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CCH® BENEFITS — 10/11/07

Mistakes To Avoid When Implementing CDHPs

From Spencer's Benefits Reports: With open enrollment season right around the corner, many employers are asking themselves if consumer-driven health plans (CDHPs) are worth the hype and wondering if they should implement a CDHP to help control costs. In a recent Workforce Management and Aon Consulting teleconference, Alexandra Jung, senior vice president of health and benefits for Aon Consulting, spoke about mistakes that employers should avoid when implementing a CDHP.

“The first mistake that employers make is to assume that consumer-driven health care (CDHC) is just a passing phase,” stated Ms. Jung. “The reality is that the CDHP market is growing exponentially.” In fact, Ms. Jung observed that CDHP membership is doubling annually: there were 14 million CDHP members in 2007, compared with 9 million in 2006. Furthermore, CDHPs have been introduced into all industries, General Motors Corporation and Wal-Mart, for example, and with employers of all sizes. Definity has 11,825 CDHC clients, 11,500 of which are small employers; while Aetna has 589 CDHC clients, most of which are midsize to large employers.

“Another mistake made by employers is that they assume that CDHPs will cut medical costs once and for all,” continued Ms. Jung. “However, CDHC is a long-term strategy, because to truly see cost savings, you must spend time and effort educating employees to be healthier and make wiser health care decisions.” Ms. Jung explained that to see cost savings right away, an employer must get at least 10% of its employees to enroll in the plan. To do this, employers must have a thorough communications campaign, and for this to be effective, communications must be “tailored to your business and you must use a diverse set of media to get your message across.”

“Another common myth is that employers believe that their employees would not like CDHPs,” stated Ms. Jung. “But your employees are more ready than you might think.” She indicated that to prepare employees to face the challenges of CDHC, it “harkens back to your communication campaign. You need to explain CDHPs to your employees, so that they do not just think that you are just doing it to save money.”

To have a successful CDHP implementation, Ms. Jung recommends that employers find a CDHP vendor with experience. “The market has been flooded with disease management companies and CDHP vendors. You want to choose someone who has experience implementing successful programs,” she stressed. Other important considerations are quality online decision-support tools, health coaching, communications support, and dedicated customer service staff.

For more information about the presentation, Consumer Directed Healthcare: What Mistakes Not To Make, visit http://www.aon.com.

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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