Lots of Window Shopping, But Modest Consumer-Directed Health Plan Adoption

Optimism Remains Strong for High-Deductible, Spending-Account Health Plans

News Release
March 27, 2008

Alwyn Cassil (202) 264-3484 or acassil@hschange.org

WASHINGTON, DC—While adoption of high-deductible health plans coupled with spending accounts remains modest, supporters believe consumer-directed health plans (CDHPs) will take hold as part of a larger employer strategy to confer more responsibility on workers for health care costs, lifestyle choices and treatment decisions, according to a study released today by the Center for Studying Health System Change (HSC).

National surveys suggest that while CDHPs—typically a high-deductible health plan accompanied by either a health reimbursement arrangement (HRA) or health savings account (HSA)—are being offered by a growing number of employers, enrollment in these products constituted just 5 percent of total enrollment in employer-sponsored health plans in 2007.

"There’s a lot of window shopping going on with consumer-directed health plans, and there’s a lot of watchful waiting to see how early adopters fare," said Paul B. Ginsburg, Ph.D., president of HSC, a nonpartisan policy research organization funded in part by the Robert Wood Johnson Foundation (RWJF).

"In the past two years, health plans have expanded consumer-directed offerings in response to employer demands for products that support broader consumer strategies, where workers take more responsibility for health care costs, lifestyle choices and treatment decisions," said HSC Health Researcher Ann Tynan, M.P.H., coauthor of the study with HSC Senior Consulting Researcher Jon Christianson, Ph.D., of the University of Minnesota. "But so far large employers are hesitant to structure premiums to incorporate strong incentives to steer employees to these plans."
The study’s findings are detailed in a new HSC Issue Brief—Consumer-Directed Health Plans: Mixed Employer Signals, Complex Market Dynamicsavailable here. The study, funded by RWJF, is based on HSC’s 2007 site visits to 12 nationally representative metropolitan communities: Boston; Cleveland; Greenville, S.C.; Indianapolis; Lansing, Mich.; Little Rock, Ark.; Miami; northern New Jersey; Orange County, Calif.; Phoenix; Seattle; and Syracuse, N.Y. HSC has been tracking change in these markets since 1996.

Other key study findings include:

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The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded principally by the Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.