HDHPs decline as sole benefit plan option
Employers’ enthusiasm for offering high-deductible health plans as the only benefit option to their employees might be levelling off.
Just 28% of U.S. employers are considering offering HDHPs as their sole benefit option to their employees in the next three years. This is a reduction from a high of 44% in 2014, according to PwC’s Health Research Institute study entitled “Medical Cost Trend: Behind the Numbers 2018,” which was based on data from a sister survey called “2017 PwC Health and Well-being Touchstone Survey.”
“The key trend is high-deductible health plans haven’t been taking off as quickly as we thought,” says Barbara Gniewek, principal with PwC. “People didn’t put HDHPs in place as quickly as they said they were going to.”
2014 was the peak year that 44% of employers were considering “full replacement” in HDHPs, which is the practice of employers offering at least two or three HDHP options for employees. Small business may offer only one HDHP as the sole plan for their workers, according to PwC.
“This year it dropped all the way down to 28%, and that's really the backlash,” she says, referring to the fact that HDHPs have not been the silver bullet for employers that benefit providers and insurance companies had hoped.
“High-deductible plans also can have unintended consequences. While they can curb unnecessary care, they also can lead to consumers forgoing cost-effective, beneficial services such as preventive care and prescription drugs. Deferring such treatment can lead to decreased productivity and increased cost of chronic care management in the long term,” according to the study.
Gniewek believes that another reason for a slowdown in HDHP adoption might be due to a perceived pushback from employees’ healthcare providers who now receive pre-deductible payments from patients instead of insurance companies.
“A lot of providers talk about this because their accounts receivable departments say that employees are not paying for their deductibles,” she says, adding, “hospitals and physician offices [say it’s] harder to get the money because they don’t get the money from the insurance companies.”
Medical cost trend rises slightly
The PwC HRI medical cost trend study also found that that the projected percentage increase in the cost to treat patients from one year to the next, assuming that benefits remain the same, will increase to 6.5% after remaining steady at around 6% for the past three years. PwC HRI says changes in the price of medical products and services and changes in the usage of services, are the main driver for the tick upward.
HDHPs have done a good job of controlling healthcare utilization, so utilization has been going down for the past three years, says Gniewek. That said, prices have gone up.
“People are not getting as many MRIs or using the emergency room as much, or seeing the specialist as much but the cost per visit is going up,” she says.
The slowdown in the use of HDHPs was one of the key drivers that PWC HRI cited for the uptick in medical cost spend. Other factors include rising general inflation, fewer branded drugs coming off patent, public and political scrutiny of drug prices, and employer’s efforts to reduce wasteful spending in health plans.
“There has been a lot of negativity in the press because people aren’t getting the care that they need. When trends are down to a manageable level, when they are not high or double digit in terms of costs, employers are not likely to make changes,” she says. “They will make small tweaks, so they are not going to full replacement. They might change the contributions to encourage people to go to high-deductible health plans.”