With Consumers Not Yet Understanding CDHPs, the Insurance Carriers Who Do the Best Job of Communicating Will Have a Competitive Advantage
New York, NY, August 29, 2005—Both awareness and understanding of CDHPs (Consumer Directed Health Plans) remain low at this point, with consumers and employers not yet understanding the plans or how they work, according to new research by GfK NOP Financial. Conducted on behalf of companies in the healthcare industry, the new qualitative study shows there is skepticism around CDHPs and a lack of knowledge about what they are, why they are being offered, how plan designs differ and what they will mean for companies and their employees.
The findings suggest a growing need for strong educational and communications programs to help employers train their employees on the features that define CDHPs, as well as on how best to use the new plans. The GfK NOP research shows that good communications strategies will be a key factor in determining the success of CDHPs. The carriers who do the most effective job of explaining these new concepts will gain a competitive advantage.
"The GfK NOP research provides a wake-up call," says Sean Cronin, Director of Research and Strategy of CIGNA Healthcare. "The fact is that employee benefits managers are only vaguely aware of CDHPs. Consumers are even less familiar with CDHPs, with most having no idea what they are."
This low acceptance of CDHPs—which trade off lower premiums for higher deductibles—currently exists, in spite of the reality that the stage seems to be set for their adoption. Recent years have seen a rise in healthcare costs that's led to the feeling there is a crisis, requiring a dramatic change in health insurance. In spite of that, the initial resistance to CDHPs remains, due to their complexity, high deductibles and substantial out-of-pocket maximums.
"CDHPs and their associated Health Savings Accounts are the most significant change in health plans since HMOs were introduced in the 1980s, so initial uncertainty and skepticism can be expected," says Kirk Pion, Director of Product Development for Blue Cross Blue Shield of Illinois. "As employers, brokers and consumers become more educated about the advantages of CDHPs, however, those opinions may change. That's why it's so critical for carriers to communicate early and often, providing information in as many forms as possible, including in-person seminars, printed literature and on-line tools."
Monitoring of Acceptance and Obstacles Is Important
In the years ahead, it will be importance to monitor the attitudes and behaviors around CDHPs and their related spending accounts—Health Reimbursement Accounts (HRAs) and Health Savings Accounts (HSAs)—to see how widely and quickly these plans will be adopted. While projections call for eventual widespread use, CDHPs are still facing some challenges to their acceptance, with consumers not yet understanding how the plans work or what support is available to help them make the right healthcare decisions for their needs. In addition, although cost savings are emphasized as a rationale for these plans, some believe that unintended consequences may actually limit the economies they offer.
"Our qualitative research shows that some employers, brokers and consumers are not yet convinced that CDHPs will work in the real world to lower health costs," according to Tim Nanneman, Vice President of the GfK NOP Health Insurance Research Practice. "That need to reduce health costs is becoming increasingly critical, with concerns around healthcare expenses continuing to grow, even as new plan options become available. In fact, GfK NOP's Roper Reports shows that, since 2001, the percent of Americans who cite the rising cost of healthcare as one of their top personal concerns has risen from 26% to 39%."
To monitor whether or not concerned Americans are willing to turn to CDHPs as a solution to the healthcare crisis, it will be essential to track a number of leading indicators. Key indicators to watch include awareness levels of CDHPs, HRAs and HSAs...the incidence of employers requesting a CDHP option as part of their RFP to carriers...an increase in the deductible levels associated with standard plans...and an increase in co-pay levels.
Employers, Consumers and Brokers Provide Insight into CDHPs
The GfK NOP findings are based on qualitative research in three key markets—Philadelphia, Chicago and Dallas. GfK NOP conducted nine focus groups among employee benefits managers and influential consumers, as well as 15 in-depth interviews with brokers.
Qualitative research is used to gain insight into the reasons behind attitudes and behaviors. Findings from qualitative studies are directional and are not projectable to a larger group.
The qualitative study is Phase 1 of the GfK NOP research into CDHPs, and the full results are now available. Phase 2, to begin in September, will be a quantitative assessment of CDHP opportunities and obstacles, as well as leading indicators of future adoption. Sponsorship of both phases is available on a shared-cost multi-client basis.