Employees Unhappy With Consumer-Driven Health Plans

May 23, 2007

Employee dissatisfaction with consumer-driven health plans is pronounced enough that it could threaten the long-term prospects for such plans, according to a Towers Perrin survey of 1,000 employees. The HR consulting company said employees’ views of consumer-driven plans reflected how well their employers explain the plans, rather than the plans’ specific features.

Consumer-driven plans combine high-deductible health insurance with a personal health account, like a health savings account, and attempt to give employees a bigger financial stake in their decisions about health care.

Ron Fontanetta, a principal with Towers Perrin’s health and welfare practice, said that in 2007, about 25 percent to 30 percent of companies offered employees a CDHP option. He predicted that close to half will offer them in 2008.

With the cost of traditional health insurance having risen rapidly during the past few years, “part of the appeal of [consumer-driven plans] is that they can be provided at a lower price point,” Fontanetta says. He adds that if employee dissatisfaction limits a company’s use of the plans, “then it becomes difficult to realize the objective of affordable health care for all.”

The employees surveyed by Towers Perrin included some enrolled in CDHPs and others who had that option but chose a traditional health plan, and the survey results show a big gap between the two groups’ attitudes.

Just 50 percent of the employees in consumer-driven plans were satisfied that their coverage protected them against the risk of major health care costs, versus 65 percent of those in traditional plans. Forty-four percent of those with consumer-driven plans were satisfied that they had access to affordable health care, versus 63 percent of those with traditional plans.

And just 44 percent of employees in consumer-driven plans thought their plan helped them find quality doctors and hospitals, versus 63 percent in traditional health plans. Fontanetta notes that consumer-driven plans almost always use the same network of doctors and hospitals as a company’s traditional plan. The difference in employees’ views of whether their plan helps them locate quality health care providers suggests companies are not doing a good job of educating their employees about the features of consumer-driven plans, he says.

“These are things we think employers need to do a better job of communicating and reinforcing,” Fontanetta says.

The survey also showed that just 22 percent of employees in consumer-driven plans were satisfied with how the plans prepared them for health care expenses in retirement, versus 30 percent of employees with traditional health coverage. Fontanetta says those numbers also suggest employees do not fully understand consumer-driven plans, since the triple-tax-exempt savings possible with the health savings accounts provided with some consumer-driven plans is a superior way to prepare for health costs in retirement.

Moreover, the majority of employees in consumer-driven plans were not taking advantage of the account to save for future health care expenses. Just 29 percent said they try to save money in the account to pay for future health expenses, and just 16 percent said they use it to save for their health expenses in retirement.

“In an environment where more employers are pulling back from their subsidization of post-retirement welfare programs, there’s a significant opportunity to use these plans, particularly [health savings accounts], to put away money on a tax-advantaged basis to use for post-retirement welfare expenses,” Fontanetta says. “We don’t think people are availing themselves of that to the extent that they could.”

Filed by Susan Kelly of Financial Week, a sister publication of Workforce Management. To comment, e-mail