Employers Will Offer More Consumer-Directed Health Plans in 2012; They Should Enhance Tools, Too

Jane Sarasohn-Kahn

First posted 8/22/11 on Health Populi

The good news: U.S. employers’ forecast their health benefit costs will grow at a slower pace in 2012 than in 2011, 7.2% versus 7.4%. The bad news: that’s only a 0.2% slowdown, and it’s still twice the rate of overall price inflation.

Furthermore, workers’ wages have been stagnant over the year, and the price of food and home goods haven’t stayed even, either.

The National Business Group on Health’s survey of American employers finds that managing health costs continues to be a front-burner issue for business. Controlling those costs is a strategic imperative for businesses, large and small. Thus, in 2012, employers will put an even sharper focus on tactics to bring health care costs down — that is, their health care costs. Workers’ costs for health will rise, as a result.

For some historically benefit-generous employers, it’s about avoiding the so-called “Cadillac tax” that the Affordable Care Act will levy on those companies who offer too-rich health plans.

More employers will offer consumer-directed health plans (CDHPs): in 2012, 73% of employers will offer CDHPs compared to 61% who did so in 2011. Most of these will be high-deductible health plans.

53% of employers will increase workers’ contributions to health plan premiums. 39% will increase deductibles, and nearly 1 in 4 will also increase out-of-pocket (OOP) costs.

The survey was conducted among 83 large employers in June 2011.

Health Populi’s Hot Points: Employers’ response to rising health care costs are a rational reaction to market realities. Workers’ responses will vary, but if past is prologue — the recent past as the recession kicked in and, for most people living in America, still continues — at least one-half will change health behaviors in the face of rising costs. I’ll raise the Kaiser Family Foundation finding that 1 in 2 people in the U.S. have done something to self-ration health care in the past year.

Employers must artfully tinker with health plans to ensure that employees do the right thing for their health and wellness in the face of rising OOP costs — both greater premium sharing out of the monthly paycheck, and OOP costs are the point of care and purchase at the pharmacy.

CDHPs have looked and behaved more like savings accounts than ‘health’ savings accounts. Too many health consumers saving into these accounts have been loathe to use funds from them for health care. Users of CDHPs need support and tools to help them understand how to be use these — for their health. Postponing a necessary visit to a medical home when feeling ill, or not filling a prescription for managing a chronic condition when that prescription has an evidence base to support its use in a particular patient, is rationing that will lead to ill health…and higher costs for all in the long term.

There are tools available that are low-cost, in that longer run, that can be used to support consumers in CDHPs. The range is broadening, from text messaging for medication adherence to remote health monitoring and self-tracking with mobile phone apps. Health benefits managers at large employers should incorporate these tools and supports into CDHPs and look beyond their banking function at the larger ROI…for both business and workers.

Jane Sarasohn-Kahn is a health care economist writing at Health Populi.

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