Reexamining HDHPs

A recent assessment by the National Business group on health suggests that two thirds of large employers believe HDHPs are one of the most effective ways to reduce benefits costs. Another by the National Bureau of Economic Research corroborates this assertion, specifically identifying employer spending decreases of 10-15% in the areas of preventive, emergency, outpatient, and pharmaceutical care. This all makes sense as HDHPs leverage higher deductibles – transferring more expenses from employer to employee. Another recent study shows that by 2020, HDHP implementation will have tripled in just 7 years, becoming available through 40% of employers.

But this isn’t the whole story. Higher deductibles logically and experientially discourage plan usage and overall healthcare engagement, dramatically increasing the likelihood of increasingly severe health concerns down the road. A failure to capitalize on inexpensive preventive care frequently causes health issues to exacerbate, inflating long-term costs for employer and employee alike. A survey by Families USA determined approximately 30% of those covered by employer-provided benefits with deductibles upward of $1,500 per individual avoided medical care due to unaffordable out-of-pocket expenses. Other studies, including one by the Commonwealth Fund, reached the same conclusion.

Beyond an aversion to obtaining care, HDHP enrollees are often less engaged in their healthcare plans, leading to a failure to capitalize on the limited but valuable services to which they are entitled at little or no personal expense. Reduced price-consciousness and a lack of plan knowledge both exacerbate the other shortcomings of the High Deductible Health Plan. To learn more about the challenges associated with HDHPs and the variety of alternatives available, contact Chelten Consulting.