Consumer-Directed Health Plans: Small but Growing Enrollment Fueled by Rising Cost of Health Care Coverage Page: 2 of 38
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SGAO
aAccountabiity Integrity-Reliability
Highlights
Highlights of GAO-06-514, a report to the
Chairman, Committee on the Budget,
House of RepresentativesWhy GAO Did This Study
Insurance carriers, employers, and
individuals are showing increasing
interest in consumer-directed
health plans (CDHP). CDHPs
typically combine a high-deductible
health plan with a health
reimbursement arrangement (HRA)
or health savings account (HSA).
HRAs and HSAs are tax-advantaged
accounts used to pay enrollees'
health care expenses, and unused
balances may accrue for future use,
potentially giving enrollees an
incentive to purchase health care
more prudently. The plans also
provide decision-support tools to
help enrollees become more
actively involved in making health
care purchasing decisions. Because
CDHPs are relatively new, there is
interest in the extent of enrollment
and in other aspects of the plans.
GAO was asked to review the
prevalence of CDHPs, how the
associated accounts are funded and
used, and the factors that may
contribute to the growth or limit
the appeal of these plans. GAO
examined survey data on CDHP
enrollment and interviewed or
obtained data from employers,
insurance carriers, individuals,
financial institutions, and other
CDHP experts.CONSUMER-DIRECTED HEALTH PLANS
Small but Growing Enrollment Fueled by
Rising Cost of Health Care CoverageWhat GAO Found
Enrollment in CDHPs accounts for a small but growing share of the 177
million Americans with private health insurance coverage. From January
2005 to January 2006, the number of enrollees and dependents covered by a
CDHP-either an HRA-based plan or an HSA-eligible plan-increased from
about 3 million to between about 5 and 6 million. An increasing number of
health insurance carriers and employers began offering CDHPs during 2005.
Most employers made a contribution to their employees' health accounts,
and the share of account funds spent by enrollees varied. Employers
commonly contributed to their employees' HRAs from $500 to $750 for
individual coverage and $1,500 to $2,000 for family coverage in 2004. Most
HRA-based plan enrollees spent some or all of these HRA funds in that year.
For HSAs, industry representatives noted that not all HSA-eligible plan
enrollees opened and contributed to an HSA, and survey data indicate that
two-thirds of employers offering these plans contributed to their employees'
HSAs. Industry representatives indicated that while most HSA account
holders withdrew a portion of their account funds in 2005, some account
holders used other, out-of-pocket funds, rather than their HSAs, to pay for
medical care.
According to industry officials and experts, the primary factor responsible
for the growth of CDHPs is the rising cost of health care coverage.
Prompting the growth of enrollment among individuals is the desire to lower
premiums and accumulate tax-advantaged savings, according to the officials.
Experts noted that employers would be more likely to offer a CDHP if the
plans demonstrate the ability to restrain rising costs, and employees would
be more likely to enroll in a CDHP if employers offered more comprehensive
CDHP benefits coupled with education about the plans.
Experts and industry officials cited several factors that may limit the appeal
of CDHPs. Certain federal requirements for HSAs and HSA-eligible plans
may preclude changes desired by some, such as higher annual contribution
limits for HSAs. Certain state insurance requirements or income tax laws in
eight states do not reflect federal statutory provisions for HSAs and HSA-
eligible plans. Insurers are generally unable to determine the amount to be
deducted from the patient's CDHP account at the time of service or offer
decision-support tools that provide enrollees with sufficiently detailed data
on the cost and quality of health care.
GAO received technical comments from organizations that provided data for
this report, and incorporated the comments as appropriate.www.gao.gov/cgi-bin/getrpt?GAO-06-514.
To view the full product, including the scope
and methodology, click on the link above.
For more information, contact John E. Dicken
at (202) 512-7119 or dickenj@gao.gov.,United States Government Accountability Office
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United States. Government Accountability Office. Consumer-Directed Health Plans: Small but Growing Enrollment Fueled by Rising Cost of Health Care Coverage, report, April 28, 2006; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc301970/m1/2/: accessed April 19, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.