consumer driven health plan research presented by: anne elmlinger and greg kline mathew greenwald...
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Consumer Driven Consumer Driven Health Plan ResearchHealth Plan Research
Presented by:Presented by:
Anne Elmlinger Anne Elmlinger and and
Greg KlineGreg Kline
Mathew Greenwald & Associates, Inc.Mathew Greenwald & Associates, Inc.
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Table of Contents
Methodology
What’s happening in the market?
Why are employers/consumers choosing/not choosing CDHP?
How is CDHP performing in the market?
- Changing consumer behavior
- Controlling cost
- Use of accounts as long-term savings vehicles
- Customer satisfaction and loyalty
What kind of market growth should we expect in the future?
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Methodology
• Mathew Greenwald & Associates keeps a database of the results from publicly released Consumer Driven Health Care research. Currently this houses data from nearly 50 studies.
• Cumulatively, these studies provide a richer picture, since each one by itself has limitations.
• The presentation draws from some, but not all of the studies in our database. The studies included represent the most current data on a topic, and/or may be based on the largest sample sizes. Preference was also given to studies for which we had detailed information about the methodology and results.
• A complete list of all of the studies included in this presentation, including specific methodologies, can be found on page 50.
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What’s happening in the market?
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What’s happening in the market? (Highlights)
As of January 2006, nearly 3.2 million lives have an HSA eligible plan, almost triple the number from March 2005 (1 million)
Source: AHIP, 2006
In the small group market, 33% of enrollment in HSA eligible plans was from small companies that previously did not offer coverage
Source: AHIP, 2006
In 2006, half of all HSA eligible enrollees in the individual market with incomes under $15,000 were previously uninsured
Source: eHealthInsurance, 2006
CDHP enrollment has increased to 6% of large employers in the health care market, up 2% from 2005
Source: Deloitte, 2006
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Enrollment in CDHP • In January 2006, health plans report having almost 3.2 million
people with HSA eligible plans, compared with about one million in March, 2005.
438,000
1,031,000
3,168,000
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
Sept. 2004 March 2005 Jan. 2006
What’s happening in the market?
Source: AHIP, 2006 Census Study
Covered Lives in HSA-Eligible Plans
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Enrollment in CDHP by Market
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2004 2005 2006
Other*
Large-group market
Small-group market
Individual market
Source: AHIP, 2006 Census Study
What’s happening in the market?
Range (000’s)
Growth Rate
Individual 346-855 247%
Small-Group
79-510 645%
Large-Group
13-679 5223%
*Other includes those who did not break down their membership by market category.
(#’s in thousands)
438
1,031
3,168
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Market Profile - Premiums
$3,157
$1,121
$1,914
$5,690
$3,951
$2,507
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
Age 20-29 Age 30-54 Age 55-64
Single Policy Family Policy
Small-Group
Large-Group
Single Policy $2,772 $2,745
Family Policy $6,995 $6,715
Individual Market Average Premium by Age:
Source: AHIP Census Study, 2006
What’s happening in the market?
Group Market Average PremiumBy Group Size
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$1,754
$2,378$2,143
$3,494
$4,311
$4,760
$0
$1,000
$2,000
$3,000
$4,000
$5,000
Individual Market Small Group Market Large Group Market
Single Policy Family Policy
2006 Market Profile - Deductibles
What’s happening in the market?
Source: AHIP Census Study, 2006
Average Annual Deductibles
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Average Age : 40 overall36 for individual enrollees41 for family enrollees(AHIP) 50% are 40 and older, including dependants
Gender: 62% Male38% Female
Annual Income: 20050-$15,000 5.8%$15,001 - $35,000 16.3$35,001 - $50,000 20.2$50,001 - $75,000 20.2$75,001 - $99,000 15.6$100,000+ 21.9
Source: eHealthInsurance, 2005
Demographic Profile (Individual Market)
What’s happening in the market?
