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Health Plan Cost Sharing, Deductibles Outpace Members’ Wage Growth

Health plan cost sharing and deductible spending are outpacing employee wage growth, which could indicate a need to reduce financial burdens on plan members.

Health plan cost sharing

Source: Thinkstock

By Thomas Beaton

- Health plan cost sharing and deductible spending have outpaced employee wage growth in the last ten years, according to data released by the Peterson-Kaiser Health System Tracker.

Employees’ total financial responsibility increased by 54 percent from 2006 to 2016 while wages only increased by 29 percent during the same years.

Kaiser Family Foundation researchers suggest that health plan beneficiaries view deductible and cost-sharing payments as financially burdensome and may not have the resources to meet their financial responsibilities for care.

Payer healthcare costs have grown by 45 percent from 2006 to 2016, with the biggest cost spikes occurring between 2006 and 2007.

Deductible spending has also grown sharply, increasing by 176 percent from 2006 to 2016, even though deductible spending on average is low per enrollee. Coinsurance costs grew by 67 percent while copay spending decreased by 37 percent during the ten-year period.

The researchers cautioned that the growth of total cost sharing is much faster than the rise in payer costs, meaning that health plans are shifting the cost of healthcare services to their beneficiaries. Health plan members may find that their coverage options are less affordable than in previous years.

“Patients are more sensitive to the actual price of health care with deductibles and coinsurance than they are with copays, which are flat dollar amounts,” the team said. “The other difference between a copay and a deductible is that copays may add up over time, while a deductible may need to be met at once, causing affordability challenges.”

Comparison of health plan costs to beneficiary financial responsibility

Source: Peterson-Kaiser Health System Tracker

In 2016, employees spent an average of $417 for deductibles, $249 for coinsurance, and $140 on copays.

The team found that even though costs grew, employer-sponsored health plans began to cut back on spending for care costs.

“Overall, payments by health plans rose 48 percent on average, from $3182 to $4724 per enrollee per year,” the team said. “This reflects a slight decline in the generosity of insurance – large employer plans covered 85.8 percent of covered medical expenses on average in 2006, but decreased to 85.4 percent in 2016.”  

Deductibles and cost-sharing are becoming increasingly important affordability factors as more employers begin to offer more high-deductible health plans (HDHP).

A high-deductible health plan is any health plan with a deductible above $1300 a year for a single beneficiary and $2600 for a family.

High deductible plan offerings shift cost-sharing from premiums to their deductible amounts, and reduce monthly premiums, but can create challenges related to healthcare utilization.

In 2017, 21 million health plan beneficiaries enrolled in a HDHP. A high-deductible health plan can discourage beneficiaries from seeking needed healthcare services because HDHP members have greater cost responsibility. Health plans that educate members on how to use preventive care effectively, as well financial services, could support more affordable and efficient cost-sharing practices.

Employer-sponsored health plans should consider any changes in plan cost-sharing, deductibles, and other member financial responsibilities to avoid beneficiary affordability concerns.

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