As the unemployment rate continues at historically low levels, employers are starting to curtail the benefit reductions and the significant increases to cost sharing that we have seen in the past 10 years. The shift to High Deductible Health Plans (HDHP) paired with Health Savings Accounts (HSAs) is also slowing.
In working with clients, it is clear that employees are much happier with traditional benefit plans with predictable copayments – but I personally haven’t seen employers who have adopted HDHP/HSA strategy walk back to traditional plan offerings. High deductible plans make sense to me, so I don’t think that’s the right answer. The rampant inflation in healthcare has largely been driven by a lack of connection between the users of healthcare (patient) and the payer (health plan).
When one looks at HSAs, it’s clear that a lot of HDHP plan participants are rolling the dice and just hoping costs won’t materialize. Employee Benefit News recently reported on a Willis Towers Watson study which showed that 65% of participants use funds on immediate expenses, resulting in 45% of accounts with balances less than $5,000. And – incredible to me – 24% of participants in HDHPs said they couldn’t afford to make any HSA contributions.
The Annals of Internal Medicine recently published a study which showed that diabetics who were involuntarily switched from a traditional to a high deductible plan, were more likely to delay necessary care.
So if HSAs are a good idea, how do we make this a better experience without patients avoiding necessary care? The clear answer is EDUCATION and IMPROVED ENGAGEMENT. Central to this is the need to improve preventive care compliance. We need to show that the focus of healthcare is to prevent future medical issues. I advocate tying premium contributions to compliance with preventive guidelines. Why not? If employees don’t want to take care of themselves, they should pay more.
But employers also need to take the time to better explain HSAs to their employees. I also like matching HSA contributions. This will encourage better understanding and greater participation. These matching contributions can be means-adjusted by giving a higher match to lower-paid workers. This will address affordability but at the same time make sure every participant has aligned incentives.
Benefits cost employers 30% of monies allocated for salary and healthcare is the largest portion of these costs. A unified effort to align cost and wellness incentives is the path forward for effective cost management.