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Consumer-Directed Health Plans Continue to Grow as Popular Vehicle to Bring Choice, Flexibility and Access to Consumers
Date:3/4/2008

AAPPO Releases Second Annual CDHP Study

WASHINGTON, March 4 /PRNewswire-USNewswire/ -- Enrollment in Consumer-Directed Health Plans (CDHPs) continues to grow, spurring employers to offer more health care information tools to employees in order to leverage the true value of these products, according to a study commissioned by the American Association of Preferred Provider Organizations (AAPPO) from the consulting firm Mercer, Inc.

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In 2007, the number of Americans enrolled in a CDHP grew a staggering 25 percent, to 12.5 million from 10 million in 2006. Virtually all CDHPs -- 97 percent -- are built on a preferred provider organization (PPO) network, up 2 percent from 2006.

"The hallmarks of PPOs -- choice, access and flexibility -- are clearly contributing factors enhancing the CDHP model and promoting the continued growth that is being seen in CDHP enrollments," said Karen Greenrose, president of AAPPO. "PPOs are the perfect platform to spur growth in CDHP enrollments due to the flexibility and choice inherent in the PPO delivery model."

While large employers were the first to embrace the CDHP model, small employers are now helping to fuel the growth of CDHPs, with 7 percent of employers with fewer than 500 employees offering a CDHP in 2007 as compared to 5 percent in 2006. Considering that average compensation is lower among small employers, this trend pokes holes in the theory that CDHP products are geared only toward highly compensated employees. In fact, CDHPs are a valuable option for employees at all levels.

CDHPs have become more popular and accessible in recent years as more Americans seek to take a greater role in making choices and decisions concerning their own health care. Participants enroll in a medical health insurance plan and, depending on the type of plan, either they or their employers (sometimes both) deposit money into an employee-controlled spending account. They can then spend the funds tax-free for various medical services, including medical insurance deductibles. The PPO delivery model complements this program by providing members access to an interconnected network of providers and services at an affordable cost.

An interesting finding in this year's report shows that employers offering CDHPs are also more likely to provide health information tools, such as information on health conditions and data on provider quality and cost, to their employees than employers not offering CDHP products. This underscores that as consumers become more informed users and are satisfied with CDHPs, their employers are stepping up to provide them with even more information tools in order to make more effective choices when accessing medical services. Health information tools are the keys to promoting consumers' satisfaction with CDHPs.

Other notable findings from this year's report, include:

-- More than 165 million Americans are enrolled in PPOs -- two-thirds of all insured Americans.

-- CDHPs use two different types of employee accounts: health savings accounts (HSAs) and health reimbursement accounts (HRAs). In 2007, 7.5 million people were enrolled in HRA-based plans and 5 million in HSA-based plans.

-- 77 percent of employers offer their employees tools that provide access to information on health conditions, 31 percent offer individual provider quality information, 27 percent provide information on provider cost and 61 percent provide tools to help members select the most appropriate plan based on expected utilization.

-- Enrollment in CDHPs grows in each successive year the plan is offered. Among those companies that offered an HSA for three years, average enrollment grew significantly each year, reaching an impressive 29 percent in the third year.

To view the entire study, please visit http://www.aappo.org.

About the American Association of Preferred Provider Organizations (AAPPO)

Founded in 1983, AAPPO (http://www.aappo.org) is the leading national association of preferred provider organizations (PPOs). PPOs put control for medical decisions in the hands of the physician and patient, resulting in easy access to the right care, provided by the right doctor, at the right time. AAPPO creates a forum for discussion and dissemination of PPO best practices.


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SOURCE American Association of Preferred Provider Organizations
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