Re-Assessing Consumer-Driven Health Plan Assumptions

Demographic Trends

CDHPs help flush out the health care imbalances employers traditionally have faced. Demographic analysis played a key role in properly assessing the medical coverage costs of employees at the onset of the CDHP movement, for insurance carriers and brokers alike.

When the CDHP concept was being developed, it was assumed that the demographics of early program adopters would be similar to those of the early adopters of health maintenance organization coverage. The early adopters of HMOs were primarily young, male and healthy.

However, CDHPs have defied all assumptions, surprising almost all experts in the industry. According to a four-year study conducted by United Healthcare–the largest provider of CDHPs–58% of purchasers bought family coverage in 2004, and 63% were over the age of 40. About 23% of the CDHP enrollees were single females, and only 19% were single males.

Because CDHPs have deductibles in excess of $1,000 per individual, another assumption was that participants would try and save their health savings account money and not seek adequate preventive care. Once again, the actual results are exactly opposite of what was expected. According to a McKinsey & Company study published in June 2005, participants in a CDHP were 20% more likely to participate in a company-sponsored wellness program, over 30% more likely to get an annual checkup (because they thought it would save them money in the long run), and over 20% more likely to follow treatment regimens for chronic conditions very carefully.

In addition, Aetna's initial 2005 HSA results showed there were no significant changes in care for members with diabetes or heart conditions and members taking common antihypertension drugs or using common treatments for asthma.

There were no significant reductions in use of preventive care services at Aetna, and United Healthcare has reported an 8% to 9% increase in use of preventive care by CDHP members.

Finally, and perhaps most surprising, the majority of CDHPs involve a single deductible of more than $1,000. While experts were skeptical that people could afford HSAs and thought only the wealthy would enroll, the results have been overwhelmingly contrary.

According to the 2004 United Healthcare HSA statistics, more than 30% of all high-deductible health plan purchasers were earning less than $50,000 per year.

Even more surprising is that 17.8% of CDHP members previously were uninsured, meaning the lower cost of CDHP coverage is attracting the attention of the uninsured population.

CDHPs are still new and have a long way to go. As any actuary will tell you, it takes a large number of people to enroll in a plan over an extended period of time before the results can be 100% accurate or reliable. However, all of the early indicators suggest CDHPs are engaging the consumer in the health care process for the first time. This engagement, coupled with the emergence of widespread medical data dissemination, is proving to be a powerful tool in helping to control the rising cost of health care inflation.