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CCH® BENEFITS — 5/7/08

Health Care Price, Quality Information Missing From Consumer-Directed Health Plan Equation

From Spencer's Benefits Reports: The term “consumer-directed health plans” (CDHPs) is a misnomer because the price and quality information tools necessary to make well-informed health care decisions are not yet available, two recent articles in The Financial Times reported. Any price reductions that CDHPs have achieved thus far may be attributed to continued cost shifting to employees and reduced utilization of services, the articles observed.

According to the articles, high deductibles and cost shifting are responsible for the continued low enrollment in CDHPs (5% of all covered employees in 2007). The in-network average deductible rose 11% to $475 for individuals and $1,134 for families, according to reports. PPOs with deductibles of $1,000 or more yield lower per-employee average savings ($674) for employers, compared to an average of $1,387 reported for 2007 for CDHP PPOs. Premium pricing lower than other standard coverage attracts some enrollees to CDHPs, and plan sponsors tout the plans’ connections to health reimbursement arrangements and health savings accounts as mechanisms to save for health care expenses in retirement.

The tools necessary for health care consumerism are “still years away,” the Financial Times articles observed. The federal government and the private sector need to collaborate to create a data base identifying the most efficient and highest quality medical policies and practices, concluded a human resources consultant cited in the articles.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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