Why your high-deductible health plan isn’t helping your employees (and what to offer instead)
High-deductible health plans (HDHPs) — plans with deductibles over $1,000 for individuals and over $2,000 for families — have been around since the mid-2000s and have grown in popularity since. From the employer’s perspective, HDHPs solve two problems: they shift costs from the employer to the plan member without increasing premiums, and they attempt to solve the “principal-agent” problem in which physicians who both provide care and patients who receive care are protected from the costs of services rendered.
Employers hoped HDHPs would skin their health plan members, creating incentives to consume health services more wisely by forcing them to pay out of pocket until they met their deductibles.
While HDHPs have been successful in reducing the use of health services and shifting costs from the employer to the employee, they have backfired with detrimental results. Why?
For starters, HDHPs encourage people to refrain from seeking care, even the care they need. It is good to reduce the use of health services if these services are unnecessary or provided by an unnecessarily expensive health care provider. But significant portions of Americans suffer from chronic conditions that require regular care. Thanks to the Affordable Care Act, basic preventative services are fully covered and outside of deductible requirements. But most services that help manage chronic conditions require patients to pay out of pocket until they reach the deductible.
This means employees with diabetes, for example, pay the full cost of the expensive test strips they need to monitor their blood sugar. Search by survey found that 38% of adults enrolled in HDHPs had not filled a prescription; skipped the recommended medical test, treatment or follow-up; or, did not see a specialist when needed. Whereas the average cost per day for a hospital admission ranges from $2,500 to $3,000, avoiding care can have disastrous health and financial consequences for individuals and employers.
Also, there is no good information to support patients as consumers. For decades, employers thought, if only individuals had information about the cost and quality of healthcare, the dream of the empowered healthcare consumer would come true. Unfortunately, even after two decades of trying to make the quality and price dimensions of healthcare easier to find, we’re a long way from “Yelp” for healthcare. And researchers find that even when patients have informationthey rarely consult it or act accordinglyunless it is coupled with incentives, such as removing their cost sharing.
Finally, your workers may not have enough money to cover their deductibles. If your company employs low-wage workers, they could be among the 46% of Americans without sufficient savings to cover the annual deductible of their health insurance plan. With the exception of preventive services covered by law before the deductible, these employees are essentially uninsured.
So given that HDHPs will make the workforce sicker and won’t help employees become self-sufficient healthcare consumers, where does that leave employers who need to cut health care costs? health ? There are options:
Be selective about healthcare providers.
In health, high prices do not correspond to best quality. Eliminating access to the most expensive providers can lower premium costs. In a tight labor market, some employers fear that restricting their employees’ choice of suppliers will generate backlash — even though evidence suggests that only about 1 % of employees quit due to benefits.
Put in place the right incentives.
Strategies like value-based insurance design vary the amount employees pay out of pocket to encourage them to use high-value preventive care and discourage them from seeking low-value services, such as those identified by The Low Value Care Working Group. Similarly, some employers use strategies like reference services encourage plan members to seek care from more affordable providers and/or at less expensive care sites (eg, an outpatient clinic rather than an emergency room).
Benefits of Design for Health Equity.
The North East Health Business Group published a “How“guide for employers on benefit designs that support access to diabetes and obesity care with messaging that engages BIPOC employees. Obesity and Diabetes disproportionate impact people of color. This targeted approach recognizes racial disparities and addresses some of the underlying social barriers to health.
These approaches are just a few of the many strategies employers can adopt with the dual goals of improving employee health while reducing costs. The common point between them is their specificity. Rather than imposing high cost sharing on employees with a vague hope that savvy consumerism will take hold, targeted benefits design allows employers to build their health plan offerings around the needs of their working populations. employees.