UnitedHealth Group Study: Consumer-Driven Plans a Success

Published September 1, 2006

UnitedHealth Group, one of the nation’s largest health insurers, released in July one of the first comprehensive studies of consumer-driven health plans (CDHPs) since Congress voted in 2004 to create market-driven, high-deductible health plans and individual Health Savings Accounts (HSAs).

So far, CDHPs appear to be successful in curbing health care spending, according to the report.

UnitedHealth’s three-year study of 50,000 individuals nationwide supports the overwhelmingly positive anecdotal information plan administrators are hearing from early adopters of CDHPs. The study compares CDHP cost and utilization with that of preferred-provider organizations (PPOs) in preventative care, acute care, chronic illness care, and overall costs.

According to the study, CDHP enrollees use preventative care 5 percent more than those in PPOs. For acute care, CDHP enrollees had 22 percent fewer hospital admissions and 14 percent fewer emergency room visits than those in PPOs. Chronically ill patients with CDHPs had 12 percent fewer emergency room visits.

Mark Tarino, CEO of Definity Health, a UnitedHealth company in Minneapolis, Minnesota, said the study confirms “consumers take responsibility for their own health care choices” more often when using CDHPs. This, in turn, lowered insurance premiums 3 to 5 percent, Tarino said, while premiums for PPOs increased 8 to 10 percent over the same three-year period.

Company Satisfaction

Businesses and universities are aggressively pursuing health care choice for their employees.

The fast-food restaurant chain Wendy’s International, Inc. is very satisfied with consumer choice in health care. In 2005, Wendy’s instituted HSAs to accompany employees’ high-deductible health plans, allowing them to accumulate about $4 million to spend on their own health care.

“We took money that used to go to a third-party payer to help pay health claims,” said Jeff Cava, Wendy’s executive vice president of human resources, “and gave it to employees, who will use it to offset their health care costs.”

University Experience

Universities also show tremendous potential to curb the health care costs of their employees with CDHP and HSA plans when compared with PPOs.

For example, Morehead State University, a state-supported institution in eastern Kentucky with nearly 10,000 students, began offering CDHPs to faculty and staff in 2004.

“In its first year of existence, the CDHP was the plan chosen by nearly 60 percent of university employees,” said Roger Barker, the university’s director of human resources. The plan showed an “additional 10 percent increase in enrollment for CDHPs in the 2005 plan year.” Barker said the university expects enrollment to level out in 2006.

Morehead State is now in its “third consecutive year without a premium increase in the CDHP,” Barker said.

Not only is Morehead State’s CDHP a success, so is its Health Reimbursement Arrangement (HRA), an HSA-like account for university employees. Barker noted, “60 percent of the HRA amount contributed in 2004 … was carried over into the 2005 plan year.” He said he expects a similar carry-over into the 2006 plan year.

Jeff Edgens, Ph.D. ([email protected]) is a freelance writer in Georgia.

For more information …

“Three year study shows consumer driven health plans continue to stimulate positive changes in consumer health behavior,” UnitedHealth Group, July 12, 2006, http://www.unitedhealthgroup.com/news/rel2006/0712Consumer_print.htm