As the number of employers offering high-deductible health plans continues to grow, the spotlight recently has highlighted an inconvenient truth: some employees are filing bankruptcy because they cannot afford all of the out-of-pocket expenses and deductibles they must pay in these plans – just like the bad old days in the 1990s and 2000s. Besides being in plans with high deductibles, many employees are also paying more for coverage as employers have shifted more and more of the premium burden to their staff. Making matters worse, studies are showing that many people with HDHPs are forgoing necessary treatment and not taking the recommended dosages of medicines because they can’t afford the extra costs.
Consider this:
- Enrollment in HDHP plans grew to 21.8 million in 2017, up from 20.2 million the year prior, and up from 5.4 million in 2007, according to a report by AHIP.
- Nearly 40% of large employers offered only high-deductible plans in 2018, up from just 7% in 2009, according to a survey by the National Business Group on Health.
- 50% of all workers had health insurance with a deductible of at least $1,000 for an individual in 2018, a huge increase from 22% in 2009, according to the Kaiser Family Foundation.
- Despite that, a 2017 report by the Centers for Disease Control and Prevention found that 15.4% of adults with HDHPs in 2016 had difficulty paying medical bills, compared to 9% of those with other types of insurance.
- Meanwhile, the average deductible for a family has risen to an average of $4,500 in 2017 from $3,500 in 2006, according to the Kaiser-HRET 2017 survey of employer-sponsored health plans.
As a result, some employers are rethinking their use of these HDHPs and trying to reduce the burden on their workers.
Skimping on care
Studies show that many people put off routine care or skip medication to save money. That can mean illnesses that might have been detected and treated early can go undiagnosed, becoming potentially life-threatening and enormously costly for the medical system.
A study by economists at University of California, Berkeley and Harvard Research, published in the Journal of Clinical Oncology had the following findings:
When one large employer switched all of its employees to high-deductible plans, medical spending dropped by about 13%. That was not because the workers were shopping around for less expensive treatments, but rather because they had reduced the amount of medical care they used, including preventive care. The study found that women in HDHPs were more likely to delay follow-up tests after mammograms, including imaging, biopsies and early-stage diagnoses that could detect tumors when they’re easiest to treat.
A report by the Robert Graham Center for Policy Studies in Family Medicine and Primary Care, published in Translational Behavioral Medicine found that:
People with HDHPs but no health savings accounts are less likely to see primary care physicians, receive preventive care or seek subspecialty services. Compared to individuals with no deductibles, those enrolled in HDHPs without HSAs were 7% less likely to be screened for breast cancer, 4% less likely to be screened for hypertension, and had 8% lower rates of flu vaccination.
The study authors noted that although more individuals have health insurance under the Affordable Care Act, premiums and deductibles have increased, leaving many Americans unable to afford these costs.
Oddly, many people in HDHPs are also forgoing preventive care services, even though they are exempted from out-of-pocket charges, including the deductible under the ACA. This is likely because most people may not be aware that the ACA covers preventive care office visits, screening tests, immunizations and counseling with no out-of-pocket charges. As a result, they do not benefit from preventive care services and recommendations.
Companies with second thoughts
A few large employers — including JPMorgan Chase & Co. and CVS Health Corp. — recently announced that they would reduce deductibles in the health plans they offer to their employees or cover more care before workers are exposed to costs.
While it is not likely that we will return to the “bad” old days of of the 90’s, it may behoove employers to check if their HDHP strategy is accomplishing what they had set out to do.
Alan Wang is the President of UBF and serves as the lead consultant. He has delivered the UBF solution set throughout the world and is highly regarded for his areas of expertise. You can follow him on Twitter @UBFconsulting.