Claims Management News

13% of Midsize Employers Provide High-Deductible Health Plans

High-deductible health plans are still a rarity among employers, the report found. A mere 13 percent of midsize employers offer high-deductible health plans.

By Vera Gruessner

The health insurance industry has been changing due to the Affordable Care Act and other regulatory pressures from the Centers for Medicare & Medicaid Services (CMS). Rising healthcare costs along with the reforms taking place among payers have led to employers renovating their approach to choosing benefits and health plans. Many employers may need to consider whether high-deductible health plans are the right choice for their employees.

Affordable Care Act

Benefitfocus released a report called the State of Employee Benefits 2016, which describes how employers are bringing greater financial responsibility for health plans back onto the employees. Therefore, it is up to the consumers or employees to work directly with health payers in order to limit their out-of-pocket spending and utilize healthcare services in a cost-effective manner.

High-deductible health plans are still a rarity among employers, the report found. A mere 13 percent of midsize employers offer high-deductible health plans. PPOs and HMOs still tend to be the most popular option among health plan offerings across businesses. Employers would be wise to consider other insurance options in order to reduce rising healthcare spending and the overuse of medical services within typical fee-for-service insurance plans.

The report looked at whether employees preferred high-deductible health plans and found that 34 percent of surveyed employees would choose a high-deductible health plan over other types of traditional insurance offerings.

The report also found that many mid-sized employers are likely to avoid the Affordable Care Act’s Cadillac tax. At the end of the day, employees are facing large deductibles regardless of which health plan they choose, according to the report from Benefitfocus.

While many mid-sized employers may not have offered these high-deductible health plans to their workers, it may be beneficial for businesses to consider adding these type of insurance options since they could prevent over or under insurance, the report stated.

Prior reports show that more employers have actually offered high-deductible health plans with at least 52 percent providing these insurance offerings. These lower-cost options are likely to become more popular in the coming years as employers and payers work together to lower medical care spending, monthly premiums, and out-of-pocket costs.

Improving cost transparency will prove to be imperative for the health insurance industry, according to Joel Ario, former Director for the Department of Health and Human Services (HHS), and Katherine Hempstead, Senior Adviser to the Vice President of the Robert Wood Johnson Foundation.

“As consumers do have what the carriers like to call ‘more skin in the game,’ so higher cost sharing, then I think it’s incumbent on the carriers then to be explaining a lot more about how that works and disclose a lot more about pricing in the marketplace so that consumers can actually be intelligent purchasers,” Ario began.

“It doesn’t do a whole lot of good to say ‘We want you to pay a higher share of the bill through cost-sharing but we’re not going to provide much information about how much your cost-sharing is going to be.’”

“An example of where you see this now is mostly in the federal and state exchanges. They have what’s called a total out-of-pocket cost calculator so that when you’re comparing a few plans, you’re not only seeing what the premium is for the plan but you see an estimate of what your out-of-pocket spending would be on that plan. If you’re a traditional user or if you entered more data, then there could be an estimate that’s based on your particular usage patterns.”

“The more consumers are expected to share in cost through cost-sharing, the more they’re going to want good transparency around what those costs may be to them,” he mentioned the importance of cost transparency.

Even though there has been a tremendous change in the way the health insurance industry operates due to the provisions of the Affordable Care Act and other regulatory pressures toward value-based care, the average consumer still does not have enough data to make the best decision for their healthcare needs. Cost transparency is a necessity in today's world of changing healthcare reimbursement structures.

“A big focus of our work has been to try to make the individual direct to consumer insurance market more efficient and better serve consumers by making people be able to compare the plans head to head. We’ve funded the creation of this data set that has a lot of cost-sharing information for all 50 states for the plans on the ACA marketplace,” Hempstead clarified some of the ongoing work taking place to improve cost transparency.

Providers and payers along with CMS have positioned the healthcare industry to move toward value-based care reimbursement and leave fee-for-service payment models behind.

Karen Ignani, President of Emblem Health and former CEO of America’s Health Insurance Plans, explained how the health payer EmblemHealth has more than 60 percent of its consumers receiving services through a value-based care payment arrangement. Within this system, financial incentives are linked directly to providing quality care and meeting performance benchmarks.

While value-based care and cost transparency are meant to reduce wasteful medical spending, health insurance companies and employers are advised within the report to promote and incorporate high-deductible health plans as a means for lowering healthcare costs.

 

Digging Deeper:

Healthcare Payment Reform May Need the Employer Perspective

Why a Competitive Health Insurance Plan Matters to Employees