High-deductibles drive costs and behavior, regardless of plan type, survey finds

Consumer-driven health plans — high-deductible health plans often paired with health savings accounts or health reimbursement accounts — are not achieving long-term savings greater than what would be reached by raising the deductible on traditional PPOs, according to the 2012 UBA Health Plan Survey, billed as the largest independent benchmarking survey in the industry. Although nearly 60% of the 11,711 employers surveyed say they plan to offer a CDHP in the next five years, despite some regional variances, PPOs remain the dominant plan type with 61.7% of U.S. employee enrollment and currently return a lower average cost per employee than CDHPs at nearly every deductible range.

The greatest savings of a PPO over a CDHP was achieved with a deductible of $2,000-$2,999, where PPO cost per employee was $7,811 and CDHP was $8,859, a savings of $1,000 per employee. In a small business with 50 employees, that is a savings of $50,000 annually, or more than $4,000 per month.

The key to savings, UBA’s survey finds, is placing an up-front hurdle, a deductible greater than $1,000, on any plan type, in order to positively impact consumer behavior, lower consumption and decrease cost. 

Despite the high deductibles in CDHPs, employers have mistakenly removed the employee risk by funding either an HRA or HSA, which does not force lower consumption. Studies show that 80% of all employees will not have more than $700 in annual health care costs, so by funding the first $1,000 of an insurance plan, most employees will never see the cost of their health care, and, therefore, not make better decisions.

“Employers are turning to CDHPs as a cost-cutting solution against the relentless upward spiral of health care costs,” says Thom Mangan, UBA CEO. “However, our research shows that small-to midsize businesses in particular, who may be considering these plans may first want to consider increasing the deductible on the plans they already have to achieve the same initial savings. Or, prior to implementing a CDHP plan, employers should build a culture of health and wellness in their workplace that drives employee behavior towards quality, low cost medical care and prescription drugs.”