High-deductible health plans pay off for employers

The strategy is credited with significantly slowing spending growth, but better coverage of primary care and preventive services is expected to soften the patient impact.

By — Posted Dec. 3, 2012

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The growth in employers’ health coverage costs has slowed, mainly because they are shifting more of the burden to their workers.

Employers spent 4.1% more money on health benefits for employees in 2012 than in 2011 — the smallest increase in 15 years — but constrained costs primarily by moving employees to high-deductible health plans, according to data released Nov. 14 by Mercer, a global consulting firm.

“There’s quite a bit of cost-shifting, and it’s actually working for companies,” said Tracy Watts, national health care reform leader for Mercer.

Researchers analyzed information on 2,809 companies with at least 10 employees. They found that companies spent an average of $10,558 per staffer on health care in 2012, up from $10,146 in 2011. Enrollment in consumer-directed high-deductible health plans also increased from 13% of covered employees in 2011 to 16% in 2012. The number of surveyed employers offering the plans went up from 17% to 22%, according to Mercer.

Growth was even more significant among large companies. The proportion of companies with more than 20,000 employees offering HDHPs went from 41% in 2007 to 59% in 2012. The insurance plans save companies money because they are less expensive than PPO products. An employee with a high-deductible plan costs a company an average of $7,833, while those with a PPO cost an average of $10,007.

“If we’re not already at the tipping point for [consumer-directed health plans] — and we may well be — at this rate of growth, it’s coming soon,” said Sharon Cunninghis, Mercer’s U.S. business leader for health and benefits.

The deductible that an employee has to pay can be in the thousands of dollars. Studies have found that can cause patients to hold back on care, which further slows the growth of employer expenses. For example, an analysis published in the May Health Affairs indicated that high-deductible plans reduced money expended on outpatient care by 18.2% but lowered cervical cancer screening by 4.7%. Colorectal cancer testing was reduced by 2.8%.

To make it more likely that people will get care when they need it and defer when they don’t, the Affordable Care Act mandates that preventive services are not subject to cost-sharing for most insurance plans. Although deductibles are going up, more employers are designing plans that allow access to primary care services, particularly preventive care, without having to meet a deductible. The percentage of workers in an HMO with no deductible for primary care went up from 77% in 2008 to 84% in 2011, and up to 87% in 2012, according to a Nov. 12 brief from the Kaiser Family Foundation, which gathered data from 2,121 companies with three staffers or more. The percentage in PPOs without a deductible for primary care increased from 76% in 2008 to 78% in 2012.

Experts said changes in insurance plans mean that physicians may need to educate patients about coverage for preventive services to ensure that they don’t avoid them for fear of paying a deductible. Plan designs have become more complicated, so even fewer patients will understand what their plans cover.

“More employees are in consumer-directed health plans with higher deductibles, but there’s more confusion about how they actually work,” said Helen Darling, president and CEO of the National Business Group on Health. “And it’s confusing to everybody.”

Mercer projects employer health care costs to grow between 5% and 7.4% in 2013. Health industry analysts said the increase is driven in part by pent-up demand from patients who had put off care during a down economy, but that the drive toward high-deductible plans and preventive care is keeping spending in relative check.

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