• Percentage of new CDHP enrollees in the individual market previously uninsured: 31% (AHIP).• Percentage of new HSA eligibles in the individual market with incomes under $15,000 previously uninsured: 50% (eHealthInsurance)
• Percentage of new purchases in the individual market that were HSA-eligible products: 23%.
Sources: AHIP Census Study, 2006; eHealthInsurance.com, 2006
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Demographic Profile
Source: EBRI/Commonwealth, 2005
Comprehensive HSA-eligible CDHP
Gender
Male 49% 55% 58%
Female 51 45 42
Age
21-34 29% 17% 21%
35-44 25 24 31
45-54 26 33 33
55-64 19 26 15
Education
High school graduate or less 32% 8% 5%
Some college, trade, business school 33 37 29
College graduate, some college 23 38 46
Graduate degree 11 17 21
Firm Size
Self employed with no employees 2% 9% 8%
2-49 15 31 38
50-199 9 9 8
200-499 10 7 5
500 or more 55 37 36
What’s happening in the market?
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More Demographics
Health Status
• 73% of APWU CDHP enrollees under age 65 report “excellent” or “very good” health status compared 58% of those enrolled in their PPO.
Source: GAO, 2005
• Those enrolled in CDHPs (57%) and HDHPs (48%) are more likely to report “excellent” or ‘very good” health, compared to 45% enrolled in traditional plans
Source: EBRI/Commonwealth, 2005
Full Replacement
• Two-thirds of employers who offer an HDHP/HSA, plan to do so as an option rather than a replacement for an existing plan.
Source: Council of Insurance Agents, 2005
What’s happening in the market?
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Why are employers/consumers choosing/not choosing CDHP?
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82% of employers are not offering CDHP’s because they are concerned about product complexity and the education curve
Source: Council of Insurance Agents, 2005
59% of employers find CDHP’s to be at least somewhat effective at controlling health care cost increases.
Source: Watson Wyatt, 2006
51% believe that the pricing structure of HSA eligible plans are unattractive to employees.
Source: Council of Insurance Agents, 2005
The decision to offer or enroll in CDHP’s
80% of employers find CDHP’s to be at least somewhat effective at increasing employee involvement in health care decision making
Source: Watson Wyatt, 2006
Why employers are offering
CDHP’s Why employers are not offering
CDHP’s
Employers Reasons for Offering/Not Offering CDHP (Highlights)
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Why employers are offering CDHP’s
Main reason for offering CDHP to your employees
Source: AON, 2006
48%
38%
11%
2%0%
10%
20%
30%
40%
50%
60%
Introduceconsumerism forlong-term change
Control health plancosts
Expand employeechoices
Provide a vehiclefor retiree medical
savings
The decision to offer or enroll in CDHP’s
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Reasons employers offer CDHP
• 59% find CDHP’s to be at least somewhat effective at controlling health care cost increases Watson
• 40% said CDHP’s offer “the most effective” approach for managing health care costs and maintaining quality care Deloitte
• 48% said that the plans would make employees better consumers of health care AON
• 80% find CDHP’s to be at least somewhat effective at increasing employee involvement in health care decision making Watson
Sources: Watson Wyatt, 2006Deloitte, 2006AON Consulting, 2006
The decision to offer or enroll in CDHP’s
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Reasons employers do not offer CDHP
82% Concerns about product complexity, the education curve
51% Pricing structure is unattractive to employees
37% Inability to carve out prescription drugs
26% Plan sponsor can not control how contributions to employee accounts are spent
21% Difficulty coordinating HSA with existing HRA or FSA
21% Concerns that HSA’s many not yield retiree health savings originally forecasted
Source: Council of Insurance Agents , 2005
