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High-Deductible Health Plans Dominate Employer Offerings

Research shows that more than four out of ten employers are likely to begin offering only high-deductible health plans over the next three years.

By Vera Gruessner

Today, the consumer or employee is left with much higher out-of-pocket costs than in previous years. Within the Kaiser Family Foundation’s 2015 Employer Health Benefits Survey, statistics show that the number of workers with a standard annual deductible has risen from 70 percent in 2010 to 81 percent in 2015. Health payers and employers are more likely today to offer high-deductible health plans than in years past.

Value-Based Care Reimbursement

The results also show that HMO health plans may be a better fit for consumers looking to lower out-of-pocket costs since about six out of ten people who purchased these offerings do not have an annual deductible for single coverage. Only 15 percent of PPO policyholders can say the same thing. Nonetheless, the results are clear that high-deductible health plans are becoming a more common occurrence around the country.

In fact, the report also found that companies that had many low-wage workers were more likely to provide higher than average annual deductibles in their single coverage health plans than firms that had fewer low-wage employees.

However, it is important to mention that the deductible does not have to be met for the health insurance plan to cover primary care office visits and prescription drugs. The majority of high-deductible health plans do cover the costs associated with these basic services.

According to the Health Affairs Blog, employers who have offered high-deductible health plans to their staff have been able to reduce their own healthcare spending over the last three years. However, while their costs went down, the billing was essentially transferred over to the employees to cover through out-of-pocket spending.

READ MORE: Pharmacy Benefit Managers Help Reduce Payer Drug Spending

“As employers cut back on health care spending, more small and large employers are offering high deductible health plans (HDHPs) among their benefit options, often paired with a tax-free spending account to pay medical bills that both employers and employees can contribute to. In 2015, 24 percent of all workers were enrolled in a HDHP with a savings option. This is a dramatic rise since 2009, when just 8 percent were covered under such plans. The latest survey also suggests that 46 percent of employees have annual deductibles of over $1,000,” Health Affairs states.

“Besides shifting a larger portion of the cost to consumers, plans with significant cost-sharing can curb utilization of medical services, since patients may think twice about spending money on care deemed avoidable, deferrable, or unnecessary.”

Research also shows that more than four out of ten employers are likely to begin offering only high-deductible health plans over the next three years. This type of information is troublesome for the consumer since their out-of-pocket costs could increase significantly and they may even forego obtaining necessary medical care to avoid high medical bills.

Benefitfocus released a third report regarding its "State of Employee Benefits" series, which outlines that manufacturing workers have higher adoption rates of high deductible health plans, according to a company press release.

Employers in the manufacturing space may need to consider encouraging their workers to take part in health savings accounts or flexible spending accounts to cover the higher out-of-pocket costs associated with high deductible health plans.

READ MORE: Health Insurance Actuaries Propose Ways to Stabilize Market

The results show that manufacturing employees chose high deductible health plans over traditional ones 46 percent of the time. The education sector was found to have greater interest in traditional health plan offerings such as HMOs and PPOs. The results show that only 23 percent of employers in the education field offered at least one high-deductible health plan.

Instead, HMOs took up 44 percent of the health plans offered in the education space, which are known for lower out-of-pocket costs but narrow provider networks. The report also found that healthcare workers tend to face high-deductible health plans versus more traditional offerings.

“Industries that have historically relied on traditional medical offerings to attract and retain talent are going to soon realize that one-size-fits-all does not work for all employees,” Shawn Jenkins, Benefitfocus CEO, said in a public statement. “By incorporating more choice into plan offerings, employers are recognizing that benefits management technology enables more affordable and customizable ways of providing health care protection than just traditional HMO and PPO plans.”

Another important point to mention is that many healthcare employees were found to choose voluntary “gap” benefit plans such as accident and hospital indemnity insurance, with about half of these workers choosing at least one gap insurance plan when the employers provided such products.

Essentially, employers, health payers, and providers will need to work further to address the expenses left to the consumer to cover through out-of-pocket spending. Through greater adherence to value-based care reimbursement such as bundled payment models, health payers and providers may be able to bring reduced out-of-pocket costs for the end consumers.

READ MORE: Minn. Healthcare Payers Reported $687M in Financial Losses


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