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February 2007 | Volume VI, Issue 2 |
Making Consumer Directed Health Care Work for YouHow can your organization establish a Consumer Directed Health Plan (CDHP) program that works? Consumer Directed plans typically give employees the flexibility of PPO coverage with a high deductible and a combination of financial components, like Health Reimbursement Arrangements (HRAs), Health Savings Accounts (HSAs), and Flexible Spending Accounts (FSAs). Consumerism works when a single, integrated program allows you to pull together case management services, financial incentives, plan design, health advocacy and decision tools in one place for consumers Key components of Consumer Directed Health Care include consumer benefit choice, financial responsibility, self management, choice of provider, and information (price) transparency. Maintaining effective health care solutions for employees and involving them in the process results in more workers in better health. Not only do employers pay less for premiums, a healthier workforce is arguably a higher-performing workforce. Consumerism streamlines health care management. Companies typically would go out and find one vendor who would do their COBRA administration, another for FSA administration, and offer maybe three or four plans from their carrier. Another company, in turn, would their employee communication material, and yet another handle eligibility and enrollment. Within a Consumerist model, integration is the key to success. The hottest topics in employee benefits are retirement and health care. Only about half of all U.S. Companies with fewer than 50 employees currently offer health benefits. Rising costs force 1% to 1.5% of those firms to drop coverage annually. In order to recruit and retain high quality employees, employers must offer health. CDHC is like high-deductible auto insurance. You are protected from catastrophic illness or accident, but everyday costs are on you instead of the insurance company. The goal of CDHC arrangements is to educate consumers about the true cost of health care and equip them with information about costs, value and quality of services and providers. Education means helping employees see how their lifestyle choices may be driving insurance costs. Lifestyle factors like obesity and smoking are significant drivers of healthcare costs. Many employers are incorporating wellness programs and disease management programs into their plan designs to target these costs. Don’t just tell an employee to lose weight, give them information on how to lose weight, and then give them incentives to lose weight. Since employees are responsible for paying for medical expenses from a HRA, FSA, or individually owned HSA, they should make wiser health care decisions. The result is more informed utilization of health care services, fewer claims, and lower health plan costs in the future. Nobel-prize winning economist Milton Friedman summed up the concept of CDHC nicely when he said, “nobody spends someone else’s money as carefully as they spend their own.” Additionally partnership with debit/credit card vendors can provide plan participants with an easy way to access their plan dollars for approved healthcare expenses. Click here for more information on Comsumer Directed Health Care. |
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LEGAL DISCLAIMER: Material contained in
this newsletter is not legal advice, and should not be construed as
legal advice. If you need legal advice upon which you can rely, you
must seek a legal opinion from your attorney. © DataPath, Inc. 2007 |