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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
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Myth 1 CDH is an HDHP with an accountReality
The heart of CDH is consumer engagement

• Four key building blocks for an effective
  program

• 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

Consumerism Tools
Consumer Financial Role
Health Promotion
Chronic Condition Management
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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
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CDH Plan Design With Employer Account
Preventive Care covered at 100
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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, Wendys
Sources Aon Consulting, 2007 UBA Health Plan
Survey, 8/07, Tower Perrin Account-Based Health
Plans What Works - and Why, 1/08
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Myth 4 Theres not enough data to make
decisions Reality Theres 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

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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)
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Actions
Results

• 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

• 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

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Myth 5 All we need is health promotionReality
Health promotion alone is not enough
To be really engaged, consumers must

• 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

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Myth 6 My employees would not like itReality
Employees are more ready than you think

• Many employees like CDH plans
• More employers with gt50 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
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Myth 7 Every vendor is the sameReality There
is a vast difference in experience
New Evaluation Criteria

• 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

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Myth 8 The health care system does not support
CDH Reality 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

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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

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Myth 10 We dont need costly communicationsReal
ity Member communication is critical to success

• Members are skeptical of change
• Members dont 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 its a big,
  important piece

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Myth 11 We dont have the money (time) to do
CDH Reality You dont 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 cant ignore rising costs and you cant just
  cost-shift
• With careful planning, CDH can cost less with no
  cost shifting

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For more about Aons CDH consulting servicesgo
to www.aon.com/cdh

• C. William SharonNational Consumer Driven
  Healthcare Practice Leader
• bill_sharon_at_aon.com813-636-3022