By Ashley Fuoco Antonelli, Contributing Editor
As employers have looked to stem rising health care costs, many have shifted their employees into high-deductible health plans (HDHPS), hoping the plans would encourage them to be smarter health care shoppers.
Health Insurance 101: Get the slide decks
But evidence suggests HDHPs don't lead enrollees to price shop for their care, and instead can cause them to delay needed health services. Luckily for employers, though, new research suggests there might be another way they can nudge their workers to be shrewder about their health spending. Let's take a closer look.
The rise of HDHPs
HDHPs require enrollees to pay more out-of-pocket before their coverage kicks in, when compared with plans that have lower deductibles. The IRS considers any plan with a deductible of at least $1,350 for an individual or $2,700 for a family of four as an HDHP.
Employers in the early 2000s began to embrace these plans as a way to lower their rising health care costs. A survey from the National Business Group on Health showed that the share of large employers that only offer HDHPs to their employees increased from 7% in 2009 to 39% in 2019.
Similarly, data from the Kaiser Family Foundation showed 85% of covered workers in 2018 had some form of deductible, with the average deductible at $1,573 for an individual. Just over a quarter of those individuals had deductibles of at least $2,000—and that percentage was higher (46%) among workers at smaller firms.
CDC also has estimated that 47% of individuals with private health insurance were enrolled in an HDHP during the first three months of 2018, up from 43.7% in 2017.
Do HDHPs control health costs?
Employers hoped HDHPs would lead employees to reduce unnecessary medical spending or become keener about shopping for health care. However, multiple studies have shown that, while HDHPs do lead to lower spending, they don't do so in the way employers likely hoped.
For example, a study published last month in Health Affairs looked at whether HDHP enrollees shopped around by comparing quality ratings or prices for health care services, discussing the cost of services or negotiated a price for a service with a provider. The study also looked at whether the enrollees had saved for future health care services. The study found that, of 1,637 adults enrolled in HDHPs, 40% saved for future health services, 25% talked with a provider about the cost of a service, 14% compared prices, 14% compared quality, and 7% attempted to negotiate a price for a service. Those findings echo a similar study published in JAMA Internal Medicine in 2017.
Instead, research conducted by Amitabh Chandra, an economist and health care researcher at Harvard University, has demonstrated that HDHP enrollees tend to skip or delay care. Chandra said, "Prevention, imaging, or drugs—consumers were cutting back on all those. And that's a sign they don't really know what care is valuable and what care isn't valuable."
And those choices can have detrimental effects, both on people's health and health spending.
For instance, a study published last month in Health Affairs found that women enrolled in HDHPs were more likely to delay treatment for breast cancer—which could lead to worse outcomes and greater health spending down the road.
Ashish Jha, a physician and health policy professor at Harvard University, looked to see how HDHPs work in practice—by enrolling his family in one. Jha has a heart condition that occasionally causes his heartbeat to spike. During one such episode, Jha debated going to the ED. The ED visit would have cost at least $2,000, and Jha's family plan had a $6,000 spending cap before coverage took effect.
While Jha could afford the bill, he was circumspect about going to the ED—even though he would have advised a patient to do so under the circumstances. After about an hour, Jha's heart rate started to slow. In retrospect, he said he should have gone to the hospital, but he added, "I knew there was a big bill waiting for me if I [went to the hospital], and I rolled the dice."
So what can employers do to rein in health care costs?
There's some early research that suggests employers are beginning to back away from the HPHD strategy and are looking for different ways to lower health care costs that eases the burden on workers.
And a study published last month in Health Affairs might have a viable solution. The research suggests there is a way employers can encourage workers to be smarter about their health care costs: paying them to shop around.
The study focused on a program offered by Blue Cross Blue Shield health plans in Illinois, Montana, New Mexico, Oklahoma, and Texas. Under the program, 270,000 enrollees who worked at 29 different companies were paid between $25 and $250 to use a price transparency tool to help them choose lower-costs providers for 131 elective medical procedures.
The study found that 8.2% of the workers used the price transparency tool. While the share of workers using the tool was low, the savings were relatively high. According to the study, the payer saved about $2.3 million over 12 months as a result of employees using the tool—or about $8 per enrollee after accounting for administrative costs.
Ateev Mehrotra, co-author of the study and an associate professor at Harvard Medical School, said, "This strategy is appealing to employers because, compared to alternatives like [HDHPs] … offering a cash reward encourages patients to price shop without exposing them to increased out-of-pocket costs."
Health Insurance 101: Get the slide decks
Confused about the U.S. health insurance system? You're not alone—it's one of the most complicated systems in the world. If you missed our recent webconference series diving deep into the system, don't worry; we've got you covered.
Review the slide decks from our recent webconferences for a quick overview of each program:
- Understand Medicare Advantage
- Overview of the health insurance business
- Understand commercial insurance
- Understand Medicaid managed care