consumer-directed health plans are on the rise. are you and your employees ready?

May 9, 2010

in client stories,context communication

update: recognizing that these plans are here to stay, context developed a suite of tools to help employees get a handle on how they work. human resource executive named the interactive game that’s part of this suite a “best HR idea for 2012.” 

the 15th annual national business group on health/towers watson employer survey on purchasing value in health care has some interesting stats on consumer-directed health plans (CDHPs):

  • 54% of companies have a CDHP and another 15% of respondents are expected to adopt one in 2011
  • 8% of companies offer a total replacement CDHP (only this plan), and this is expected to rise to 12% in 2011
  • companies with at least 50% of employees enrolled in the CDHP see lower costs per employee, up to $1,000 per employee less than companies without a CDHP

with initial cost savings like this, it’s no wonder more employers are looking at these plans. but pay close attention to this passage from the report:

For all the advantages of CDHP design to empower employees with greater responsibility for managing their own health, plan design alone is not enough to control future increases in costs… the way to differentiate on trend is through implementing effective programs to encourage employees to make better health care decisions.

that is no exaggeration. my work with clients has driven home the importance of helping employees understand and use CDHPs.

hold up. let’s make sure we’re all defining CDHPs the same way. a CDHP typically offers members a lower premium (out-of-paycheck) in exchange for a higher deductible, some form of account to buffer the higher deductible, and a traditional copay/coinsurance model once the deductible’s met. the best-designed plans include free preventive care and fund a portion of the account. the idea is that with their own money at stake, members will take a more active interest in getting the best care at the best cost—just like when you buy a major appliance.

that’s the concept. reality and reaction have varied. the CDHP has been labeled as a plan that works for only the young, healthy, and kid-free—those who don’t traditionally require a lot of health care. others have countered that’s not the case. critics have levied additional critiques: CDHPs alone don’t save companies money; the information necessary to make consumer decisions isn’t widely available; and the plans cause people to skip care because they’re unable to cover the high deductible, want to save their account funds for specific care, or just don’t understand how the plan works (note: more people are skipping care these days, regardless of their plan type).

the thing is, these plans are here to stay—at least for the foreseen future, judging by the numbers above. that means companies need to focus on educating employees about choosing and using CDHPs.

back to those two clients.

last year i worked with a global health care information services company to improve their U.S.-based CDHP enrollment communications. they knew the plan would work for many more employees than were electing it. the obstacle wasn’t the pricing; the obstacle was employees’ distrust. in response, we devised a two-pronged approach to appeal to employees’ rational and emotional sides. we created communications that focused on the stats: who enrolls in these plans? how satisfied are they? what are their health and financial goals? and we created an interactive communication that let employees debunk their own fears while learning about the plan and their responsibility. enrollment jumped from 4% to 7.5%, a more than 80% increase.

in 2004 i worked with another client to readress some problems with their CDHP rollout. the company brought me in after enrollment to find out whether employees were becoming savvier health care consumers or delaying medical services. unfortunately, we found many employees were putting off needed care. although their enrollment materials explained how the plan works and offered cost-comparison tools, many saw only the much lower premium. when it came time to cover the deductible, they were caught off guard. it didn’t help that employees were seeing the full cost of care on their explanation of benefits, those impenetrable statements you get from your insurer after every health care visit. employees saw the mega-dollar signs, didn’t realize they weren’t on the hook for most of it, and stopped getting care.

we first addressed the immediate problem, delivering communications to plan members with real-life scenarios that explained how the plan works and translated the explanation of benefits into plain english. next, we plugged this useful piece into their annual enrollment communication plan so all new CDHP members received it, and we overhauled their ongoing benefits communication strategy to provide regular health care consumer-related education. since then, their enrollment and understanding has shot up. this year, 43% of eligible employees enrolled in the CDHP plan. based on their 2010 benefits survey, these members have confidence in their ability to make informed decisions (69% agree/strongly agree) and evaluate and select health plans and providers (62% agree/strongly agree).

the jury’s out on whether CDHPs deliver the goods, but we’re not done with them yet. so pay heed to the quote over the stats. misunderstanding’s a you-know-what.


notes: the NGBH study includes employers with at least 1,000 employees. nearly half of the respondents had more than 10,000 employees. both clients asked to remain anonymous.


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Elizabeth May 10, 2010 at 7:20 am

As ususal a great post. We’ve also found great results when you take the message down to the individual level. Give ’em examples, make it “real” to them. When it comes down to it, folks just want to know “how’s this impact me.”


fran May 10, 2010 at 7:59 am

elizabeth, great point. i used that approach with both organizations. we included sample stories of how employees at different stages of life and with different health situations/needs experienced the plan. these narratives were particularly helpful in letting employees and their families see how the plan worked: when they paid, when their health reimbursement account was tapped, and so on. neither of these organizations used blogs (one is this year), but blogs let it go from the “people like me” to real employees sharing their experience and answering questions.

thanks for reading and commenting,


Crystal Peterson May 11, 2010 at 4:47 pm

Hey Fran – great post. I’m knee-deep in the middle of this right now. We’re more than likely going to move into a CDHP in the fall and we’ve been doing educational newsletters and seminars on what this all means. We’re doing another one next month and then once I get back my renewals and start looking at plan design, we’ll start doing one-on-ones with employees (and our brokers) so that they can dive deep into the day-to-day issues of CDHP’s. I’m doing my best to get as much information out to our employees as possible so that if/when it does happen, the employees who elect that plan will have the knowledge needed to make it work for them. Crossing my fingers! 🙂


fran May 11, 2010 at 7:40 pm

crystal, thanks. and getting out in front, with lots of education is terrific. i know you know that many employees won’t pay attention until they need to, so hit those messages again and give them decision support tools to see how it works in their life.



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