Employees Are Increasingly On The Hook For Their Medical Costs

A Hospital Bill's High Fees Look Even Bigger When Unbundled : Shots - Health  News : NPRSource: Axios, by Caitlin Owens

The growth of high-deductible health plans led to people with employer-sponsored coverage paying for a larger share, on average, of their health care costs between 2013 and 2019, according to a new analysis by the Employee Benefit Research Institute.

Why it matters: A large portion are paying significantly more in terms of raw dollar amounts as well, with the biggest increases among the highest spenders — and that’s on top of premium increases. As costs rise, even many insured patients struggle to afford their care.

Yes, but: Out-of-pocket spending decreased during 2020, likely a byproduct of the way the pandemic disrupted the health care system and pandemic-era policies that may have lightened patients’ cost burden.

By the numbers: The share of their medical expenses paid by people enrolled in employer-sponsored coverage increased from 17.4 percent in 2013 to 19 percent in 2019, the analysis found. It declined to 16.2 percent in 2020.

  • * Enrollees spent a median $249 out-of-pocket in 2013, $287 in 2019 and $205 in 2020. This median includes people without any medical expenses. The average out-of-pocket costs rose from $737 in 2013 to $906 in 2019, falling to $811 in 2020.
  • * Enrollees in the 75th percentile saw their spending obligation increase from $826 in 2013 to $1,030 in 2019, and those in the 90th percentile saw an even larger increase, from $2,792 to $3,295.
  • * Out-of-pocket spending obligations varied significantly among patients with different underlying conditions.

Between the lines: Spending trends also varied based on the type of service.

  • * Before the pandemic, both the share of out-of-pocket spending and the absolute amount paid by patients increased most for outpatient services.
  • * The average amount spent out-of-pocket on prescription drugs actually decreased between 2013 and 2019, before seeing a slight increase in 2020.

Hospitals Are Seeing Fewer Acute Patients

Rural hospitals that have higher volumes of less-acute patients, saw a 3.7% drop in year-over-year admissions (and 0.7% growth in admissions adjusted for outpatient activity), according to a report by Fitch. Payors are exerting pressure to reduce short-stay admissions and re-admissions; high-deductible health plans encourage patients to seek care in less expensive settings outside of the acute-care hospital; and technological advances allow more complex cases to be handled in outpatient settings.

Manufacturing Leads Adoption of High-Deductible Health Plans


A survey by Benefitfocus reveals distinct differences in benefit offerings among manufacturing, education, and health care industries. Manufacturing leads the adoption of high-deductible health plans (HDHPs), education favors traditional plans (PPOs, HMOs, etc.) and the health care industry offers the most voluntary benefits. Manufacturing is the only industry of the three, in which more companies offer a combination of HDHPs with traditional plans than traditional plans only (48% to 46%). Manufacturing employees selected an HDHP over a traditional plan 46% of the time. The findings suggest that manufacturing employers have an opportunity to encourage employees to participate in health savings accounts (HSAs) or flexible spending accounts (FSAs) to cover higher out-of-pocket costs associated with HDHPs. Only 23% of education employers offer at least one HDHP. Traditional health plans dominate the mix of benefits. HMOs made up 44% of employee enrollments, which suggests an opportunity to offer a wider range of lower cost benefit options for a multi-generational workforce.

Employees in the health care industry face high deductibles regardless of plan selection, but are better equipped to cover unexpected medical costs with voluntary benefits (including critical illness, accident, and hospital-indemnity insurance). Health care employers offered gap products at the highest rate of the three industries at 12 percentage points above the average. Nearly half of health care workers selected a voluntary plan when given the choice.

When Midsize Employers Offer HDHPs, 34% of Employees Elect Them

Thirty-four percent of employees who work for midsize employers would choose a high deductible health plan (HDHP) if given the choice, according to a report by Benefitfocus. Millennials over 26 are the most likely to opt in at 40%. Thirteen percent of employers offer at least one HDHP. Regardless of  whether the plan is a PPO or HDHP, employees face higher out-of-pocket costs. With rising copays and coinsurance, the average family could spend nearly 40% more on health care than on food in 2016. To close the gap, many employers are funding health savings accounts (HSAs) and flexible spending accounts (FSAs). Yet adoption is low at large and midsize companies. On average, eligible employees contribute less than half the maximum amount allowed. Shawn Jenkins, Benefitfocus CEO, said that employers will drive more choice and innovation in  benefits and in the plan selection process in order to attract and retain talent. He added that, as the market shifts toward consumer-driven health plans, employers must make make it a top priority to offer decision support, education, and financial wellness resources.

