'Consumer-directed' health plans attracting healthier feds

Participants in a new type of health plan offered through the Federal Employees Health Benefits program are generally younger, healthier and better educated than enrollees in more traditional options, government auditors said in a report released Wednesday.

Advocates of the new kind of plans, known as consumer-directed health plans, say they keep health care costs down. But opponents argue that they drive up premiums for traditional plans. That is because consumer-directed plans tend to draw out younger and healthier participants who offset costs incurred by older and sick enrollees.

Consumer-directed plans are designed to provide incentives for prudent health care decisions. The plans include health savings accounts that participants can use to cover medical costs, or spend on other personal needs. They have high deductibles, further encouraging conservative health care spending.

The Government Accountability Office's report (GAO-06-143) looked at the first consumer-directed plan offered among the 279 options in the Federal Employees Health Benefits program. That plan, provided through the American Postal Workers Union, had about 9,500 enrollees in 2005.

GAO found that enrollees in the plan tended to be younger and healthier than participants in national preferred provider organization plans such as Blue Cross Blue Shield of America's Federal Employee Program.

The average age of participants in the APWU plan was 47 -- 15 years younger than the average in national plans. Excluding participants over the age of 65, 73 percent of participants reported "excellent" or "very good" health, compared to 58 percent in national plans. Forty-nine percent in the consumer-directed plan had a four-year college degree, compared to 36 percent in PPOs.

Only 11 percent of enrollees were older than 65 or retired, compared with 53 percent of national PPO enrollees. GAO pointed out, however, that all recently created FEHBP plans had much smaller numbers of these participants.

Linda Springer, director of the Office of Personnel Management, which administers the FEHB program, said in response to the GAO report that she was not concerned about any adverse effects on traditional plans. Springer noted that the three-year-old consumer-directed plan covers less than one-half of 1 percent of total FEHB enrollment.

"FEHB program enrollees have many different kinds of health plans to choose from, and we do not anticipate any enrollee harm accruing to individual enrollees as a result," Springer said. "Nonetheless, OPM will continue, as always, to monitor enrollment shift and take appropriate action to eliminate or minimize any adverse effects."

The GAO report, which was requested by Sen. Max Baucus, D-Mont., also found that enrollees in the consumer-driven plan were generally as satisfied as participants in other plans.