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National Survey Shows Employee Fears About Consumer-Driven Health Plans on Decline

CDH plans continue to grow in popularity among employers and employees

CHICAGO, Sept. 12 /PRNewswire-FirstCall/ -- Employees who fear high out-of-pocket costs aren't blocking the growth of consumer-driven health (CDH) plans, as more individuals and employers take advantage of money-saving options as healthcare costs rise, according to a survey conducted by Aon Consulting Worldwide, the global human capital consulting organization of Aon Corporation (NYSE: AOC) and the International Society of Certified Employee Benefit Specialists.


The nationwide study of 470 employers found the number of employers offering CDH plans is on the rise, with 37 percent offering this plan type to employees, up from 28 percent of employers in 2006 and 22 percent in 2005, the first year this study was conducted.

"This finding shows that the CDH movement continues to grow," said Bill Sharon, senior vice president with Aon Consulting and co-author of the survey. "Early CDH results have been very positive. Employers like them because they are seeing a reduction in healthcare cost increases. Our analysis shows that a company can achieve first year savings of 8 percent of their premium if they implement an effective consumer-driven healthcare strategy."

More employees this year than last are enrolling in a CDH plan. Sixty percent of employers have more than 10 percent of their employees participating in a CDH plan, up from 53 percent of employers in 2006. Additionally, employee fears about enrolling in this new plan type have decreased. Of those employers offering a CDH plan, 54 percent cited concerns among employees about high out-of-pocket costs as the principal reason for not enrolling in a CDH plan. That figure is down from 66 percent in 2006.

"There is a growing recognition that most employees do not want a medical plan with high out-of-pocket costs," Sharon said. "Therefore, most companies with CDH enrollments of 40 percent or more have designed CDH plans with out-of-pocket maximums comparable to their more-traditional HMO and PPO plans. In addition, employers have used out-of-pocket cost comparisons to show employees the relative cost advantages of the CDH plan." (See health plan out-of-pocket cost comparison chart, page 5).

Employers offering CDH plans

The survey found that 83 percent of employers offer a CDH plan in addition to other healthcare plans, with the remaining 17 percent offering CDH plans in lieu of more traditional health plans.

"This finding has held pretty steady over the past five years," Sharon said. "The majority of employers offer CDH as an optional plan, since these plans operate very differently from an HMO or PPO, and it takes time for employees to become comfortable with a new plan type." The main drivers behind employers offering CDH plans are similar to the reasons stated in the 2006 survey: To introduce consumerism into the purchasing of health care for long-term change (47 percent) and to control rising healthcare costs (33 percent).

The survey found the CDH plan models and contribution levels to be consistent with 2006 as well. Forty-two percent of employers are using health reimbursement arrangements (HRA)(1), 48 percent are using health savings accounts (HSA)(2) and 10 percent are offering both. Of the employers offering an HSA, 67 percent contribute either a flat dollar amount of less than $500 per person (17 percent), $500 or more (40 percent) or match employee contributions (10 percent).

Employers without a CDH plan

Similar to 2006, 42 percent of employers without a CDH plan are planning to offer one in the future. Eleven percent are planning to offer one this year or next, while 31 percent are undecided on an effective date. The remaining 58 percent of these employers are not seriously considering a CDH plan as a future plan offering.

The survey also reported the following results from employers:

-- 83 percent of employers began offering a CDH plan in 2005, 2006 or 2007.

-- 77 percent of employers believe employee meetings are the most

effective method of communicating about CDH plans to employees.

-- 49 percent believe CDH plans make employees better, more efficient

consumers of health care; 27 percent believe they lead employees to

forego needed health care to save money; and 5 percent believe they

have no effect on employee healthcare purchasing.

-- 39 percent believe CDH plans will be successful in controlling

employers' healthcare costs in five years; 27 percent do not believe

they will; and 33 percent don't know.

For more information, contact:

Sara Carlson Stacy Van Alstyne

Aon Consulting ISCEBS

312.381.5045 262.373.7746

Note to Editor: See summary of the survey findings on page 4.

About Aon

Aon Corporation ( is a leading provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. There are 43,000 employees working in Aon's 500 offices in more than 120 countries. Backed by broad resources, industry knowledge and technical expertise, Aon professionals help a wide range of clients develop effective risk management and workforce productivity solutions.

About Aon Consulting Worldwide

Aon Consulting Worldwide ( is among the top global human capital consulting firms, with 2006 revenues of $1.282 billion and 6,500 professionals in 117 offices worldwide. Aon Consulting is shaping the workplace of the future through benefits, talent management and rewards strategies and solutions. In August 2006 and 2007, Aon Consulting Worldwide received the Reader's Choice Award by the readers of Business Insurance for "Best Employee Benefits Consulting Firm".


