is ever more prevalent in the small market. In my opinion, one of the main reasons is that health insurance brokers are not given the financial incentive to introduce these plans to their clients. These plans make it more cost effective for the employers and less lucrative for the broker….. In addition, many brokers that service the small market don’t have the necessary tools to fill in the education gap that is not being provided by the carriers. I don’t think that consumer sophistication is at the core of this undereducated segment of the market. Small businesses must seek the expertise from the industry around CDHP’s if this has not been presented as an option thus far. It makes sense for companies to consider as a means to combat the rising cost of healthcare.

 

To view the GAO study, visit this link.Click here