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Consumer Driven Healthcare: Myth vs. Reality. 2008 Health Care Forecast Conference University of California, Irvine February 22, 2008 C. William Sharon, CEBS National Consumer Driven Healthcare Practice Leader .

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consumer driven healthcare myth vs reality

Consumer Driven Healthcare: Myth vs. Reality

2008 Health Care Forecast Conference

University of California, Irvine

February 22, 2008

C. William Sharon, CEBS

National Consumer Driven Healthcare Practice Leader

myth 1 cdh is an hdhp with an account reality the heart of cdh is consumer engagement
Myth #1: CDH is an HDHP with an accountReality: The “heart” of CDH is consumer engagement
  • Consumerism
    • a set of techniques designed to transform members to be more effective health care consumers
  • Consumer driven healthcare (CDH)
    • consumerism using an account-based (HRA or HSA) plan design

Four key building blocks for an effective program:

Consumerism

Tools

Consumer

Financial

Role

Chronic

Condition

Management

Health

Promotion

myth 2 cdh savings are due to cost shifting reality savings come from changing consumer behavior
Myth #2: CDH savings are due to cost-shiftingReality: Savings come from changing consumer behavior
  • Well-designed CDH plans do not require cost shifting to save money
    • CDH plan = similar cost share + lower utilization through improved consumer engagement
  • 80% of employers fund account
    • All HRA and 60% of HSA
  • The higher the CDH enrollment the higher the savings
    • Full replacement CDH saves the most

Source: United Healthcare CDH Study, 5/07 and 2/08

cdh plan design with employer account
CDH Plan Design – With Employer Account

Preventive Care covered at 100%

myth 3 cdh is a passing phase reality cdh market growth is strong
Myth #3: CDH is a passing phaseReality: CDH market growth is strong
  • 11 to 12 million CDH members (Aon est.)
    • 500,000 CDH members in 2003
  • Growing 20-30% per year
  • 46% of large employers*
  • 10% of all employers
  • All industries and sizes
  • More in Central and Southeast
  • Many more in plans with “consumerism”

* eg. American Express, General Motors, John Deere, Owens Corning, Union Pacific, Wendy’s

Sources: Aon Consulting, 2007 UBA Health Plan Survey, 8/07, Tower Perrin “Account-Based Health Plans: What Works - and Why”, 1/08

slide6
Myth #4: There’s not enough data to make decisionsReality: There’s plenty of data; it will never be perfect
  • Good studies: Aetna, Cigna, McKinsey & UHC
  • CDH plan findings
    • Increase in consumer engagement
    • Reductions in utilization
    • More value-conscious purchasing decisions
    • More engagement in wellness
  • McKinsey findings (2005)
    • 50% more likely to ask about cost
    • 33% more likely to ask about treatment options
    • 25% more likely to engage in healthy behaviors
    • 20% more likely to participate in wellness
    • 30% more likely to get an annual checkup
    • 20% more likely to treat a chronic condition
how does cdh change utilization
How Does CDH Change Utilization?

Sources: Aetna CDH Study (9/06 and 2/08), CIGNA CDH Study (10/07), United Healthcare CDH Study (5/07 and 2/08)

slide8

Employer Situation

  • 2,200 participants
  • Unions
  • $21 m health care cost in 2004
  • 15% annual cost increases

Actions

Results

  • Formed Insurance Committee of labor and management
  • Added HRA to HMO and PPO in 2004
  • Added HRQ in 2004
  • Aggressive employee communications
  • Onsite wellness coaches in 2007
  • Focus on nutrition
  • Fitness competitions
  • 77% enrollment in HRA plan (60% in 2004)
  • 60% HRQ participation
  • 70% web activation
  • No increase in healthcare costs from 2004 to 2007
  • Employee cost share (13%) lower than before
myth 5 all we need is health promotion reality health promotion alone is not enough
Myth #5: All we need is health promotionReality: Health promotion alone is not enough
  • Use preventive benefits
  • Understand treatment options
  • Evaluate price and quality
  • Make informed, shared decisions
  • Use generic drugs, pill-splitting or mail order
  • Comply with evidence-based medicine
  • Follow proper chronic condition management
  • Maintain personal health record
  • Complete health risk questionnaire (HRQ)
  • Participate in wellness programs
  • And, more

To be really engaged, consumers must:

myth 6 my employees would not like it reality employees are more ready than you think
Myth #6: My employees would not like itReality: Employees are more ready than you think
  • Many employees like CDH plans
    • More employers with >50% CDH enrollment
    • 95% CDH re-enrollment rates
  • CDH plan cost share may be lower than traditional plan
  • CDH members receive preventive care and evidence-based care equal to or better than traditional plan members
  • 90% prefer to consult sources other than their doctor when making a treatment decision

Sources: Aon Consulting client data; National Business Group on Health, Employees and Healthcare Decision Making, 1/08; United Healthcare Quality of Care Study, 4/07

myth 7 every vendor is the same reality there is a vast difference in experience
Myth #7: Every vendor is the sameReality: There is a vast difference in experience
  • CDH experience
  • Administration integration
  • Consumer engagement techniques
  • Online decision support tools
  • User-friendliness of website
  • Price and quality transparency data
  • Chronic condition management
  • Health promotion programs
  • Incentives administration

New Evaluation Criteria

myth 8 the health care system does not support cdh reality the health care system is changing
Myth #8: The health care system does not support CDHReality: The health care system is changing
  • Retail Clinics (CVS, Walgreens, Wal-Mart)
  • Medical tourism
  • Electronic medical records
  • Computerized Rx scripts
  • Online consultations (eg. Relay Health)
  • Evidence based medicine
  • Pay for performance
  • Concierge medicine
  • Hospital published pricing
myth 9 cdh will cut medical costs once and for all reality cdh is a long term strategy
Myth #9 CDH will cut medical costs once and for all Reality: CDH is a long term strategy
  • Initially, most employers add CDH as an option
  • Hard work to get high CDH enrollment
    • Cost savings depend on enrollment
  • Consumer behavior change takes time
    • Still learning how to engage consumers
    • Overcoming 25+ years of managed care
myth 10 we don t need costly communications reality member communication is critical to success
Myth #10: We don’t need costly communicationsReality: Member communication is critical to success
  • Members are skeptical of change
    • Members don’t know CDH can be a “win”
  • Members need to be taught to be an effective healthcare consumer
    • Face-to-face works best
  • Communication must be ongoing and targeted
    • Must come from a trusted source
  • Budget for the expense in advance – it’s a big, important piece
myth 11 we don t have the money time to do cdh reality you don t have the money not to
Myth #11: We don’t have the money (time) to do CDH Reality: You don’t have the money not to
  • The reality is that your health care costs will increase no matter what action you take – curbing the increases is the objective
  • There are more unhealthy and aging workers in the workforce every day – the trend is not reversing
  • You can’t ignore rising costs and you can’t just cost-shift
  • With careful planning, CDH can cost less with no cost shifting
for more about aon s cdh consulting services go to www aon com cdh

For more about Aon’s CDH consulting servicesgo to www.aon.com/cdh

C. William SharonNational Consumer Driven Healthcare Practice Leader

bill_sharon@aon.com813-636-3022