Summary
CDHP's are not the "end all" to the growing healthcare problem in this country, but at least it is a beginning for the employer and employee to gain back some sort of control on the expenditure they have on insurance premiums.
Analysis
United Benefit Advisors (UBA), an alliance of 141 of the nation's premier independent benefit advisory firms, released, on September 14th, 2006, the results of its second annual employer-sponsored health plan benchmark survey Among the survey's numerous findings:
- The average annual health plan cost per employee is $6,629 (medical/Rx coverage), with an average employee cost of $2,031 and an average employer cost per employee of $4,592.
- Average premiums for all plans were $331 for single coverage and $817 for family (a weighted average of all non-single coverages).
- 32.3% of all plans required no employee contributions and 8.3% required no family contributions. Of plans requiring contributions, employees contributed an average of 26.9% of premium or $88 for single coverage and 45.3% or $361 for family coverage.
- Average premiums increased 8.6% for all plans (after any plan adjustments) versus 9.6% last year, with Consumer Driven Plans having the lowest increases at 5.7%.
- Consumer Driven Plans (plans with an HRA or HSA) are now offered by 5.8% of employers versus 2.6% last year, with 3.4% of all covered employees now enrolled in such plans (also up from 1.9% last year).
One can see how the savings are not only for the employee but the employer as well. One thing to keep in mind when looking at CDHP's is that, although in many cases they are offered as one of several choices for the employee to choose from, many employees are in fact weighing out the savings versus the benefit difference and are choosing to "buy up". The main thing we see, from the view of an insurance advisor, is that many employer are looking to offer low end and high end plans. They are not forcing their employees to take one over another. The employees are asking many questions, of us at time of enrollment, and are making the best choice for their particular situation. The increase in CDHP participation goes hand in hand with better knowledge on the part of the employee and acceptance that with this choice comes some financial risks which they are willing to take on. Also, one major point to look at is the annual cap on CDHP's, although higher than traditional Medical/Rx plans, is still a dollar figure, that when reached, employees know the plan will cover the rest. So, total exposure becomes the focus and employees are willing to say, "...as long as I know what I am on the hook for, I can be rest assured that the plan will cover my family for the rest..."
This is a typical response we get from the employee and they do not have any regrets. CDHP's are not the end all to the growing healthcare problem in this country, but at least it is a beginning for the employer and employee to gain back some sort of control on the expenditure they have on insurance premiums.