High-Deductible Health Plans Don’t Actually Increase Consumerism


High-deductible health plans (HDHPs) are associated with lower health care spending, but not because consumers are shopping around for healthcare, according to a study published in the Journal of the American Medical Assn. (JAMA). Health insurance claims data indicates that these savings are due primarily to decreased use of care, and not because HDHP enrollees are switching to lower-cost providers. Enrollees in HDHPs are no more likely than those in traditional plans to consider switching their health care provider or comparing out-of-pocket cost among health care providers.

Researchers surveyed a nationally representative sample of insured adults from 18 to 64 who used medical care in the past year. They compared enrollees in HDHPs  with those in traditional plans on how much they shopped for care. The study found the following:

  • High-deductible health plan enrollment is higher among whites, those employed, those with more education, and those with higher incomes.
  • 60% of HDHP enrollees say there are large differences in prices and quality among health care providers.
  • 17% say that higher price physicians provide better care.
  • 71% say that out-of-pocket costs are important when choosing a doctor. These perceptions are not significantly different from those in traditional plans. HDHP enrollees are less likely to say that higher price facilities provide better care. They are more likely to say that out-of-pocket costs are important in choice of radiology facility.
  • 56% of HDHP enrollees say they would use additional sources of health care price information if available.

To encourage price shopping, consumers need more price information. Also, the market needs innovative approaches to get enrollees to take advantage of pricing information, according to researchers.

Employers Take a Closer Look at Employee Benefits

The landscape for employee benefits is ripe with opportunity, according to a white paper by Wells Fargo. Healthcare reform has prompted benefit managers — and increasingly C-suite executives — to look closer at employee benefits. Most employers have not yet made changes, such as moving from fully insured to self-funded or using private exchanges. But those two strategic items took the top spots in the “under consideration” category. While offering a high-deductible plan ranked as only the fifth most common change, it held the top spot for options under consideration.

Compared to benefit managers, C-suite executives are more strongly anticipating the increase of changes that shift the cost burden. Both C-suite executives and benefit managers cite the top four changes expected in the next five years as [mportance of wellness offerings, coverage of family members, employee attraction due to benefit offerings, and employee retention due to benefit offerings. From spousal coverage to wellness programs, employers are reviewing and updating a wide array of benefits to attract and retain the best talent, improve employee productivity, and boost morale.

Ninety-two percent of C-suite executives and 80% of benefit managers say their company has been effective in improving morale through benefits. Most decision-making falls within the company’s executive committee. However, nearly 60% of benefit managers say that staff is involved in managing strategies and benefits.

C-suite and benefit managers agree that employee benefits have the biggest effect on improving employee loyalty and engagement, and lowering medical costs for the employer and employees. This is followed by reduced absenteeism, reduced cost of temporary or fill-in workers, and reduced presenteeism. Four in five employers say it’s important to measure the effect of these benefits on improving employee health. However, their confidence in measuring the effectiveness of these benefits is lower.

C-suite executives and benefit managers agree that the top goals for employee benefits over the short-term (12-18 months) are maintaining employee productivity and managing costs. However, benefit managers are more focused on maintaining the current level of benefits than are the C suite executives, which is most likely because they the ones fielding employee questions and complaints. With the economy improving and the quantity of job seekers expected to increase, benefit managers say that maintaining benefits will help them attract the right talent and retain high performers.

For the long-term (next five years), maintaining employee productivity and managing costs remain among the top three goals. However, both C-suite executives and benefit managers say that managing costs is number one. This comes as no surprise with the ACA’s excise tax looming in 2018.

Seven in 10 companies are increasing the percentage that employees contribute to premiums for spouses or have already done so. Six in 10 have changed or are changing the options for type of plan and increased the co-insurance feature. Less than six in 10 benefit managers said employees had reacted positively to benefit changes, compared to nearly seven in 10 C-suite executives. Employers can increase employee acceptance by partnering with benefit providers to communicate changes to employees.

Last Updated 08/10/2022

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