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High deductible health plans were conceived as a means of stemming the upward spiral of healthcare costs by making consumers more cost-conscious. The use of HDHPs gained momentum in 2003 when the Medicare Modernization Act made it possible for consumers to set aside tax-free funds in a Health Savings Account (HSA) to help cover that high deductible.
Since then, more employers are offering an HDHP option, and more employees are choosing that option:
| Percentage of privately insured adults with deductible ≥ $3000 |
2003 | 2014 | 2015 | 2016 |
| 1% | 11%* | 25%** | 29%** |
*Commonwealth Fund Biennial Health Insurance Survey 2014.
Employees are understandably attracted to the HDHP because of the lower premium. Employers are attracted by the potential to improve workforce health and generate savings. But that potential is realized only with educated and engaged employees.
Without proper support, the HDHP can operate as a barrier to care. A member faced with $3,000 in out-of-pocket costs may simply postpone necessary care, and the downward spiral begins, Avoidance of care leads to an urgent visit to the ER when conditions become acute. The employee who postpones preventive screenings may later be diagnosed with an advanced condition that requires a more invasive intervention. A studypublished this month confirms that HDHPs reduce use of ambulatory and preventive care among members with chronic conditions.
Three strategies adopted alongside the HDHP can make all the difference – and generate real savings.
It’s not uncommon for prices for procedures to range by over 1000%, even within network and within the same zip code. In order to assist the employee who is looking for the fair-cost provider, many employers now offer access to transparency tools, with incentives and rewards attached. Free tools have proliferated on the web: New Choice Health, Fair Health, Health Care Cost Institute, and Clear Health Costs using crowdsourced data.
In practice, however, employee use of transparency tools continues to be discouraging. “Shoppable” procedures are limited. Comprehensive data that should be available is lacking. Many states require that hospitals report cost data (including North Carolina), but only one state has posted a user-friendly tool to access that data, Colorado.
Employers have supplemented transparency tools with member engagement strategies to provide one-on-one assistance for employees seeking medical care. Members work directly with advisors to facilitate positive clinical and financial outcomes. Reports on the MRI next door that costs three times more than the MRI across town are now common knowledge. How to find that lower-cost provider is not so easy, and health plans are having success with direct guidance using transparency tools and their own data. Employees want to make the best decision for themselves and their wallets; they just need a little help.
Advisors can also play an important role in helping members understand their benefits. Reminders that wellness visits and preventive screenings are covered without deductible encourages healthy habits. Again, informed choices lead to responsible health care consumption, with savings for the member and the Plan.
An HSA is a special tax-advantaged account similar to a traditional IRA but designated for medical expenses. Both employer and employee may contribute to this account. An HDHP offered with an employer-assisted HSA mitigates the burden on the employee, encouraging cost-conscious behavior without strapping the worker in need of medical care.
The popularity of HDHPs is expected to continue under the new administration. According to Benefitfocus, HDHPs are gaining popularity across the board: 52% of employers are offering an HDHP option and if given a choice, 41% of employees will choose the HDHP. Younger generations especially are taking an interest, with 44% of millennials currently enrolled in HDHPs.
HDHPs are an effective design when used appropriately. The HDHP member now cares about cost. The next step is educating and assisting that member. Whether evaluating personal health risk or tackling pricing obscurity, informed health plan members make better healthcare decisions. With an investment in member engagement and employer contributions to the HSA, HDHPs offer an opportunity for improved outcomes and cost savings for both the health plan and the member.
