High deductible health plans are the new normal, says a report by NPR. Just over half of employees this year have a health insurance policy with a deductible of at least $1,000, according to a survey of employers from the Kaiser Family Foundation (Menlo Park CA).High deductible health plans are the new normal for employees Click To Tweet
It’s the continuation of a multiyear trend of companies passing more of the costs of employee health care back onto workers. Overall, health insurance premiums for a family covered by an employer health plan rose an average 3% this year to $18,142. Of that, employees pay an average of $5,277.
Historically, that’s not much of an increase. But it still outpaces the rate of inflation, so it takes a larger bite out of worker income and employer profits.
“There’s been a gradual sea change in what insurance is for most Americans, from more comprehensive coverage to skimpier coverage,” says Drew Altman, president of the Kaiser Family Foundation, according to NPR.
Covenant Care, a Pensacola, FL-based hospice and home-health care nonprofit, is one organization that has made the switch. About 450 of its 600 workers now have high-deductible health plans.
“At Covenant, we pay 80% of the costs of the plan and even at that point, there are some business decisions that need to be made regarding what we can afford to do,” says Pat Holtman, senior manager of human resources.
She says the company offsets some of that deductible by putting cash into accounts that workers can use for healthcare costs. And if employees participate in wellness programs, they get points to pay even more.
“If they go online and do a wellness assessment, they can accrue points that way,” Holtman says. “If they’re non-tobacco users there are a certain number of points that are accrued there.”
Premiums have risen 20% since 2011, the Kaiser survey released last Wednesday shows. They rose 31% in the previous five years and 63% in the five years before that. With the continuous increases, companies like Covenant are getting creative, Altman says. They use those wellness programs, he says. They try to help workers manage their chronic illnesses. “
But if you want to bring down the premium increase quickly in any given year, the immediate step you can take is to increase deductibles and other forms of cost sharing,” Altman says.
Employers can shave 20% from insurance premiums simply by raising deductibles from $200 to $1,000, says Dave Anderson, CEO of HealthNow Inc. (Buffalo), which runs BlueCross BlueShield of Western New York. Anderson says companies do think hard before they bump up deductibles because employees don’t like it.
“I would say no one goes there lightly,” he says. “Many employers have felt like they just had to go in that direction. They had to fix premium costs in some way.”
BlueCross BlueShield of Western New York offers its own employees a high deductible plan. And like Covenant in Florida, it encourages its workers to participate in wellness programs to knock down their share of the cost. The company will pay $500 toward a $1,000 deductible if employees undergo a health risk assessment each year. Anderson says the risk assessment will help employees embrace more healthy behavior and stick with exercise and nutrition plans.
“We believe we’ll have that kind of overall reduction in our healthcare costs,” he says.
But Anderson says high deductibles raise troubling issues as well, according to NPR.
“And that is whether it is inherently disadvantageous to lower-income employees. And we struggle with that,” he says. “A $1,000 deductible if you’re making $100,000 is no big deal. If you’re making $30,000 a year, a $1,000 deductible is a big deal.”
In the future, Anderson says, he expects employers and insurance companies will have to address that inherent unfairness by offering health plans with deductibles indexed to workers’ income.
Steve’s Take: When I was breaking into the healthcare arena many years ago working as a federal lawyer in various capacities monitoring hospitals, I learned certain tenets of the cost issues America was still struggling with in the early days of the post-Medicare era.
One of the fundamental tenets underlying the assessment of a healthcare system was that the emergency room is NOT the door you want your citizenry using to gain access to the healthcare it needs. But that’s what was, and still is, albeit to a lesser extent, the problem today. The problem stems from a lack of routine “healthy” checkups to spot still undetected problems that can be treated relatively simply before they require an ambulance to the ER.
I’m going to deviate from my general rule of keeping the “Steve’s Take” closely tied to the news event it follows and move horizontally, to consider a study I remember reading late last year that I believe is worth reviewing in gauging where our system needs to go next as the ACA continues to evolve. In other words, the following is meant to address some of the factors in the US healthcare system that need to be evaluated more closely in order to improve our delivery system, with me digressing again.
According to its overview of the U.S. healthcare system from a global perspective, the Commonwealth Fund (Washington DC) says its cross-national comparisons allow it to track the performance of the U.S. healthcare system, highlight areas of strength and weakness, and identify factors that may impede or accelerate improvement.
This analysis is the latest in a series of Commonwealth Fund cross-national comparisons that use health data from the Organization for Economic Cooperation and Development (OECD), as well as from other sources, to assess U.S. healthcare system spending, supply, utilization, and prices relative to other countries, as well as a limited set of health outcomes.
According to the Fund, healthcare spending in the U.S. far exceeds that of other high-income countries, though spending growth has slowed in the U.S. and in most other countries in recent years. At 17.1% of GDP, the U.S. devotes at least 50% more of its economy to health care than do other countries.
Even public spending on health care, on a per capita basis, is higher in the U.S. than in most other countries with universal public coverage. Even though the U.S. is the only country without a publicly financed universal health system, it still spends more public dollars on health care than all but two of the other countries.
Americans have relatively few hospital admissions and physician visits, but are greater users of expensive technologies like magnetic resonance imaging (MRI) machines. Available cross-national pricing data suggest that prices for health care are notably higher in the U.S., potentially explaining a large part of the higher health spending. In contrast, the U.S. devotes a relatively small share of its economy to social services, such as housing assistance, employment programs, disability benefits, and food security.
High healthcare spending has far-reaching consequences in the U.S. economy, contributing to wage stagnation, personal bankruptcy, and budget deficits, and creating a competitive disadvantage relative to other nations. One potential consequence of high health spending is that it may crowd out other forms of social spending that support health. In the U.S., healthcare spending substantially outweighs spending on social services. This imbalance may contribute to the country’s poor health outcomes.
A growing body of evidence suggests that social services play an important role in shaping health trajectories and mitigating health disparities. Additional cross-national research is needed to better understand the relationship between social services and health, as well as other health determinants like lifestyle and environment.
Finally, despite its heavy investment in health care, the U.S. sees poorer results on several key health outcome measures such as life expectancy and the prevalence of chronic conditions, says the Fund. Mortality rates from cancer are low and have fallen more quickly in the U.S. than in other countries, but the reverse is true for mortality from ischemic heart disease.
My admittedly unprofound take today is that U.S. workers are paying an increasing amount (more than ever before) toward their health care. Yet the bigger picture perspective says that despite all of the money invested by the entire nation (workers, employers, retirees, governments at all levels with our taxes, etc.), we still experience poorer results, such as, for instance, life expectancy, according to the Commonwealth Fund.Steve's Take: Spending a lot on healthcare should lead to value like longer life expectancy? Click To Tweet
Forgive me if I’m missing something here but logically, shouldn’t we mostly get what we pay for in healthcare services, and isn’t life expectancy one of the key metrics of value received? If we’re not getting fair value, comparable to other nations, shouldn’t we address that first before scurrying to analyze practically everything else?
Obamacare is working. Healthcare coverage is up to 90%, according to the Census Bureau, and likely will improve even more. Does there need to be some fine tuning; of course. But scuttle it? I can hear tennis great John McEnroe’s famous query to more than one referee: “You cannot be serious.”