Worksite / Healthcare

Cost Conundrums and Conscientious Consumers

High Deductible Health Plans require a ramp up in benefits communication in order to achieve positive effects

by Karen White

Ms.White is AVP, Healthcare and Exchange Solutions, Sun Life Financial. To register for Sun Life’s Summit on benefits disruptors visit www.sunlifesummit.com

The thinking behind high deductible health plans (HDHPs) is that individuals who are responsible for paying a portion of the bill will be more conscientious consumers – choosing the less expensive MRI, asking doctors if certain tests are really necessary, using emergency services only for true emergencies – thus encouraging cost and quality competition among healthcare providers, driving lower prices.

Yet conscientious consumers are not born overnight and research is proving that employees who have long been protected by their employer’s paternal instincts strain to understand their new roles in managing their own healthcare and may go so far as to forego care, resulting in potential long-term impacts.

This can confound employers who embrace their role as a benefits provider, and consider benefits an integral part of their talent and retention strategy—and who nonetheless need to contain costs and the potential negative impacts down the line for both their employees and their businesses.

Engaging employee-patients can be more easily understood if employers look at the migration to an HDHP as they do a business process: Employers implementing a new IT system extensively train their teams to meet ROI goals. That same level of commitment needs to be present when changing a major benefit like the health plan.

Employers can take small, meaningful steps to get the most out of the high deductible health plan over the long-term, helping both their valued employees and the healthcare system that serves us all.

Bring On The Training

At a base level, employers can partner with their benefits brokers and providers to develop a benefits communication strategy that helps employees with varying degrees of health literacy manage their increased responsibility. This could range from educational campaigns to self-service price comparison tools and appointed staff in HR who can answer questions about high deductible health plans.

Employees crave benefits education, particularly when costs are high and choices are many. A recent Sun Life survey shows that a large percentage of employees (43 percent) don’t think their companies provide enough information to make the most informed choices about their benefits, and almost all surveyed employees (96 percent) who had one-on-one meetings to discuss their choices found the face time helpful.

Part of the issue is that many employees have limited understanding of how their health benefits actually work, or where their financial responsibilities lie. The Sun Life survey revealed that half of employees (54 percent) don’t know their out-of-pocket maximum and one in three (33 percent) don’t know their deductible; three in 10 (30 percent) don’t know either of these numbers. Employees also have trouble discerning what qualifies as discretionary and what health outcomes could result from the wrong benefits decisions, because there are few healthcare pricing and quality tools available to help them become informed consumers.

Build a plan that promotes access to care

While HDHPs help solve the cost conundrum in the short-term, employers should carefully consider the potential negative long-term impacts.

There is a growing body of research suggesting that HDHPs are serving their intended purpose: slowing the rise in medical costs because consumers are being more careful about what they spend on care

There is a growing body of research suggesting that HDHPs are serving their intended purpose: slowing the rise in medical costs because consumers are being more careful about what they spend on care. Yet research also shows that people enrolled in high deductible health plans often forego necessary medical care to avoid the increased costs.

  • A recent study by Families USA revealed that 25 percent of survey respondents avoid preventative care such as trips to the doctor, tests, and prescription refills, due to cost concerns.
  • In the Kaiser Foundation’s 2015 Employer Health Benefits survey, 43 percent of insured patients said they avoided physician-recommended tests or treatment because of high associated costs.
  • A recent NPR report discussed the growing health disparities between wealthy and poorer groups, due to access to and affordability of medical care. Since the deductible accounts for a larger percentage of income, there may be reluctance to spend.
  • EBRI research shows lower income workers in an HSA-eligible plan pursued flu vaccinations and preventive office visits at lower rates than higher income workers – and had 2x fewer outpatient (non-preventive) office visits.
  • Research from the American Diabetes Association shows lower-income respondents with diabetes and high deductibles are more likely to forego needed services, with significant decreases in service use for primary care (42%), checkups (65%), and specialty visits (86%) as compared to respondents with diabetes and no deductible.

Assuming benefits are appropriately communicated, the size of the deductible is among the leading contributors of whether a group’s improved results are the result of effective health care shopping and less wasteful spending or the result of an avoidance of care, which in the long-term could result in more serious, costlier health conditions.

Offer ways to fill the gaps

Employers are adding critical illness, cancer, accident and medical gap insurance to their benefits offerings, and encouraging employees to purchase this type of protection. These supplemental benefits can help offset the hidden costs of medical treatment under an HDHP, such as co-pays, co-insurance, deductibles and even travel. Supplemental benefits satisfy two gaps: 1) they help employees adhere to the standard of care and 2) they reduce the stress of financial burdens associated with higher out-of-pocket costs. When employers vet and make these plans available, they are helping employees with a more comprehensive solution.

But while most employees (86 percent) understand that changes in their healthcare coverage are creating gaps, few (30 percent) are familiar with supplemental, or voluntary benefits according to the Assurant/Sun Life study. Once this option is explained, six in ten employees (63 percent) surveyed agree that voluntary benefits could be helpful in filling their coverage gaps even if they have to pay for these benefits themselves.

HDHPs are here to stay, but the experience can be improved

High deductible health plans are becoming the de facto standard for employer-sponsored health insurance and in some cases, employees have no option other than an HDHP. According to Pricewaterhouse Coopers’ 2016 Health and Well-being Touchstone Survey approximately 25 percent of all U.S. employers offer high deductible health plans as their ONLY medical offering.

Even as health care policy remains uncertain, the trend of employee responsibility, of both costs and decisions, is going to continue to grow, and employers will need to explore a variety of options to keep health care costs in check while promoting a healthy workforce. ◊