APRIL 5TH, 2022
In the world of American healthcare, high-deductible health plans (HDHPs) are having a moment. Nationwide, nearly 53% of Americans with employer-sponsored health insurance opted for HDHP coverage in 2020 — up significantly from 39% in 2015. Although these figures vary by state, there has been a definite surge in enrollment.
As with most things in life, suggesting there’s only one driving factor behind this spike would be reductive. Still, there’s no doubt that many healthcare consumers are drawn to HDHPs because they boast lower monthly insurance premiums. Enrollees pay less upfront for high-deductible plans than they might if they had enrolled in a more traditional preferred provider organization (PPO) plan — and that’s the main difference between PPOs and HDHPs. Traditional PPOs are characterized by higher premiums and lower deductibles, while HDHPs offer lower premiums and higher deductibles.
Employers also like HDHPs because lower premiums mean they can reduce their healthcare spending. As insurance premiums continue to rise at alarming rates, the idea of reducing these costs is more than enough to persuade smaller businesses on shoestring budgets. The only problem? HDHPs have not always delivered on their promises.
When HDHPs first came on the scene, they were marketed as a way to help reduce growing healthcare costs for both employees and employers. After all, the average HDHP premium is about 36% cheaper than the premium for plans with lower deductibles.
While that’s all well and good, issues can arise when policyholders need medical care and are suddenly on the hook for most (if not all) of the bill. Per IRS guidelines, HDHP enrollees’ deductibles must be at least $1,400 for individuals and $2,800 for families. And when enrollees opt for out-of-network providers or care, those limits don’t apply.
Many folks argue that HDHPs incentivize employees to shop around for higher-value care and get the most bang for their buck. While this is sometimes the case, HDHPs can also cause policyholders to delay or skip care altogether because they don’t want to deal with a hefty bill.
What causes this? Although people generally like to shop around to get the best price when it comes to major purchases like cars or electronics, healthcare consumers aren’t always able to tell the difference between high- and low-value care. In some cases, they might not even be aware that they shop around for medical care.
In most markets, giving consumers more financial responsibility spurs them to seek more cost-effective solutions. So why isn’t this happening among healthcare consumers? We can point to a few reasons:
1. Emergencies require quick decisions
Nobody plans for medical emergencies — they just happen. And during those hectic moments, we don’t carefully weigh our options to find the most cost-effective care option. We just focus on getting better.
HR leaders can help by talking to team members about planning for medical crises in the same way they speak with them about retirement planning. They must be prepared for people to stick their heads in the sand, as it’s uncomfortable to think about getting sick or needing care. Employees who feel empowered to take a more active role in managing their healthcare expenses — including planning for the unexpected — benefit from that knowledge.
2. Power dynamics
When you feel sick, you visit a doctor because you need help with something you can’t solve yourself. You default to their professional judgment because you trust them, and a 2019 survey found that more than 90% of people would do the same.
We’re not saying healthcare consumers should question all professional advice from their medical providers — far from it. But they should be aware that this power dynamic can cause people to follow recommendations blindly without understanding the financial implications. Healthcare consumers should engage in dynamic discussions to reach more informed conclusions about their care.
3. Healthcare can be confusing
Americans don’t want to be confused by healthcare, but that’s the unfortunate reality. The problem is that few people truly know what it looks like to be a better consumer of care — and nobody really talks about it.HR leaders can help by educating their plan participants on how to minimize the cost of care, how to shop around effectively, and how to have collaborative patient-provider discussions. Most people also benefit from friendly reminders that it’s perfectly fine to get a second opinion from a doctor before pulling the trigger on an expensive health procedure.
4. A general lack of transparency
One of the main things preventing healthcare consumers from shopping around for medical care is a significant lack of transparency in the industry. The vast majority of folks wouldn’t even know where to start learning about the basics of healthcare — not to mention the inner workings of health insurance.
This is where company leadership can serve a crucial role. Tools have been cropping up over the past few years to bring a better sense of transparency to the process of buying medical care, and folks who are more familiar with those resources are better positioned to find the best care at the best price.
High deductibles are a reality of the current insurance landscape. And as time goes on and medical costs continue to rise, more folks are likely to find themselves on high-deductible health plans. While there are definite benefits to HDHPs — access to a health savings account and lower premiums, to name a couple — they are still a work in progress. When team members feel empowered to capitalize on their coverage and shop around for more cost-effective care, it creates a win-win scenario for everyone involved
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