Health Care Cost Hikes Are Significantly Lower for Companies With High Enrollment in Consumer-Directed Health Plans

A consumer orientation in health benefits appears to have a halo effect with advantages that go beyond those enrolled in consumer-directed health (CDH), according to a new study from Watson Wyatt and the National Business Group on Health (NBGH).

Washington, DC (PRWEB) April 28, 2008 -- AIS's Inside Consumer-Directed Care (ICDC) reports that a consumer orientation in health benefits appears to have a halo effect with advantages that go beyond those enrolled in consumer-directed health (CDH), according to a new study from Watson Wyatt and the National Business Group on Health (NBGH).

Health cost increases for companies with high CDH enrollment are about half of those offering only traditional coverage, the authors of the report say.

"As CDHP [consumer-directed health plan enrollment goes up, trend numbers consistently decline," Ted Nussbaum, Watson Wyatt's director of group and health care consulting in North America, tells ICDC. "That was pretty unexpected and astounding."

The survey -- the 13th annual study conducted by NBGH and Watson Wyatt -- included 453 large employers. Overall, 47% of respondents now offer a CDH plan, up from 38% in 2007 and 33% in 2006. The proportion is expected to rise to 54% by 2009, according to the report.

Enrollment is rising as CDH plans are more widely adopted by employers. Enrollment is 15% among companies offering them, up from 10% in 2007 and 8% in 2006. Only 6% of companies report 100% enrollment in CDH, a proportion expected to rise to 9% in 2009, the report says.

The best performers among the companies surveyed -- those with the lowest rise in annual health care costs -- had increases of only 1% during a two-year period, the analysis showed. The "poor performers" on the list reported increases of 10% in health care costs during the same period.

"The most unexpected finding is the trend rate for the best performers and the differential between the best and worst performers," says NBGH President Helen Darling. While the trends for top performers have been steadily improving for several years, "I did not expect to see a 1% trend," she says.

A median trend of 1% over a two-year period "is a huge difference between best and worst performers and a significant improvement over previous years," says Nussbaum.

This article has been excerpted from AIS's Inside Consumer Directed Care (ICDC). To read the full story, visit http://www.aishealth.com/Bnow/hbd042208.html.

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