©2006 Information Strategies, Inc.1 The Impact of CDHC Offerings on Consumer Behavior JoAnn M. Laing President and CEO, Information Strategies, Inc. Author,

©2006 Information Strategies, Inc. 1

The Impact of CDHC Offerings on Consumer

Behavior

JoAnn M. Laing

President and CEO, Information Strategies, Inc.

Author, The Small Business Guide to HSAs and

The Consumer’s Guide to Health Savings Accounts


Consumers Are Smarter, Stronger Than We Thought

Using and Benefiting From CDHC In Increasing Numbers


CDHC Growth

Percentage Of CDHP Users Through 2010

HSAs

HRAs

FSAs

Non-CDHC

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006 2007 2008 2009 2010


What Healthcare Consumers Want

Prevent medical catastrophe from becoming financial one

Save money

Grow funds, if possible

Ease-of-use and good customer service

Good, reliable information to make decisions


Insurance


How CDHC Insurance Was Obtained

CHART TO BE PROVIDED


Influencers, Concern, Satisfaction



Premiums, Deductibles & Savings



Customers: Assuming Control

Becoming responsible for healthcare takes time and education; desire to do so is strong.

Savings on HDHP is a big attraction, as is a lower future increase on premium.

Utilizing Internet website, 800 lines to self-serve.

Increasing awareness of costs and how to minimize.

Using preventive measures and taking medication.

Fewer uninsured.


Insurance: What’s Next

Lower loss claim rates lead to lower premiums.

Incentives for preventative healthcare.

Multi-year insurance.

Better customer service and information for decision making.


The Savings/Spending Account and The Custodian


Where Individuals First Turned To For Custodial Account

Advice



Ranked Sources That Influence Custodial Account Choices

Chart based on latest 7,000+ interviews through June 15, 2006

2.96

3.28

3.25

3.11

4.33

4.2

1.43

1.9

3

3.07

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5

Insurance agent

My current bank

Benefits Manager

Friends and Family

Colleagues

Managers of other companies

Websites

Rate comparison charts

Books

Media


Customers: Increasing Demands

Preference for seamless one-stop-shop.

Look first to local bank; majority bank 300+ miles away.

Expect superior customer service; else account portable.

Want to save their money; grow their balances through tiered interest and investment options.

Shopping for lower fees.


Preferred Consumer Benefits

Tax-advantages for contributing to account.

Funding of account by others.

For HSA: Ownership and control, as well as privacy

Portability Rollover to retirement


The Account: What’s Next

Focus on growing accounts.

Competitive fees and features.

Better customer service, educational materials.


Wise CDHC Spending


Careful Consumer Spending

Comparison shop, choose wisely: research, check prices and results.

Ask for referrals from trusted sources. Give feedback.

Request discounts.

Think twice about going to the emergency room or seeing a medical professional.

Decide how to pay; delay if advantageous.


Usage Comparison of CDHC and non-CDHC Insurance

Holders

1.89 1.89 1.84 1.87 1.82 1.89

2.892.68

2.86 2.84

1.681.89 1.86

1.23

1.81

1.48

1.23

1.76

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CDHC Non-CDHC

C har t ba sed on la te s t 7 ,00 0+ in terv iew s th rou gh J une 15 , 20 06


How Plan To Use HSA



Spending: What’s Next

Consumer’s will expect competition for their dollars.

More global tourism, sometimes with devastating results.

Greater reliance on comparative information.

Internet portals to play increasing role.


Government / Regulation


Government Regulation

Created most flexible form of Consumer Driven Healthcare.

Trifecta of tax advantages.

Easy reporting for account custodians, consumers.

Prevents medical catastrophe from being a financial one.


Government Major HC Purchaser and Information

SupplierPays for nearly 40% of healthcare.

Walk the Talk; order to Health and Human Services Department, Defense Department, Veterans Affairs Department and Federal Employees Health Benefit Program agencies:- Use interactive health information systems.

- Enact programs that measure the quality of care, and develop those measures with private sector and other govt agencies.

- Make available to beneficiaries the prices that agencies pay for common procedures.

- Develop and identify practices that promote high-quality health care.


Regulation: What’s Next

Permit rollovers of FSAs and HRAs into HSAs.

National insurance of small businesses, others.

Raise contribution limits.


Providers Pulled Into Marketplace


Insurance: Warming to CDHPs

State regulation, slow plan rollout and brokers not pushing has effect, but demand is greater.

Employer factor on consumer product.

Insurance information and customer service necessary added expense.

Congruent goal with wise healthcare user: judicious spending for medications, prevention, and healthcare services can lead to lower loss claims, effect future rates.

Affecting components of non-CDHC plans.


Financial Industry: Waking-Up

Early offerings were based on offering a current account with high activity.

Realized opportunity to increase number of accounts and grow deposits (consumer goal), as well as cross-sell other offerings.

Transparency of offerings, pricing, customer service are driving marketplace.

Communication and education challenge.

Employer factor.


Other Providers: Realizing Market

Drug companies, hospitals, care providers etc.: promote specialties, benefits, cost, efficacy, as well as clarifying offerings and payment terms to generate business.

Back office processors, education and info service firms: good offerings (provide tools, calculators to promote transactions) and superior customer service leads to customer acquisition, usage and retention.

TPAs to manage process for employers, to enable them provide quality healthcare benefit to their employees.


How Consumers Changed Providers

Sought price concessions.

Pushed for more flexible plans and tax advantages.

Utilize wellness and other programs from Insurers, Employers.

Forced more information.

Reduced fees of custodial accounts.

Broke alliances of insurance / account custodians.

Demanded, got investment products.


The Impact of CDHC Offerings on Consumer

Behavior

JoAnn M. Laing

President and CEO, Information Strategies, Inc.

[email protected]

©2006 Information Strategies, Inc.1 The Impact of CDHC Offerings on Consumer Behavior JoAnn M. Laing President and CEO, Information Strategies, Inc. Author,

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