As the recession and escalating costs of health care continue to plague businesses in Connecticut, enrollment in consumer-directed health plans is growing as state-based employers turn to less-costly coverage options.
At Aetna for example, about 60 percent of new business sales for small-group employers in Connecticut have been in consumer-directed health plans, according to Steve Logan, head of small and middle market business in the Northeast.
A consumer-directed health plan is an insurance coverage with a high deductible that is typically combined with a health-savings account, the tax-advantaged product that is either funded by the employer or by regular contributions from employees. Enrollees use the accounts to pay for qualified health expenses before they reach the deductible.
Logan said the Hartford-based insurer will sell coverage to about 15,000 small group members in Connecticut this year and over 10,000 will be in consumer-directed plans.
At the same time, two-thirds of middle-market employers, with 50 to 300 employees, are offering some form of consumer-directed health care as an option.
Farmington-based Connecticare is tracking similar numbers for small employers, said Terri Guidone, vice president of small group and individual sales and retention.
Nationally, the number of people with high-deductible health plan coverage rose to 8 million in January 2009, up from 3.2 million in 2006, according to an industry survey.
Premium Savings
Logan said more employers are adopting the plans because they represent a savings on premiums, precisely what most employers currently need.
“We have customers who said they would consider consumer-directed care down the road, but have suddenly adopted it now,” Logan said. “Employers are feeling squeezed and these plans represent a savings to them.”
“We believe the reason behind this [trend] is primarily cost savings in premiums,” added Guidone.
Logan said the most popular consumer- directed plan at Aetna is one with a $2,200 individual deductible and $4,400 family deductible.
Proponents of consumer-directed plans say they are one of the answers to reducing health care costs in the United States. Since consumers have a high deductible, it gives them the financial incentive to eliminate unnecessary care and seek lower-cost, higher-quality treatments.
To help them make financially and medically sound decisions, Logan said insurers provide online tools to members that allow them to compare prices for prescription drugs or get estimated costs for treatment options.
“We feel all members should have the tools to measure quality and cost of care,” Logan said.
Critics, who include some consumer groups, say such plans may cause patients to avoid treatments altogether, which would lead to higher costs down the road.
According to a recently released study of health care claims for members in Aetna’s HealthFund consumer-directed plan, employers who offered health savings or reimbursement plans saved $21 million per 10,000 members over a five-year period.
Employers who offered the plans as an option experienced savings of $7 million per 10,000 members over the five-year period, according to the company’s survey.
Meanwhile, Cigna says consumer-driven health plans reduced medical costs for its customers by 13 percent compared to more traditional plans.
Kurt Weimer, head of Cigna’s small group division, said the survey indicates consumer- directed plan enrollees are seeking increased levels of preventive care, using generic drugs more often and accessing online tools and information at higher rates than members in typical HMO-style plans.
“This is about having people take more accountability,” Weimer said.
Slower Adoption In NE
Logan said employers in the Northeast have been slower to adopt consumer-directed plans because they have traditionally offered richer benefits than other parts of the country.
“Employers might not want to have been the first company in the area to make the switch because of competition concerns,” said Logan, who added that the current downturn is leaving some employers with no other choice.
Matthew Katz, executive vice president of the Connecticut State Medical Society, agrees that consumer-directed plans could lead to future health care savings, but he says they are also still a work in progress. One of the problems, Katz said, is that consumer-directed plans are causing doctors to wait longer for payments since co-pays and deductibles aren’t collected at the time of service.
“The problem is that there is no real-time adjudication of the claims,” he said. “That was supposed to be one of the attractions for doctors to these types of health plans. The idea was that patients would have something similar to a debit card that could be swiped at the time of service. But no insurer that we know of allows for real-time payment yet.”
Katz said claims still have to go to the insurer first, and then doctors need to bill patients, who then may be asked to write a check months after they received their care.
Katz also said there is still a lack of understanding on how those plans work. “Consumer-directed plans are not bad in any respect, but there needs to be a lot more education for the consumer,” said Katz, noting that insurers need to invest in the necessary technology.
