Health Care Consumerism Is More Than A Benefit Design

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By: Steven Auerbach

The shift to health care consumerism is well underway. Trends continue to point to increased financial responsibility for consumers with rising deductibles, increased consumer out-of-pocket responsibilities, and accelerated adoption of consumer-directed health care plans (CDHPs), health savings accounts (HSAs), and other account-based benefit offerings.

According to Mercer, enrollment in CDHPs among large employers nearly doubled in the past three years from 15 percent to 28 percent of covered employees.

Employer adoption of these consumer-directed benefit designs will continue to grow for the foreseeable future, driven by the need for cost control, the impact of health care reform and the looming excise tax. The costs of providing health care continue to rise, surpassing $25,000 for an average family for the first time in 2016 (Milliman Medical Index).

However, the fact that the term “consumer-directed health care (CDH)” has become almost synonymous with CDHPs and HSAs is a bit of a misnomer. In reality, CDH is much more than a benefit design – it is a paradigm shift for how consumers must manage their health care and make health care decisions going forward.

Dimensions of consumer-directed health care  

The underlying premise of CDH is that, if given more financial responsibility for health care and empowered to make informed decisions, consumers will make better choices – leading to improved health outcomes and decreased overall health care costs. Implicit in this definition are two equally important dimensions:

  1. Benefit designs that require increased consumer financial accountability
  2. Empowerment and engagement to support decision-making

The market has made considerable progress shifting to benefit models that increase consumer financial responsibility, as evidenced by the data above. While new plan designs have been created and successfully implemented, financial accountability is only the beginning— behavior must change too, not just costs. We have only just begun to unlock the second dimension of health care consumerism.

Giving somebody new responsibility without the education, tools and support to manage those responsibilities is like giving a teenager the keys to the car without teaching them to drive.

Unlocking consumer engagement

So where does the health care industry really stand in terms of engaging and empowering consumers to make better choices?  The health care industry is still struggling to drive meaningful consumer engagement.

Consumer fluency is low. Alegeus research is clear that consumers still don’t have a good grasp on how the plans work, how to predict and manage out of pocket costs, how to determine coverage, etc.  Engagement overall is low. The average consumer interacts with their health plan just one or two times per year – and more than 40 percent of members have never taken the time to log-on, dial-in, subscribe, or download any content from their benefit providers.

And in many cases, consumers are resistant to change. When asked whether they wanted to take a more active role in managing their health care, 50 percent said no thanks.

Employers are now spending nearly $700 per employee on various employee engagement programs related to health care, per Fidelity. There are more tools and resources than ever before. Yet most of these programs are delivered with a “one-size-fits-all” approach, and the consumer experience is still very fragmented.

However, by its very nature, CDH may be the key to unlocking consumer engagement. CDHP members are significantly more engaged than their counterparts in traditional coverage for one very important reason…

People pay attention to their money

According to our research, people enrolled in CDHPs scored universally higher on all measures of engagement.  CDHP members:

  • Are considerably more fluent in the details of health care coverage, costs and billing
  • Are more value-conscious - 50 percent more likely to research and compare costs for health care purchases
  • Interact more frequently– the average CDHP member interacts with their account 10-50 times per year
  • Leverage available resources & channels - one-third more likely to consume content and engage with their benefit service providers through available channels
  • Are more likely to participate - twice as likely to participate in employer engagement and wellness programs

Although CDHP members interact more frequently, the key to true engagement and behavior change is not just driving more interactions, it is driving strategic engagement that is targeted, timely and relevant.

Health & wealth must converge

The path to true, meaningful engagement in health care may lie in the convergence of these financial components with the traditional health care domain.  No matter what age, health status, or consumer segment, the responsibility for managing finances and costs will become universal.

The convergence of claims, financial transactions and other behavioral and demographic data will provide a robust foundation for targeted engagement.

The fact that consumers pay closer attention to their finances presents a unique opportunity to tap into a captive audience with personalized offers, messages and value-added tools designed to improve engagement, influence behavior and enhance decision-making.

For the vision of consumer-directed health care to be fully realized, it is imperative that employers and benefit providers do not overlook the critical importance of education and targeted engagement to empower better decision making – and better outcomes for all stakeholders.

