AIS's Health Business Daily
Featured Story February 19, 2008
UnitedHealth and WellPoint Add More Than 1.2 Million Lives
to Country's Largest Consumer-Directed Health Plans
Reprinted from INSIDE CONSUMER-DIRECTED CARE, a biweekly newsletter with timely news and insightful analysis of benefit design, contracts, market strategies and financial results.
WellPoint, Inc. and UnitedHealth Group, the nation's two largest sellers of consumer-directed health plans, collectively added 1.13 million CDH lives over the past year, ICDC has learned.
While results have not yet been finalized, United says its Jan. 1, 2008, CDH enrollment will likely exceed 2.6 million lives. That's up from 1.9 million lives on the same date a year ago and 2.25 million on July 1, 2007. The insurer says the majority of its CDH members (65%) are enrolled in a plan that includes a health reimbursement arrangement (HRA). The other 35% have coverage that is compatible with a health savings account (HSA).
"We have a lot of confidence that we will surpass 2.5 million [lives] by a wide margin" as of Jan. 1, 2008, says Meredith Baratz, vice president of market solutions in United's Definity Health division. "There have been discussions about CDH enrollment plateauing, but we haven't seen evidence of that." An upcoming study from Hewitt Associates, for example, predicts flat to declining enrollment in CDH plans for 2008 and beyond.
Bill Sharon, an employee benefits consultant in the Tampa Bay, Fla., office of Aon Consulting, says the number of employer clients with a CDH plan is up 25% from a year ago. "And we expect that growth rate to continue," he says. "I think there is a growing recognition that CDH plans are an effective strategy for reducing health [coverage] cost increases. We're eight years into the CDH movement, and there is now a considerable body of research that shows CDH plans are working."
Alexander Domaszewicz, a consultant in Mercer Health & Benefit's Newport Beach & Calif. office, agrees that CDH plans have become more common among employers. The plans also have become more popular among employees, he adds.
Last year, Mercer surveyed 77 large employers that have had an optional CDH plan since 2005. The average enrollment, according to survey results, increased from 21% in 2005, to 25% in 2006 and to 29% in 2007, according to the study.
"The years of consistent doubling of CDH enrollment are probably over," says Domaszewicz, "but strong in-program enrollment growth, new offerings and a small but steady number of total replacements continue to fuel meaningful growth."
Although the vast majority of employers continue to offer CDH plans alongside more traditional options, Baratz says a handful of United's large employer clients have launched full-replacement programs. Kohler Co., a Wisconsin-based manufacturer of kitchen and bathroom fixtures, for example, began a full-replacement HRA-based strategy on Jan. 1, 2008. Baratz says some of United's employer clients are already gearing up to launch new CDH initiatives for the 2009 plan year.
Cathy Tripp, a consultant in Watson Wyatt's Minneapolis office, says she has seen only incremental CDH enrollment increases among employer clients. She suggests that the growth cited by WellPoint and United might be due in part to employers that switched CDH carriers.
"My guess is that when we add up all the [CDH] enrollment increases among all carriers, the total number, as a percentage of the covered population, will still be about 10% nationally."
WellPoint's CDH Enrollment Jumps 59%
WellPoint, the nation's second largest seller of CDH plans, says it ended 2007 with 1.35 million lives covered by either an HRA-based product or an HSA-qualified plan. That's up 59% from 821,000 on the same date a year ago, says spokesperson James Kappel. Jan. 1, 2008, enrollment results are not yet available.
Between June 30, 2007, and the end of the year, WellPoint's CDH enrollment grew by 135,000 lives. "While CDH [enrollment] currently represents less than 4% of our business, we expect this membership will continue to grow," Kappel tells ICDC. WellPoint does not break out enrollment by the type of plan.
"Employers that have been on the sidelines waiting for more proof are beginning to move forward with CDH implementation,"
Sharon
says. "And employers and insurance companies are becoming better at designing, pricing, administering and communicating the plans."