The decision to offer or enroll in CDHP’s
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Reasons employers do not offer CDHP
• 62% believe biggest hurdle is employee resistance and/or entitlement to coverage
• 13% said that employee attraction and retention were the primary obstacles to change
• Only 16% believe that these plans will be “very effective” in controlling health care costs
• 42% are neither tracking nor measuring the financial effectiveness of the programs
Source: Deloitte, 2006
The decision to offer or enroll in CDHP’s
Source: Kaiser/HRET, 2005
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Why employers are not offering CDHP
Source: AON, 2006
The CDHP concept is too new 30%
Do not believe enough employees will enroll to make it worth offering
20%
Currently satisfied with traditional plan designs
16%
Do not want to expose employees to potentially high claims costs
13%
CDHP will siphon off healthy employees from traditional plans
13%
Main reason employer is not planning to offer a CDHP to employees
The decision to offer or enroll in CDHP’s
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82%
29%
13%16%14%
17% 18%
28%
0%
15%
30%
45%
60%
75%
90%
Did not like high out-of-pocket costs
More familiar with planselected
Too much trouble tomanage/open
accounts
Did not have money toput into account
Traditional
HDHP
Why consumers are not enrolling
Reasons for not taking CDHP or HDHP
Source: EBRI/Commonwealth, 2005
The decision to offer or enroll in CDHP’s
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Why consumers are not enrolling in CDHP
Main reason employees do not enroll in CDHP
Source: AON, 2006
66%
7% 7% 4%
0%
10%
20%
30%
40%
50%
60%
70%
Fear of highdeductible/ out-of-
pocket costs
Still favor traditionalplan design over
CDHP
Lack of knowledge,awareness of CDHPs
CDHP's viewed as toocomplicated
The decision to offer or enroll in CDHP’s
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Why consumers are enrolling
17%
56%
34%
49%
64%
24%31%
45%
52%53%
10%
24%
0%
10%
20%
30%
40%
50%
60%
70%
Lower out of pocket costs Good network of docs andhospitals
Cost of premium Easy access to care
Traditional
CDHP
HDHP
Source: EBRI/Commonwealth, 2005
Main reasons for enrolling in your health plan
The decision to offer or enroll in CDHP’s
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How is CDHP performing in the market?
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Consumer behavior – Health information (Highlights)
How is CDHP performing in the market?
58% of CDHP consumers talked to their doctors about a less expensive Rx substitute vs. 32% of those using traditional plans.
Source: McKinsey, 2005
55% of CDHP consumers talked to an MD about treatment opinions and cost vs. 43% of those with traditional plans.
Source: EBRI/Commonwealth, 2005
47% of CDHP consumers asked a doctor or pharmacist about the cost of an Rx vs. 27% of those in traditional plans
Source: McKinsey, 2005
HSA eligibles were more likely to use the nurse hotline (18%) than were consumers with traditional plans (8%).
Source: BCBSA, 2005
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Consumer behavior - Health information
10%
3%
44%
9%6%
11%
26%27%
32%
6%7%11%
58%
47%
0%
10%
20%
30%
40%
50%
60%
70%
Talked to MDabout lessexpensivesubstitute
Asked MD orpharmacist
about cost ofRx
Talked topharmacistabout lessexpensivesubstitute
Waited to getRx filled until
could pay
Did not fill Rxbecause
thought issuewould resolve
itself
Asked MD toprescribe a
brand insteadof a generic
Did not fill Rxbecause found
non-Rxsubstitute
Traditional
CDHP
Source: McKinsey, 2005
How is CDHP performing in the market?
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Consumer behavior - Health information
Source: BCBSA, 2005
8%
3%
20%18%
15%14%18%
9%
33%
27%
0%
10%
20%
30%
40%
Information oncost of Rx
Wellnessprograms
Information oncost of MD visit
Nurse hotline Online costtracking tool
Non-CDHP
HSA eligible
How is CDHP performing in the market?
