As consumer-directed health plans become more prevalent, their power to save money for employers is waning, according to the latest survey by Indianapolis-based United Benefit Advisors, a network of health insurance brokers.
For the first time, employers switching from an HMO or PPO health plan to a consumer-directed health plan saw an increase in costs over the previous year, according to preliminary results from UBA's 2011 survey. The national survey included nearly 11,000 employers.
Costs in 2011 for new consumer-directed health plans were 2.1 percent higher than the cost of the 2010 plans employers switched from. Consumer-directed health plans, also called CDHPs, are a combination high-deductible health insurance and a health spending account, such as a health savings account or a health reimbursement arrangement.
"For the first time in more than seven years of reporting, CDHPs nationally did not create a savings over the clients' in-force plan prior to [annual] renewal," said Bill Stafford, UBA's vice president of member services. "As these plans become more prevalent, the percentage of savings has continually declined."
Switching to a consumer-directed health plan still made financial sense for employers, as the cost increase for all plans this year was nearly four times as high—8.2 percent, according to UBA's survey.
But employers already using CHDPs didn't see a great savings, either. The average CDHP renewed this year for costs 8 percent higher than last year, just a tick under the average for all plans.
Overall, consumer-directed health plans account for 23 percent of all employer plans offered and cover 17 percent of all employees. By contrast, HMOs cover 12 percent of all employees and PPO plans cover 64 percent of all workers.