CDHC Enrollment Exceeds HMO Enrollment

Did you know that Consumer Driven Health Plans (CDHCs) now cover more employees than HMOs? If not, it may be because someone doesn’t want you to know.

I found this fascinating fact midway down in a United Benefits Advisors (UBA) press release. In the trade, this is called burying the dead. But this release does more than bury what someone must consider an inconvenient truth. It purposefully misleads.

Its headline says “Consumer Driven Health Plan Growth Slows; Costs Surpass HMOs.” It was picked up by other publications, including the National Underwriter website which has an article headlined “UBA: Health Account Plan Savings Not So Great.”

There are other shenanigans. The press release minimizes CDHP cost savings by comparing CDHP cost growth of 8.0 percent to the average of 8.2 percent of all plans. Comparing the cost increase from CDHPs to the overall average makes CDHP cost savings appear less significant because CDHP growth rates are part of the overall average and CDHPs cover just 17 percent of the employees in the survey. If CDHP growth is lower than the average, the growth in costs of the other plans in the average must have been markedly higher. For example, if there were only two plans in the average and CDHP plan cost increased by 8.0 percent, then the cost increase of the other plan would have had to have been 8.4 percent in order to create a 2 plan average growth of 8.2 percent. For comparison, Aon Hewitt reports that HMOs had the highest increases in five years, averaging 9.8 percent, and projects that PPO increases will be 8.5 percent.

Presumably UBA had the growth rates for other categories including the 12 percent of employees covered by HMOs. It chose, for some unspecified reason, not to report them.

After that, comes a convoluted quote from Bill Stafford, UBA Vice President, Member Services, that seems designed to mislead. “For the first time in more than seven years of reporting,” Stafford is quoted as saying, “CDHPs nationally did not create a savings over the clients’ in-force plan prior to renewal. This year experienced an increase (2.1 %), albeit less than the average 8.2 percent increase of all plans. As these plans become more prevalent, the percentage of savings has continually declined.”

This is an unusual way of describing what happened. Had Mr. Stafford wished to be clear, he might have said the following: In past years, employers converting to a CDHP enjoyed an immediate drop in premiums from their conventional plan. This year, they saw their premiums increase by 2.1 percent over their old plan. Had they remained in their conventional plan, however, the average increase would have been more than 8.2 percent. We do not know what caused the increase. Perhaps insurers were adjusting premiums meet the anticipated costs of ObamaCare requirements like unlimited lifetime benefits, or perhaps the savings from CDHPs are dissipating as membership grows.

The final oddity of the UBA survey is that it uses “health plan account” and CDHP to avoid addressing possible performance differences between Health Reimbursement Accounts (HRA) and Health Savings Accounts (HAS). Though both are commonly called CDHPs, their incentives differ. Employees own unused HSA balances and take them with them when they leave and employer. Unused HRA balances are owned by an employer. As has been widely noted, it is possible that HRA accounts create a “use it or lose it” mentality that may differ from the behavior encouraged by HSAs.

Presumably the UBA survey differentiated between HSAs and HRAs. If not, it would be interesting to know the reason why.

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