Percentage who used the following resources:
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Consumer behavior – Health information
Source: EBRI/Commonwealth, 2005
27%23%
14%
44%
32%
19%
43%49%
55%60%
0%
20%
40%
60%
80%
Checked if planwould cover
care
Talked to MDabout treatment
options, cost
Asked MD torecommend
less costly Rx
Checked costof service
Checked qualityrating of MD or
hospital
Traditional
CDHP/ HDHP
Percentage who took each action
How is CDHP performing in the market?
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Consumer behavior - Utilization
• Consumers who moved to a CDHP used less health care (measured by total cost of claims) with an 8% drop in claims dollars over the prior year, compared to those who stayed in a traditional plan who had a 4% increase in claims dollars.
• Costs dropped most for moderate and heavy users• Change occurred across all service types• Inpatient facility costs dropped 5% • Outpatient facility costs dropped 12%
• CDHP consumers had a higher usage of preventive care than those in traditional plans.
• Overall, pharmacy utilization expense was 5% higher for CDHP vs. traditional.• Reduced usage of medications for discretionary purchases (migraines,
indigestion)• Increased usage of medications for chronic conditions
– Usage of medications to control diabetes was up 18%– Usage of medications to control cholesterol was up 23%– Usage of medications to prevent heart attacks was up 18%
• Behavior changes continued after meeting the deductible.
Source: CIGNA, 2006
How is CDHP performing in the market?
29
Consumer behavior - Utilization
Source: McKinsey, 2005
27%
36%31%
44%
51%55%
0%
20%
40%
60%
Total with health issues Only those with highblood pressure
Only those with diabetes
Traditional
CDHP/ HDHP
Percentage who very carefully follow the treatment regimens
How is CDHP performing in the market?
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Consumer behavior - Utilization
Source: EBRI/Commonwealth, 2005
16%
20%
26%
Traditional CDHP HDHP
15%
20%
26%
Traditional CDHP HDHP
17%
35%
31%
Traditional CDHP HDHP
Did not fill prescription due to cost
Skipped doses to make prescription last
Delayed/avoided care when sick due to cost
How is CDHP performing in the market?
31
Controlling cost (Highlights)
In the individual market, CDHP rates were down 19% for single coverage and 4% for family coverage between June 2004 and January 2005
Source: e-HealthInsurance, 2005
Despite lower premiums, total employer costs for HRAs is higher than for traditional plans due to the contributions to the accounts. Total employer costs for HSAs are lower than for traditional plans.
Source: Kaiser/HRET, 2005
In 2006, cost increases for all plan types among large groups averaged 7.1%, but were just 2.6% for CDHP
Source: Deloitte, 2006
How is CDHP performing in the market?
32
Controlling cost
Source: Deloitte, 2006
7.3%
2.8%
7.2%6.4%
8.5%8.0%
7.1%6.6%
7.5%
2.6%
7.3%7.4%
0.0%
5.0%
10.0%
HMO POS PPO Traditional CDHP Average
2005
2006
Premium Increases Over Prior Year By Product: 2005 - 2006 (Large group market)
How is CDHP performing in the market?
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Controlling cost
AGE 2004 2005
18-24 $73.39 $65.54
25-34 $88.00 $79.44
35-44 $129.01 $110.02
45-64 $222.05 $187.07
$277
$138
$264
$112
$0
$50
$100
$150
$200
$250
$300
Individual Family
2004 Jan- Dec
2005 Jan- Jun
19%
4.8%
Change in CDHP Rates: By Single/Family, By Age Group
Source: e-HealthInsurance, 2005
How is CDHP performing in the market?
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Controlling cost
$3,872
$7,538
$2,850
$7,337
$4,024
$10,880
$3,413
$8,167$8,530
$3,503
$7,909
$2,700
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
Single Family Single Family
HRA HSA All Plans
-----------Total Premium ------------ ----Total Employer Contribution ----
Source: Kaiser/HRET, 2005
How is CDHP performing in the market?
