Consumer-directed health plans (CDHPs) emerged in the late 1990s as a way to control costs by giving greater responsibility for health care decision-making to consumers. These plans are based on a simple premise: Knowledgeable consumers with a financial stake in their health choices will be more engaged, make better decisions and reduce their use of unnecessary health services.
Not surprisingly, employers have been intrigued by the potential of CDHPs. Especially after a 2012 Health Affairs study projected that if 50% of employer-sponsored insurance plans were CDHPs, annual health care spending would be reduced by about $57 billion.
Employers have attempted to drive CDHP adoption with their employees in a myriad of ways but have had trouble attracting employees beyond the executive staff and HR benefits managers who understand the opportunity. While CDHP enrollment initially grew slowly, a National Business Group on Health survey reported that 22% of employers indicated that CDHPs would be the only plan design they offered to employees in 2014. The growing popularity of private health insurance exchanges, which offer CDHPs, will no doubt accelerate this growth.
What’s even more important, however, is the fact that early evidence indicates that private exchanges could be leading the way in successfully fulfilling the promise of CDHPs to control costs by changing the way employees interact with health care.
For example, according to the insurance industry’s 2013 census, only 8% of employees enroll in HSA-qualified health plans under traditional group coverage. But Blue Cross Blue Shield of Michigan’s GlidePath private exchange experiences a much higher CDH enrollment, with 30% of enrollees in HSA-qualified health plans.
In addition, 79% of employees who have selected health plans on GlidePath chose a plan with a deductible of at least $1,000 compared to only 38% for those not using a private exchange to enroll. This is a telling statistic because utilization is the No. 1 driver of health costs and multiple studies show that individuals use less health care when they have plans that require higher cost sharing.
“An exchange can right-size employees’ medical coverage,” says Eric Grossman, exchange business leader at Mercer. “At most companies, a majority of employees are overinsured.”
Employees who participate in private exchanges also seem to like the idea of having more choices and control over their insurance and health care decisions. Two-thirds of GlidePath enrollees, for example, feel that they’ve selected the best-fitting benefits, and 94% are satisfied with the GlidePath advisors who help them through the process.
More than 40 Michigan employers with 25,000 members now use the GlidePath private exchange, which offers an assortment of up to 10 different benefits options for employees. For more information or to request a quote, visit GlidePathBenefits.com.
Rising benefit costs is a challenge for all companies. GlidePath from Blue Cross Blue Shield of Michigan and Blue Care Network offers your mid-size company an innovative way to manage spending and risk. It can transform the way you finance your company’s health insurance coverage. With GlidePath’s defined-contribution solution, you can determine your company’s health benefit budget and simplify the administrative work that goes along with offering health benefits.
Coverage for Companies
Coverage for Companies, operated by Blue Cross Blue Shield of Michigan, is an online private exchange for small groups with up to 50 employees. You determine an amount you’d like to spend on each employee’s health insurance coverage. Then, you select a collection of plans to offer your employees. We have HMO and PPO options. Your employees can then shop online and get help finding a plan that fits their needs.
For more information or to request a quote, visit bcbsm.com/exchange.