Employee benefits and healthcare often appear slow to change. However, the adoption of consumer-directed health plans (CDHPs) seems to be going against trend. The question is: Are CDHPs fast growing —or simply a faster snail?
From 2006 to 2018, enrollment in CDHPs grew from 4 percent to 29 percent.
By the same token, enrollment in Health Maintenance Organizations (HMOs) grew 12 percent per year during the 29-year period from 1970 to 1999 — an increase from 3 million to 80 million members.
However, these statistics are an “apples-to-oranges” comparison because the CDHP numbers are in terms of workers (i.e. subscribers), whereas the HMO numbers are in terms of members.
In addition, the time period examined for the CDHP study was 12 years vs. 29 years for the HMO study.
To make this analysis an “apples-to-apples” comparison, let’s use the Compound Annual Growth Rate (CAGR) Calculator to look at the compound annual growth rates of CDHPs and HMOs in these studies, which were:
- 18 percent per year for CDHP enrollment from 2006 to 2018
- 12 percent per year for HMO enrollment from 1970 to 1999
Isn’t that interesting?
CDHPs have actually grown faster than HMOs. Not only that, but CDHPs have grown 50 percent faster than HMOs.
It is often lamented that employee benefits and healthcare are very slow to change. Well, “slow” is a relative term. Compared to the adoption of smartphones, maybe employee benefits and healthcare are “slow” to change.
However, compared to the previous MAJOR employee benefits and healthcare innovation of the HMO, CDHPs have seen rapid adoption:
- CEOs have been relatively fast to adopt CDHPs.
- HR professionals have been relatively fast to promote CDHPs within their own organizations.
- Insurance brokers and benefits consultants have been relatively fast to educate HR professionals on the merits of CDHPs.
BUT, that’s like saying CDHPs are a faster snail than HMOs. They’re NO jack rabbit.
This dynamic will likely not change anytime soon because:
- Healthcare has not been and will not be a major strategic focus of a business or organization—it’s just not a core part of what they do.
- Healthcare is episodic. Employees and their family members tend to use a little healthcare, then use a lot for a 1- to 2-year period of time, and then they go back to using a little healthcare. As a result, there is not a consistent constituency within a company or organization to push for sustained quality improvement or cost containment.
However, when organizations are ready for change, companies like Compass and Alight Solutions are there to lend a helping hand.
To learn how Compass’ healthcare navigation solutions help lower healthcare costs for employers and their employees, please visit WhyHealthcareNavigation.com.