New research allows brokers and advisers to demonstrate, even more conclusively, that health reimbursement arrangements may be the right spending account for many employers who are considering implementing consumer-driven health plans.
According to data estimates presented to members of the Benefit Advisors Network in late February, Aetna's HRA plan reduced claim costs by $3.5 million during 2003 and 2004, compared to the book of business generated by the company's preferred provider organization. For purposes of the comparison Aetna looked at plans with 10,000 members.
'Brokers really want to know, now that these plans have been around for a couple of years, are they working?' Robin Downey, Aetna's head of product development, says. Across the board, it looks like products designed to make people better consumers of healthcare are doing just that. 'Consumerism is having an impact,' Downey says.
Certainly, as more carriers produce CDH plans and clients ask about them, brokers have proven to be hungry for performance data. Ongoing media coverage of consumer-driven health confounds some advisers who frequently find themselves ill equipped to field client questions on the issue.
'It is imperative [that brokers] understand the early results of consumer-driven health care as they provide guidance to their clients,' says BAN Executive Director Kathy Newton.
Cost effectiveness of HRAs
Aetna estimates the HRA plan reduces claims costs by $1.97 million in the second year, compared to savings of $1.53 million in the first year. In addition, the report shows that increased consumerism does not result in health care avoidance, as some critics - and brokers - have suggested. In fact, members with chronic conditions actually maintain care levels under the plan.
The data also demonstrate the value of an integrated pharmacy benefit. Generic and mail order usage is higher among HRA members, compared to the company's PPO. HRA members also are more likely to use the plan's Web-based health information tools, and 83% of HRA members say they are more conscious of health care costs.
A number of employers have decided to try CDH plans to help them contain skyrocketing health care costs, with HRA programs the dominant form of account-based CDH coverage. As of Jan. 1, according to trade newsletter Inside Consumer-Directed Care, more than 3.2 million people were enrolled in CDH plans, with at least 2.6 million using HRAs.
One reason could be that advisers, impressed with the HRA's requirements that funds to be used only for medical expenses and that any unused money revert back to the employer if the plan member leave the company, have advocated the account - sometimes at the expense of health savings accounts, which allow employees to take the money with them and use it for whatever they want.
But Downey thinks the positive cost and consumerism trends exhibited with HRAs may be even more prevalent in HSAs.
'With HSAs, there is the potential people will feel, because it is portable, they have stronger ownership of it. There may be more behavior change,' she says.
The company does not expect to report on the performance of its HSA until next year, after culling the numbers from 2005.
Copyright 2005 Thomson Media Inc. All Rights Reserved.
http://www.thomsonmedia.com http://www.employeebenefitadviser.com
