High Deductible Health Plans Have Mixed Results

by Lisa Higgins, Contributing Editor

If you are among the employers offering an high deductible health plan (HDHP), it’s likely you see it as a way to reduce health care costs for the company. It can also be a helpful step on the path toward creating better health care consumers, by allowing employees to understand the real cost of their insurance – an important aspect of containing costs.

In exchange for lower upfront premiums, employees in an HDHP are responsible for a greater share of their medical expenses. Employees whose pockets will be hit by healthcare expenses, the theory goes, will shop around for the best deals.

It’s a great theory. But how is it working in practice?

insurance.com recently released results from a survey of nearly 2,000 Americans, asking about the ways they use their HDHP and why those chose it for their health insurance coverage. The survey found that plan design and provider networks are important, according to managing editor Les Masterson – but not as important as the monthly cost.

Unsurprisingly, many (35%) said they chose the HDHP because they wanted lower monthly premiums. In fact, more than half of respondents (52%) said low premiums and/or low deductibles are the most important factors in their ideal health plan preferences.

For years, insurance companies and employers have tried to figure out ways to improve health plan designs, Masterson said, when in fact, low premiums continue to be most important to consumers. “The results show that the way a health insurer designs a plan and the network of providers are not as important as cost.”

Employees Have to be Willing to Play Along

One plan design element that plays a key role is the addition of a Health Savings Account, or HSA. This account allows the employee to save money to offset out-of-pocket health care expenses, on a pre-tax basis. Employers can also contribute to employee HSAs, helping the account build up faster.

In order for the HDHP/HSA combination to be effective, employees have to play along by doing the shopping for and comparing of services. With several years of experience in the rear view mirror, it is becoming apparent that many would rather not.

Although 63% said they are getting more information from their health insurer to make them better consumers of health care, and 60% said they shop around for health care services, just 41% said they consider themselves better health care consumers.

Of concern is that survey respondents report their choice of an HDHP isn’t saving them money. 62% said their health care costs have increased when compared to the plan they had before.

Delaying Needed Medical Services

Even more concerning is that people seem to be putting off needed health care services. Insurance.com’s survey found that 64% said they delayed care because they don’t want to pay the high deductible in their HDHP. Not only can failing to seek treatment as needed threaten the individual’s health, it can result in much higher medical costs in the long run – the very thing these plans seek to avoid.

“The bottom line is that people are still looking for the lower premiums possible, which means HDHPs will continue to be a popular option for those looking to pay the least upfront costs possible,” said Masterson. “As HDHPs become more prevalent, however, health insurance companies and employers will need to make sure that members aren’t putting off necessary care and then have to pay much more down the road.”

Employers Can Communicate and Contribute

One way to help is by making sure employees understand the benefits of saving money in an HSA and by contributing to them. With deductibles topping $3,000 for some people, providing a means to pay for out-of-pocket costs can be – quite literally – a life saver. In its survey, insurance.com found that more than half of individuals who are eligible (57%) contribute over $1,000 per year to their HSAs. 66% said their employer also contributes at least $500 per year on their behalf.

In spite of concerns highlighted by the survey, there are some positives. Consumers seem to feel they are getting more information to help them make health care decisions, something that may pay off in the long run. By necessity, they are becoming more likely to put some real thought into shopping for a health care plan that best fits their needs. And, the vast majority report contributing to an HSA, and that their employers are also contributing on their behalf.

“The results are definitely mixed for HDHPs,” Masterson says. “People feel there is more information out there to help them become better health care consumers, but they still don’t feel it’s helping. They are shopping around more for their health care, which should make health plans and employers happy, but they should also be worried that so many appear to be putting off care because they don’t want to pay the high deductible.”