Reports on rising health care costs are beginning to seem like abroken record. Each report (accurately) says health care costs arecontinuing to rise for Americans and their families. That's why thelatest data won't be a surprise.

According to the annual Behind the Numbers report on medicalcosts released by PricewaterhouseCooper's Health ResearchInstitute, health care costs are expected to increase by 8.5percent in 2012. This figure is up slightly from the 8 percent risein 2011. Considering the total medical costs for a family of fourin 2010 was in excess of $18,000, any increase can have negativeripple effects on families who are continuing to deal with thelackluster economy.

The report, however, notes some good news. Among the factorsthat will help lower costs are high deductible health plans, whichhave been the fastest growing type of plan in 2011, according toPwC. Even better, a new multi-year study of health care claims of655,000 CIGNA customers shows that as overall medical costscontinue to experience double-digit jumps annually, medical costsfor individuals in account-based consumer-driven health plansactually went down 26 percent over four years.

The annual CIGNA Choice Fund Experience Study is the latestevidence that more than any plan currently under consideration,CDHPs consistently have proven to provide quality health care atsubstantially lower costs. This study shows the incentives offeredby consumer-driven plans—such as lower premiums, freedom of choice,and the ability to build up health savings—resulting in animmediate and sustained improvement in health care quality andlower costs.

Furthermore, CIGNA's study points out that if the number ofAmericans enrolled in a CDHP rose from the current 18 percent to 50percent, the U.S. could achieve $350 billion dollars in savingsover 10 years. Think of the impact that could make in the overallcost of health care.

As further proof that consumer-directed plans work, the MillimanMedical Index 2010 notes that while out-of-pocket health care costswere more than $3,000, potential savings from using a flexiblespending account would have reduced that number by nearly athird.

To encourage participation in a CDHP, employers may want tothink of “seeding” the program with initial funds. This isparticularly true if the organization is offering an FSA, whichtends to lack the popularity of health reimbursement arrangementsand health savings accounts due to the “use it or lose it”provision in FSAs.

Land O'Lakes is one of a number of larger companies saving moneythrough the use of consumer-directed health plans. Since Jan. 1,2007, when the first CDHP was offered, the company and itsemployees have saved more than $10 million in health plancosts.  The company attributes its successes to opencommunication with employees coupled with consumer-focusedinformation and tools.

Education adds up

The importance of educating participants in consumer-directedhealth plans continues to become more important as more of thedecision making is put on the consumer's shoulders. In order tomake these informed decisions on health care, consumers arerequesting data, facts and figures—in fact, 90 percent of consumerssay having quality information is essential. 

Without question, educating consumers is one of the largestchallenges employers face. 

As in the case of Land O'Lakes, information and educationdesigned specifically for each employee or participant is criticalto the success of consumer-directed health plans, and it helpsemployees make the best decisions on their own care choices. It'simportant to remember that a well-designed CDHP alone won't beeffective at controlling costs or improving health without athorough and continuous education strategy. When employees have astrong understanding of their health care plan, they become moreinvolved, competent consumers.

Both third party administrators and employers, however, need toremember educational materials have to resonate with a wide varietyof people. Many only have a high school diploma and a median incomeof $48,000, while half are likely to be health illiterate.Materials also have to resonate with young people, the blue collarworker, and even college-educated participants who are unfamiliarwith CDHP jargon.

Luckily, participant education has been refined over the pastfew years and learning from others will save employers valuabletime. Keeping in mind that consumers are busier than ever, the keyis to keep things short, simple and easy.

In addition, consumers now learn and gather information indifferent ways, so reaching them using a variety of formats will beimportant. Some still prefer traditional paper methods, such asnewsletters, posters and direct-mail postcards, while others prefershort notices, online messages or mobile video. There has been arise in popularity of online flash commercials, which can focus onspecific lifestyles such as those with families, those who aresingle and those nearing retirement.

Some of the most successful participant education campaigns takeplace during off-enrollment periods, which breaks up the routine ofreceiving benefits information only at certain points during theyear. Participants also have more time to absorb educational inforather than at enrollment time when participants are deluged withmaterials.

Visually-engaging materials graphically depict specific itemscovered under their consumer-driven health plan, like Lasik eyesurgery, braces, crutches, and over-the-counter medications.Examples and lists like this are especially valuable for those newenrollees who are trying to come up to speed quickly with theirbenefit debit card and CDHP, whether they're enrolled in an HRA,HSA or FSA.

In addition to listing out specific items that are covered, itis recommended to show participants side-by-side comparisons ofpost- and pre-tax savings. (One example: an FSA modeler thatestimates savings, is below.) Especially in today's economy, simplyeducating participants on the amount of money they can save eachyear is an effective way to demonstrate the benefits of a CDHP.

While there are more and more health care options for today'sconsumer, one thing is certain: Consumer-driven health plans arehere to stay. While they present a communications challenge foremployers, they also present a unique opportunity and can provesuccessful as long as a comprehensive education and communicationsplan is in place.

Anne Carpenter is a vice president of Evolution1, a providerof comprehensive electronic card payment, on-premise and cloudcomputing solutions for the administration of flexible spendingaccounts, health savings accounts, health reimbursement accounts,VEBAs, wellness and transit plans. Contact Anne at [email protected].