Dear Employer: High Deductible Health Plans are Making People Sick
We get it. Healthcare is expensive and costs are going up every year. Medication costs are skyrocketing. For some chronic conditions, a year of treatment with a specialty drug can exceed $100,000. American companies are shouldering the burden of a healthcare system where ½ of what we spend in healthcare is considered “wasteful”. Healthcare is now the 2nd highest business expense for most companies, second only to salaries. And because most employers pay their health claims at dollar 1, regardless of what their business does, by default all companies end up in the business of healthcare. And something’s gotta give.
Why do employers bear the burden of the inefficiency of the US healthcare system? In US healthcare we spend twice as much per capita with health outcomes that rank among the worst in the world. So the growing trend for employers to deal with crippling health care costs is to find others to share in this cost. Why not hold employees more accountable? After all, employees’ personal health choices and behavior make up37% of health costs. Employers tell their employees “let’s solve this together. We will support you.”
So very well-meaning companies offer “high deductible health plans” to employees. On the surface, it’s a win-win. The thought behind these plans is that if employees have to contribute more to their healthcare costs, they will take more responsibility for their health. In theory, employees will take better care of themselves so they can stay healthy. They will avoid unnecessary medical procedures, since they are responsible for paying for costs under their deductible. Employees will start to compare costs of medications and procedures to make sure they’re keeping their health expenses as low as possible. And so with average out-of-pocket costs for individual employees at $5,248, the rationale is that overall health costs for both the employer and the employee will go down since employees start to understand the value of their health, and they become smarter consumers of health care.
From an employer perspective, this sounds like a brilliant plan to control costs. But does this idea to transform Americans into savvy health consumers actually happen once a company starts expecting employees to pay a higher share of health costs?
As we track the results, there is evidence that raising employees’ out-of-pocket costs for healthcare does NOT increase consumerism, and it also has led to people not taking necessary medications and delaying care for chronic conditions, which leads to more serious health events (and costs) later on down the road.
Employers save money in the short term…but at what cost?
Researchers from UC Berkeley and Harvard studied the results of a large employer’s choice to offer a high deductible plan over 2 years. But instead of finding evidence to support the theory that high-deductible plans make people take more charge of their health spending, they found some surprising trends. Yes, employees spent 12% less on their healthcare, so in the short term these plans achieved their goal of lowering health costs. But these “savings” were from avoiding care of EVERY type. There was no evidence to show that employees were comparing costs or cutting unnecessary services once they had a high healthcare deductible. They went to the same doctors. And they cut low-value health services at the same rate as they were cutting important medical services, causing the employer to question whether members were making the right choices for their long term health.
Yes, But What if Preventative Services are Free?
The common response from employers with high deductible plans is to make sure necessary and preventative health services come at little to no cost to employees. But a recent study from California found that despite these efforts, 1 in 5 people still avoided preventative care citing cost as the reason. In fact, most high deductible health plan members surveyed did not know that their preventative screenings and important care was available with little or no out-of-pocket payments. Additional studies show that high deductible health plans have the most adverse impact on those with chronic conditions, people with mental health disorders, and low-income individuals and families. The danger of high deductible health plans is that their members with the highest health risks have shown that they avoid necessary care and medications. And this trend is one of many symptoms of the crippling cost of healthcare in America.
Employers: we know you did not ask for the job of footing $640 billion of our healthcare bill in the U.S. It’s ridiculous, we know. But we just want to make sure you know high deductible health plans are a band-aid—not a solution.
Signed, Hardworking Americans
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If you’re an employer who feels there’s got to be a better way to control health care costs, you’re on to something. And we can help. BetaXAnalytics partners with employers to use the power of their health data “for good” to improve the cost and quality of their health care. By combining PhD-level expertise with the latest technology, they help employers to become savvy health consumers, to save health dollars and to better target health interventions to keep employees well. For more insights on using data to drive healthcare, pharmacy and wellbeing decisions, follow BetaXAnalytics on Twitter @betaxanalytics, Facebook @bxanalytics and LinkedIn at BetaXAnalytics.