Conning Research: Consumer-Directed Health Plans May Cause Major Shift In Healthcare Insurance Market

  • Impact Could Be as Far Reaching as Advent of HMOs
  • “Be Careful What you Wish For”

(New York, NY) May 20, 2003- If widely adopted, consumer-directed health plans (CDHPs) will cause a major shift in the healthcare insurance industry similar to the impact felt by the emergence of HMOs, according to a new study by Conning Research & Consulting, Inc.

According to the study, “Consumer-Directed Health Plans — Hoped for Results and Unintended Consequences,” supporters argue they have the answer to the unrelenting increase in the cost of health insurance premiums. Mass adoption of this concept will introduce a new product cycle to the health insurance industry that moves the cost of coverage from the employer to the employee. However, the full consequences of this shift are difficult to predict, according to Conning.

“Decisions about care for the CDHP patient may increasingly involve personal finances rather than quality of care or prevention,” said Robert H. Booz, the principal author of the study. “Individuals covered by CDHPs may delay or forego needed care out of fear of exhausting their health savings.”

The CDHP design tackles the employer’s problem of the escalating cost of employee health insurance. It shifts health insurance from the “supply side” controls of managed care, which limits direct access to medical care providers (suppliers), to “demand side” limits by shifting costs to the employee to reduce the pressure for services. In this change alone, the emergence of CDHPs is as significant in its presence as the development of the HMO concept was to the emergence of managed care.

“The large, publicly traded managed care companies have all announced CDHP product offerings,” said Booz. “Some have said CDHP penetration could be as great as 50% in the next five years. They should be very careful of what they wish for; CDHPs could have effects far different than they anticipate. CDHP products carry less risk for the insurance company; which should ultimately lead to lower premium revenues over the long run.” This is just one of the unintended consequences mass CDHP adoption may produce, according to the study.

“Consumer Directed Health Plans – Hoped For Results and Unintended Consequences,” is available from Conning Research & Consulting, Inc. by calling toll free (888) 707-1177 or (860) 520-1521. A complete listing of all Conning research products can also be found by visiting the company’s Web site at

About Conning Research & Consulting, Inc.

The Conning name has represented excellence in independent insurance industry research for more than 90 years. As a result of its wealth of experience and intimate knowledge of the insurance industry, Conning understands industry challenges and opportunities and can provide in-depth insights and analyses. Conning provides both public and proprietary research as well as consulting services to the financial services industry. Conning has offices in New York and Hartford.