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Consumer Driven Healthcare: Myth vs. Reality

Consumer Driven Healthcare: Myth vs. Reality

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Consumer Driven Healthcare: Myth vs. Reality

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  1. 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

  2. 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

  3. 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

  4. CDH Plan Design – With Employer Account Preventive Care covered at 100%

  5. 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

  6. 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

  7. 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)

  8. 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

  9. 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:

  10. 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

  11. 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

  12. 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

  13. 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

  14. 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

  15. 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

  16. 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