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Satisfaction and loyalty (Highlights)
In 2003-2004, 67% of people with CDHP said they were satisfied overall, compared with 76% of people with PPO plans and 53% of people with other new plans.
Source: GAO FEHBP, 2005
44% of CDHP consumers are as satisfied or more satisfied with CDHP vs. their previous plan, which typically had more benefits.
Source: McKinsey, 2005
68% of HSA eligibles are satisfied with the performance of their health insurer, compared with 56% who have non-CDHP plans.
Source: BCBSA, 2005
42% of HSA-eligibles are much more or somewhat satisfied overall, compared to 20% of those with non-CDHP plans.
Source: BCBSA, 2005
42% of people with CDHP plans said they were extremely or very satisfied overall, compared with 33% with HDHP and 63% with non-CDHP. Source: EBRI/Commonwealth, 2005
How is CDHP performing in the market?
36
Satisfaction and loyalty: Consumer
86%
59%
87%
67%
76%
87%93%
74%77%
53%
85%
67%
0%
20%
40%
60%
80%
100%
Overall Access to care Claims processing Customer service
Other new plans* CDHP PPO plans
Percentage satisfied by plan type
Source: GAO FEHBP, 2005
How is CDHP performing in the market?
* Other new plans includes those who changed to a new plan (not CDHP)
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Satisfaction and loyalty: Consumer
• 44% of CDHP consumers are as satisfied or more satisfied with CDHP vs. previous plan, which typically had more generous benefits.
• 80% indicated they did not have sufficient information on prices, doctor’s charges
• Satisfaction did not vary by health status, but did vary by employer. McKinsey suggests this was partly due to differences in how plans/employers helped consumers handle increased responsibility
Source: McKinsey, 2005
How is CDHP performing in the market?
38
Satisfaction and loyalty: Consumer
Source: EBRI/Commonwealth, 2005
63%
73% 73% 72%
42%
33%
60% 60%
52%
12%
42%
69% 69%
63%
18%
0%
20%
40%
60%
80%
Overall Easy access todoctors
Choice of doctors Quality of care Cost paid out-of-pocket
non-CDHP
HDHP
CDHP
Satisfaction with Plan% Extremely/ Very Satisfied
How is CDHP performing in the market?
39
Satisfaction and loyalty: Consumer
Source: BCBSA, 2005
69% 71%
42%35% 37%
56% 55% 55% 57%
20%16% 15%
67%68%
0%
20%
40%
60%
80%
Performanceof insurer
Responsivecustomerservice
Info. fromhealth plan
Access topreventive
care,wellness
Overall Valuereceived
Being incharge of
health care
HSA eligibles Traditional
Change in Satisfaction Over Prior
Year: Much more/Somewhat more satisfied
Satisfaction with Plan
How is CDHP performing in the market?
40
Satisfaction and loyalty: Consumer
51%
61%
22%
30%34%
46%
0%
10%
20%
30%
40%
50%
60%
70%
Likely to recommend plan Intention to renew
non-CDHP
HDHP
CDHP
% Extremely/ Very Likely
Source: EBRI/Commonwealth, 2005
How is CDHP performing in the market?
41
Satisfaction and loyalty: Employer
53%
24%
13%
5%
0%
20%
40%
60%
Most importantobjectives met
Too soon to tell Neutral Objectives not met
Source: Mercer, 2005
How is CDHP performing in the market?
Has CDHP met your company’s objectives?
42
Satisfaction and loyalty: Employer
How satisfied are each of the following constituencies with your CDHP?
Source: Deloitte, 2005
51%
71%
59%
69%
33%26%
33%
17%15%
3%9%
13%
0%
20%
40%
60%
80%
Employees/theirdependents
Senior Management Middle Management HR Department
Satisfied Neutral Dissatisfied
How is CDHP performing in the market?
43
Using the savings account (Highlights)
About half of consumers with single coverage spend less than half of their HRA funds each year, with 36% spending the entire balance.
