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HIN (02/16/06): Interest in CDHP High; Growth Lags Behind Predictions

There's no question the consumer-directed health plan (CDHP) was the hottest health insurance product of 2005. In a year in which many large employers reduced the number of medical plans offered, the CDHP was the only type of medical plan to grow in prevalence. But a closer look at the results of a national probability survey conducted by Mercer Health & Benefits LLC shows that these plans remain concentrated among the largest employers and that predictions for their growth – even the predictions employers made in a prior Mercer survey – have been overly optimistic.

The survey results also suggest that offerings of CDHPs will grow sharply in 2006 among employers of all sizes: 11% of all employers said they were “very likely” to offer a CDHP this year.

• However, this figure should be viewed as an _expression of serious interest rather than an actual projection. In Mercer's 2004 survey, a much greater percentage of employers – particularly small employers – said they were likely to offer a CDHP in 2005 than actually did so. Employers complete the survey in the late summer and early fall, when few small employers have finalized their plans for the upcoming year. Larger employers were far more accurate in their predictions.
• Just 2% of all employers with 10 or more employees offered a CDHP and just 1% of all covered employees were enrolled in one in 2005; compared to 10% among employers with 5,000–9,999 employees; 19% among employers with 10,000–19,999 employees; and 22 percent among jumbo employers, those with 20,000 or more employees – up from 12% in 2004.
• Average CDHP cost per employee in 2005 was $5,480 — 18% lower than PPOs.
• HRA-based plans more common than HSA-based plans in 2005, but HSAs expected to gain ground in 2006.
• When a CDHP was offered as a choice, 16% of employees selected it.
• Majority of sponsors say employees need more assistance with CDHPs.

Sources: Mercer Health & Benefits LLC, HIN Healthcare Daily Data Byte