It only feels like it's been 60 million years that employers been doing health & welfare benefits pretty much the same way. Probably more accurate to peg it at 30 million. Still, we've stuck with it this long, right?
But the old ways may not last for too much longer, because Consumer-Driven Health Plans are placing tremendous pressure on businesses to embrace new forms of change. CDHP began as part of a movement to deliver greater control to consumers over the management of their health plan costs and behavior—somewhat like the way that the advent of §401(k) plans revolutionized consumer activity in retirement planning and investment. I care about these things because, among other things I do, I am responsible for planning, designing, and negotiating for the health insurance plans my company procures for nearly 20,000 employees. In that role, I've been dealing with the CDHP trend ever since it began to surface in the late 90s.
Now, I have a theory that the commoditization of financial planning for retirement, and the consumerism it has driven, is different than the type of consumerism required of health plan participants to engage the complexities of the health care system. Still, I believe that consumerism properly informed and supported can in fact increase efficiency, rationality, quality of care, patient satisfaction, and cost-effectiveness in the health care system.
The problem is that CDHP also carries tremendous shortcomings—which include CDHP’s tendency to provide inadequate information to consumers to make informed choices, its tendency to provide poor protections in terms of Personal Health Information (PHI), and the burden it puts on the consumer’s wallet.
Don't get me wrong. I support CDHP in theory, but these shortcomings are potentially crippling. Employees, especially valuable free agent types, want less personal exposure to unpredictable, often staggering, health costs, while employers are seeking more ways to shift costs, not necessarily to employees specifically. But in the absence of an effective alternative, that's where the brunt of those shifts typically lands. The employee consumer is expected to take the first hit in this "reform," and consequently, the first wave looks a lot like that tried and true favorite: "raise the deductible!" And then, "if they don't like that, raise the co-pay!" And then, failing that, "raise the OOP max!"
It’s possible that CDHP may not transform the employer-sponsored benefits landscape as much as many people had predicted. Even as CDHP trends are gaining steam, the countervailing pressure of a tightening labor market and shortcomings in the first wave of CDHP are blunting some of the CDHP effectiveness. In other words, even as employers are looking toward CDHP to boost the company’s bottom line, a resurgent talent war is forcing them to reconsider whether they shouldn’t simply shoulder the employee's costs—just like in the days of old. It's no wonder we can't make progress: too many dinosaurs, not enough small mammals.
This post was provided by Greg Hammond. Greg is the Executive Vice President of Strategic Development and General Counsel for TriNet.
Next week I will be attending the HR Technology Conference (also known as the real "HR Tech" and not to be confused with the imposter "HR Tech" conference by IQPC.) This year is shaping up to be the best HR technology conference ever in terms of interest, exhibitors and attendees. I look forward to some engaging discussions, viewing many new products, and actually attending some sessions. I plan to blog about some of the interesting happenings and events so stay tuned next week.
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