Consumer-Driven Health Insurance Catching On Slowly

There was some grumbling among employees at Boynton Beach-based Nutters Engineering when the company introduced a health care reimbursement account (HRA) in May.

Most of the 75 employees hadn't heard of the consumer-driven health plan the company signed up for with BlueCross BlueShield of Florida, office manager/partner Elizabeth Butler said. Now, almost half the staff has signed up.

"It's not just paying a simple co-pay for their services, so they'll really have to study everything and go in the right direction," she said.

Encouraging people to make more cost-efficient health care decisions has prompted most health insurance providers to introduce consumer-driven health plans over the past two years.

Finding participants hasn't been easy.

Nutters Engineering is one of only 15 companies in Florida that offer the HRA with BlueCross BlueShield. The program has between 1,500 and 2,000 enrollees.

"Anything that's significantly new takes time to be understood and accepted in the market because health care is so important to people," said Craig Thomas, VP of product development and management at BlueCross BlueShield. "A lot of customers like to wait and see how it plays out."

An HRA is the most typical consumer-driven health group model available. It features an employer-funded reimbursement account for pre-defined health care uses. The employee chooses providers. Unspent funds in the account roll over, year after year. If the account is exhausted, a high deductible plan kicks in until a maximum out-of-pocket sum is reached.

The devil is in the details, said Neal Murray, an account executive with Pompano Beach-based insurance firm Frank H. Furman Inc. HRAs are great if the account rolls over and builds up over the years, but they can be costly for employees if they quickly empty the account, he said.

"People are used to paying $25 and going home," Murray said. "Now they have to pay for a deductible if they don't have enough money in the account and there's a culture shock."

This new plan leads to more cost-effective choices, according to a national UnitedHealth Group study of 45,000 consumers, including 20,000 enrolled in its HRA plan. It found that HRA members had a drop in the number of claims per 1,000 enrollees compared to the year before enrollment, a decease in emergency room visits, reduced specialist visits and increased use of preventive care.

"People still see their doctors, but they're more likely to consider their options," said Meredith Baratz, VP of marketing and product design for UnitedHealth.

As of July 1, UnitedHealth had 61 HRA clients nationwide, covering 93,000 individuals. Eleven clients chose the HRA as their only health plan. In companies where it was an option, UnitedHealth recorded 20 percent participation, with healthy individuals more likely to sign up.

HMOs continue to thrive in South Florida and consumer-driven health plans have yet to be embraced by employers or employees, said Peter Joseph, senior VP of commercial sales at Hollywood-based Vista Healthplan. Still, Vista will launch an HRA program in January.

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Like most insurance companies, Vista also plans to introduce a group health savings account (HSA) plan early next year. The federally mandated plan will function similarly to an HRA, but employees can also pay into the account, which can be invested tax-free.

"Employers might like HSAs because it's employee money," Murray said. "For the HRA, the employer is the only one who puts money in for a higher deductible plan. It's harder for some people to embrace this."

Employers could view the HSA plans as too flexible, compared to HRA plans, said Bob Nay, director of product development at BlueCross BlueShield, which will launch its group HSA plan in January.

The employees can spend the HSA money outside of health care - on cars or vacations, for example - provided they're willing to pay a tax penalty. Also, the employee keeps the money the employer put into the HSA after leaving the company.

"It will be of interest to me over the next couple of years whether employers will want HRA or HSA plans," Nay said.