AAPPO Releases Second Annual CDHP Study

CONSUMER-DIRECTED HEALTH PLANS CONTINUE TO GROW AS POPULAR VEHICLE TO BRING CHOICE, FLEXIBILITY AND ACCESS TO CONSUMERS

AAPPO Releases Second Annual CDHP Study

Washington, D.C. –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. 

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.

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: