EnPro Industries Inc., a Charlotte, North Carolina–based diversified manufacturing company, began offering its 2,800 U.S. employees an HRA-based CDHP five years ago. Approximately 1,800 use it; the remainder have stuck with an HMO offering or declined coverage. Steve Spradling, director of compensation and benefits, estimates that EnPro saved about 11 percent over the first three years compared with what it would have spent if it hadn’t introduced the CDHP, and that the company’s costs since then have continued to increase at a slower rate.
He credits that in part to an educational campaign. “We did a tremendous amount of communication in the first two years,” says Spradling. “This was a new way of paying for and delivering health care, and the average employee was skeptical. But people have found over time that this is a very clean way to deliver it.”
One notable change, Spradling notes, has been “very high usage of generic drugs” since the CDHP was initiated. The company is still struggling to get employees to use a lower-cost mail-order program, though, so it is now contemplating offering some financial incentive, such as paying for the first 30-day supply.
To date only about 5 percent of all employees are enrolled in CDHPs, according to Mercer, despite evidence that they save employees money. HealthPartners, a Minnesota-based not-for-profit HMO, found that employees in CDHPs spent 4.4 percent less than those in traditional plans because they used lower-cost or more-efficient providers. But there is a caveat: the study also found that CDHP participants tend to be younger and healthier, raising the question of whether insurers could segment employees in ways that could undermine the pooling of insurance risk.
Another type of segmentation may be more palatable. Tailoring health-benefit programs to the health segment that employees and their families belong to — a concept that consulting firm Watson Wyatt Worldwide calls targeted consumerism — could reduce costs. “It’s a targeted approach to looking at how employee populations use health-care services,” says Watson Wyatt’s Ted Nussbaum. “Five percent of the population drives 50 percent of the costs, and 70 percent drives 10 percent. We look at what proportion of the population falls into various segments to help employers decide what to emphasize. For younger, healthier employees, you target health-improvement programs — diet, exercise, weight loss. At the other extreme, you have disease-management or health-management programs that can keep people with acute conditions stable or improve their health.”
Lafond says that when Gartner decided to offer an HSA to its employees this year, alongside its traditional PPO and HMO offerings, one of the attractions was that it would likely appeal to younger employees, who are less likely to be confronting major medical expenses but nonetheless cannot afford to forgo insurance.
In addition to three types of insurance plans for its U.S. employees, for example, Gartner also offers the Gartner Employee Assistance Program in the United States and Canada. Through a third-party provider, associates are given access to counseling on a wide range of issues, including family concerns and substance abuse. Features include unlimited, 24-hour-a-day access to a telephone hotline and three live visits with a counselor annually. “I can’t really say what cost benefit this has provided,” Lafond says, “but we hope that providing an avenue to deal with issues early can impact costs longer term.”