Full Replacement Consumer-Directed Plans Yield Greatest Savings

February 11, 2015

Consumer-directed health care plans can lead to savings for employers, according to two recent studies. Savings are greater for full replacement plans, or when the consumer-directed plan offered as an option is implemented in conjunction with strategies that foster engaged consumerism, education and wellness initiatives.

One of the studies, from Aetna, reviewed health care claims and utilization data from 2.6 million plan members, 410,000 of whom were enrolled in a consumer-directed plan that included a health savings account (HSA) or health reimbursement arrangement (HRA). Cost savings were reported as follows:

  • For full replacement plans, employers saved $21 million per 10,000 members over a five-year period.
  • Employers that offered the consumer-directed plan as an option to a traditional health care plan saw $7 million in savings per 10,000 members over a five-year period.
  • Employers that offered the consumer-directed plan as an option, but additionally implemented certain identified strategies, recorded $23 million in savings per 10,000 members over a five-year period. These strategies included nurturing a workplace culture that encouraged employees to be engaged health care consumers; implementing a focused and ongoing education program; offering wellness programs and incentives for healthy behavior; fully covering preventive health care services; and designing the consumer-directed plan to create the appropriate amount of employee responsibility. This type of high-level plan savings also was achieved by employers offering the consumer-directed plan as an option, when they also encouraged enrollment in the plan through low employee premium contributions and/or increased employer contributions to the HSA or HRA.

Research from the University of Minnesota funded through the Robert Woods Johnson Foundation and the Department of Health and Human Services found that full replacement consumer-directed health care plans achieved a level of savings not seen in previous studies in which employees had the option of choosing another type of health plan. Data from this study came from four large employers covering more than 61,000 plan members, and examined claims and enrollment data for the year prior to and the year following consumer-directed plan implementation. One employer saw a 4.1% decrease in total plan expenditures and another saw a decrease of close to 1%. The other two firms both saw increases, but only of 1.3% and 3.6%, both well below reported national health care cost trends for the year.

Both studies also looked at consumer-directed plan members’ use of preventive care services. The Aetna study found that, compared to PPO members, consumer-directed plan members sought preventive care more often, and accessed screenings for diabetes and breast and cervical cancer at the same or higher levels. The Minnesota study, in contrast, found that total replacement consumer-directed plans led to a decrease in use of preventive care services, even though such care was covered at 100% with no cost sharing in the studied plans. The authors speculated that because patients sometimes are reminded of the need for preventive care when seeing a doctor for other reasons, a decline in the frequency of non-preventive care visits could be leading to the observed reduction in use of preventive care. Since regular use of preventive services is important in the maintenance of good health, these latter study findings would indicate that communications and education about the availability of preventive care services under the consumer-directed plan will be needed in order to sustain savings over time.