Source: GAO, 2006
About 40% of those with a rollover option are able to rollover at least $500 at year’s end.
Source: EBRI/Commonwealth, 2005
Each year, employers contribute an average of $550 for HSAs and $790 for HRAs with single coverage.
Source: Kaiser/HRET, 2005
How is CDHP performing in the market?
44
Using the savings account
Source: Kaiser/HRET, 2005
$792
$1,556
$553
$1,185
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Single Family
HRA HSA
Average Annual Employer Contribution
How is CDHP performing in the market?
45
Using the savings account
36%
14%
23%27%
58%
19% 20%
4%
0%
20%
40%
60%
80%
100% 51 to 99% 1 to 50% 0%
Single coverageFamily coverage
Source: GAO, 2006
Average Share of HRA Funds Spent by Enrollees, 2004
How is CDHP performing in the market?
46
Using the savings account
Source: EBRI/Commonwealth, 2005
$100 to $49913%
$500 to $74913%
Nothing 28%
Don't know10%
$750 or more27%
<$1009%
Amount Rolled Over from Prior Year (Among CDHP owners with 1+ years in plan)
How is CDHP performing in the market?
47
What kind of market growth should we expect in the
future?
48
The future of CDHP’s
43% of US companies either have a CDHP in place or will offer one in the next two years (21%). 51% said they are reviewing CDHP options and may offer it in the future.
Source: Deloitte, 2006
Of those considering offering a CDHP in 2007 or beyond, 28% plan to offer an HRA and 54% plan to offer an HAS; 18% plan to offer both.
Source: Deloitte, 2006
36% of health care insurance executives believe HSA’s/HDHP’s will be the fastest growing new product in the next year.
Source: American Re HealthCare, 2006
The future of CDHP’s
49
List of sources
50
Index of Studies
NOTE: This list includes all studies used in this presentation.
Sponsor Sample size Study methodology Date of releaseAHIP Census Study "almost all" AHIP members AHIP member companies January, 2006
American Re HealthCare 100+ Survey of CEO and CFO executives April, 2006
Aon Consulting/ISCEBS 434 Survey of ISCEBS members and select AON consulting clients
2006
Aon Consulting/ISCEBS 210 Survey of ICEBS Members 2005
Blue Cross Blue Shield Association
1,861 HSA eligible, 196 with HRA, 1,066 non-CDHP
Online survey of adults with health coverage Sep-05
CIGNA Corporation 42,200 Analysis of claims from continuously enrolled members who switched to HRA or HSA
February, 2006
Council of Insurance Agents 77 Survey of Council members - Employee Benefits Market Study
2005
Deloitte Center for Health Solutions
152 Survey of HR Benefit Executives from large US companies
March, 2006
EBRI/Commonwealth Fund 1,204 National; 185 CDHP; 463 HDHP
Online survey of adults with private health insurance December, 2005
eHealthInsurance.com "several thousand" HSA purchasers
HSA-eligible plans sold by eHealthInsurance.com July, 2005
GAO Consumer Directed Health Plan Report
unknown Analysis of HRA account data supplied to GAO by 3 large, multistate insurance carriers
April, 2006
GAO FEHBP unknown CAHPS survey of APWU enrollees 2005
Kaiser Family Foundation/HRET 2,013 Survey of randomly selected public and private employers
May, 2005
McKinsey & Company 2,500 Survey of adults with health coverage, incl.full-replacement CDHPs
March, 2005
Mercer Human Resource Consulting
3,020, 88 with CDHP Survey of employer health plan sponsors, including those with CDHP
February, 2005
Watson Wyatt/National Business Group
585 Survey of mid-size and large companies 2006
51
For more information, contact:
Anne Elmlinger
Mathew Greenwald & Associates, Inc.
(202) 686-2510 ext. 141
or
Greg Kline
Mathew Greenwald & Associates, Inc.
(202) 686-2510 ext. 109