CDHPs increasingly popular among employers

By Marli D. Riggs



Consumer-driven health plans have bypassed health maintenance organizations to become the second most common plan design offered by U.S. employers, according to an Aon Hewitt survey.

CDHP designs are becoming increasingly popular among employers because they provide the framework needed for educating and motivating employees to actively engage in managing their health and wellbeing, according to Maureen Fay, senior vice president and head of Aon Hewitt's CDHP working group.

In 2011, 58% of employers offered a CDHP and 38% offered HMO plans, according to the survey of nearly 2,000 U.S. employers representing more than 20 million U.S. employees and their dependents.

PPOs continue to be the most popular plans, with 79% of employers offering them in 2011.

“As employers struggle to address unsustainable increases in health care spend, they can no longer rely on traditional methods of tweaking plan designs like increasing copays and deductibles or increasing employee payroll contributions for medical coverage,” says Fay. “Employers are beginning to explore innovative solutions that focus on both the short-term need to manage health care costs and the longer-term requirement to change underlying behavior patterns, shifting the focus from ‘caring for the sick’ to ‘actively managing the health of their employees.’”

A growing number of employers are also considering using voluntary benefits, such as critical illness and accident insurance policies, to supplement CDHPs. More than a quarter (26%) can attribute an increase in CDHP enrollment to the availability of voluntary or supplemental medical benefits. While just 6% of employers use voluntary benefits today to complement the CDHP and encourage enrollment, 42% report they will consider this approach in the next few years.

Among employers that offer CDHPs, health savings accounts outpace health reimbursement arrangements, 34% to 18%, respectively. However, the survey shows a higher number of employees enrolling in HRAs (43%) compared to HSAs (28%). HRA plan designs are popular among large employers embarking on full replacement CDHP strategies, as they offer more design flexibility to the employer than HSA designs.

Employers are using a variety of tactics to encourage employees to enroll in CDHPs, including subsidizing premiums at a higher level than other plan options (36%), covering preventive medications before the deductible (34%) and contributing employer funds to the HSA (30%) and HRA (22%).

Employees are willing to try CDHPs and their associated accounts, and will continue to choose them because they often come with a lower premium, according to a separate survey of 3,000 employees and their dependents by Aon Hewitt, The Futures Company and the National Business Group on Health.   However, employees find the plans challenging to understand and use.

“Employees want to choose the most cost-effective plan with the least hassle, but they often have very full lives and are not all that interested in digging into the details of CDHPs, HSAs and HRAs,” says Joann Hall Swenson, partner and health engagement best practice leader at Aon Hewitt. “Our research and experience tells us that simply giving employees lots of educational information about these plans and accounts is only helpful to the small minority of people who like all the details.”

To address this, she offers employers the following tips:

• Make sure the right people are in the right plan. Employers need to identify segments of their population most likely to value and take advantage of the unique features of the CDHP, and tailor the marketing to them. They also need to monitor employees’ day-to-day experience of using the plan to ensure it “re-sells” itself and engages consumers in the appropriate financial and health behaviors.

• Reinforce the plan’s actions and advantages. Employers should articulate what’s in it for employees; how they can benefit from the plan’s key features, and be very specific about the actions they need to take.

• Make it easy for employees and their families.  This includes removing barriers to care at the point of need through initiatives like value-based plan designs or fully-funding employer contributions to HSA/HRA accounts at the beginning of the year.

To be effective, employers must also provide tools and support throughout the year so more employees and their families can learn how to:

• Participate in activities to help them assess their health opportunities and risks such as health risk assessments and biometric screenings.

•  Navigate new tools to help them make smart choices in selecting appropriate treatments.

• Leverage behavioral and clinical resources like disease management nurses and health coaches to help set and make progress toward health improvement and maintenance goals.

• Follow preventive care guidelines to stay their healthiest.

• Manage chronic conditions by working closely with their physician and adhering to evidence-based treatment protocols.



Consumer-driven health plans (CDHPs) can play a major role in persuading employees to adopt healthier lifestyles and save health care dollars, according to a new analysis by the Health Care Service Corp. The study found that CDHP enrollees were four times more likely to take advantage of preventive services and 10 percent more likely to fill their prescriptions with generics.