Cost-effective Benefits of CDHPs for Small Businesses

Emmie Sahlan

Cost-effective Benefits of CDHPs for Small Businesses

The cost benefits of CDHPs are one of the reasons for their increase in popularity among employers. According to a study conducted by the National Bureau of Economic Research (NBER), which analyzed data from 13 million people across 54 large U.S. organizations, health care costs among companies offering CDHPs dropped by 5 percent, when measuring total health care spending, in each of the three years after CDHPs were introduced.

Many companies are introducing high-deductible plans, as these benefit employees by encouraging them to take control of their health and be more engaged in decision-making for the best value care.

For instance, as an incentive, CDHPs encourage employees to save money for medical expenses through their health savings accounts (HSAs). If employees remain healthy, they get to accumulate unused money in their accounts in the form of pretax savings, which can be used to off-set cost after retirement. CDHPs can also be paired with a Health Reimbursement Arrangement (HRA), whose balances may roll over and can be accessed after retirement.

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Are CDHPs the Health Coverage for Small Businesses in the Future?

The NBER noted that health care costs for companies offering CDHPs are significantly lower in the first years after the plan is introduced. This suggests that the impact of CDHPs continues instead of just a one-off decrease in spending.

Moreover, the ACA’s Cadillac Tax due to be introduced in 2018, motivates employers to offer lower-cost plans, the International Business Times explained. Employees will benefit from such plans in a way that they save for future health expenses due to prudent spending and informed decision-making.

According to Mercer, the enrollment in CHDPs peaked to 29 percent of all covered employees, a rise from 25 percent in 2015. This figure paints a positive future for CDHPs, as they gradually become the norm for small businesses.

How Do You Communicate the Benefits of CDHPs?

The success of CDHP enrollment in an organization is dependent on an effective consumer engagement strategy that motivates consumers to better understand and manage their health expenses.

1. Tap into technology – Developments in technology will encourage innovation in health care, giving way to avenues for information dissemination. Mobile phone apps provide real-time, relevant and actionable information that helps customers retrieve information and make informed health care decisions.

2. Incorporate multimedia – Use various media options to reach age-specific and lifestyle-oriented audience. Taking advantage of a mixture of print and new media, such as Twitter and blogs, will ensure the message is conveyed to a diverse audience.

3. Conduct focus group meetings – Organize meetings to speak and listen to your employees. Find out if the existing resources and online tools work for them. Use their feedback to improve current communication strategy.

4. Communicate actively – Communicate year-round and keep the conversation active. Use social media tools and face-to-face meetings to update information about employee benefits.

CDHPs will become more prevalent in the private sector. In collaboration with their health plan providers, most employers provide their employees with a transparency tool to compare provider price and quality. Mercer noted that 28 percent of employers offered transparency tools via industry vendor last year, an increase from 15 percent in 2014.

Creating more empowered consumers by making health care costs transparent through the use of information tools seems to be an effective method to boost consumers’ confidence. This helps them make informed decisions on when to receive quality care while cutting down health spending costs.

Emmie Sahlan has a graduate degree in English and has been writing professionally for the past five years. Her niche areas are insurance, credit cards, personal finance and education.