The International Society of Certified Employee Benefit Specialists is a nonprofit educational association providing continuing education opportunities for those who hold the Certified Employee Benefit Specialist (CEBS), Compensation Management Specialist (CMS), Group Benefits Associate (GBA) or Retirement Plans Associate (RPA) designations offered through the CEBS(R) program. Visit the Society Web site at

This press release contains certain statements related to future results, or states our intentions, beliefs and expectations or predictions for the future which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from either historical or anticipated results depending on a variety of factors. Potential factors that could impact results include: general economic conditions in different countries in which we do business around the world, changes in global equity and fixed income markets that could affect the return on invested assets, fluctuations in exchange and interest rates that could influence revenue and expense, rating agency actions that could affect our ability to borrow funds, funding of our various pension plans, changes in the competitive environment, our ability to implement restructuring initiatives and other initiatives intended to yield cost savings, our ability to successfully execute strategic options for our Combined Insurance subsidiary, the impact of current, pending and future regulatory and legislative actions that affect our ability to market and sell, and be reimbursed at current levels for, our Sterling subsidiary's Medicare Advantage health plans, changes in commercial property and casualty markets and commercial premium rates that could impact revenues, changes in revenues and earnings due to the elimination of contingent commissions, other uncertainties surrounding a new compensation model, the impact of investigations brought by state attorneys general, state insurance regulators, federal prosecutors, and federal regulators, the impact of class actions and individual lawsuits including client class actions, securities class actions, derivative actions, ERISA class actions, the impact of the analysis of practices relating to stock options, the cost of resolution of other contingent liabilities and loss contingencies, and the difference in ultimate paid claims in our underwriting companies from actuarial estimates. Further information concerning the Company and its business, including factors that potentially could materially affect the Company's financial results, is contained in the Company's filings with the Securities and Exchange Commission.

Summary - Consumer Driven Health Survey

Survey Background: Aon Consulting and the International Society of Certified Employee Benefit Specialists have conducted the consumer-driven health (CDH) survey since 2005 to evaluate employers' views on these plans and its present and future impact on delivering health care. This year 470 employers participated.

Definitions: CDH plans are account-based plans designed to better engage the consumer in the purchase of healthcare services. This health plan is a combination of employer contributions through a health reimbursement arrangement or health savings account, out-of-pocket purchases paid by the employee, and preventative healthcare coverage.

-- Health reimbursement arrangements are plans with accounts owned and

funded by the employer.

-- Health savings accounts are plans that are owned by the employee and

are funded either by the employee or with contributions from the


Survey results: More employers are offering CDH plans and more employees are enrolling in CDH plans. Compared to last year, fewer employers who offer a CDH plan cite fears of high out-of-pocket costs among employees as the main reason they are not enrolled in the plan.

-- 37 percent of employers are offering a CDH plan to employees, up from

28 percent of employers in 2006 and 22 percent in 2005.

-- 60 percent of employers have more than 10 percent of their employees

participating in a CDH plan, up from 53 percent of employers in 2006.

-- Of employers offering a CDH plan, 54 percent cited concerns among

employees about high out-of-pocket costs as the principal reason for

not enrolling in a CDH plan. That figure is down from 66 percent in


Impact on employers: Employers are offering CDH plans to employees as a way to introduce consumerism to healthcare purchasing and to reduce healthcare costs, which continue to increase by double-digit percentages. The philosophy behind CDH is that informed employees will spend their own money more conservatively than they would spend employer or health plan funds.

-- Aon Consulting's analysis (independent from the CDH survey) shows

employers can achieve first year savings of 8 percent of their premium

if they implement an effective consumer-driven healthcare strategy.

Impact on employees: More employees are becoming comfortable with CDH plans as enrollment has increased and fewer employers cite fears of high out- of-pocket costs among employees. This increase can be attributed to employers providing CDH plans that are comparable to out-of-pocket costs of traditional health plans (HMO and PPO), and implementing a strong communication plan to explain this plan type. For an employee out-of-pocket cost comparison of CDH versus PPO and HMO plans (see the chart below, page 5).

-- Aon Consulting consistently sees 90 percent satisfaction rates among

employees who are enrolled in CDH plans (based on client analysis).

Health Care Plan Out-of-Pocket Cost Comparison:

Single Coverage

Cost of CDH

Services Service Plan* HMO PPO

Office visit for cold $50 $0 $15 $20

Chest x-ray and lab $200 $0 $15 $200

Rx - brand formulary $68 $0 $20 $20

Well woman exam

(preventive) $75 $0 $15 $15

Pap smear

(preventive) $15 $0 $15 $15


(preventive) $95 $0 $25 $25

Mail Rx - non-

formulary (2) $360 $0 $70 $70

Total out-of-pocket

expenses $863 $0 $175 $365

Annual premium paid

by EE $720 $960 $360

Total annual cost to

EE $720 $1,135 $725

* An employee enrolled in this example CDH plan first has a $1,000 employer-provided fund to cover medical expenses. Once that fund is depleted, the employee is responsible for the next $1,000 of expenses. Once those expenses are paid by the employee any additional expenses are covered 100 percent by the plan for the remainder of the year. Preventative services are covered 100 percent. The monthly premium is $60, or $720 per year. The employee in the example above didn't incur any out-of-pocket expenses because she did not deplete the $1,000 employer-provided fund. This example also included co-insurance of 100 percent. CDH plan designs will differ in their co-insurance and out-of-pocket maximum.

1. Health reimbursement arrangements are plans with accounts owned and

funded by the employer.

2. Health savings accounts are owned by the employee and are funded either

by the employee or with contributions from the employer.

SOURCE Aon Corporation
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