Income Impacts How Employees Use HDHPs

Income impacts how employees use HDHPs | BenefitsPRO

Source: BenefitsPRO, by Willa Hart

One of the biggest benefits a company can offer its employees is health insurance. But that health insurance isn’t necessarily used by all employees in the same way. A new study released earlier this month in the American Journal of Managed Care suggests that low-salary employees on high-deductible health plans tend to have lower utilization of primary care services than higher-salary employees, while also having a higher utilization of acute care services.

High-deductible health plans, or HDHPs, have become popular in recent years as a replacement for traditional health plans. HDHPs are thought by some to be beneficial as they offer lower premiums to employees. However, some have cautioned that HDHPs can discourage patients to seek out preventive care, and can lead to worse outcomes for patients as a result.

The new study, “Disparities in Health Care Use Among Low-Salary and High-Salary Employees,” analyzed administrative and medical claims data from employees at a large corporation to determine how low-salary versus high-salary employees utilized their HDHPs. It found that low-salary employees, defined as those making less than $75,000 a year, were significantly less likely to use outpatient services than higher-salary workers. However, low-salary employees were much more likely to require inpatient or ED services, resulting in a 40% increase in spending on ED care by employees making less than $50,000. Study authors speculate that the higher utilization of ED care might indicate that low-salary patients’ health conditions are not as well managed as their higher-salary counterparts’.

Other findings of the study include:

  • * High-salary employees are more likely to seek outpatient care. The highest salary earners the study tracked, who made more than $100,000 a year, were more likely to utilize primary care services than employees of the middle salary group making $75,000-$100,000 per year.
  • * Low-salary employees are less likely to fill prescriptions. Employees making less than $75,000 a year were less likely to utilize pharmacy services than employees with higher salaries.
  • * Low-salary employees see higher rates of preventable inpatient stays. Employees who made less than $50,000 per year were more likely to utilize inpatient services for a preventable issue.

The study authors note that avoiding primary care services can be concerning. “This pattern of health care utilization may lead to delayed diagnosis of health conditions and potentially miss the window and benefits of early diagnosis or prevention,” the authors write.

Past research has suggested that some patients, including low-salary patients, prefer health care plans with spending that is more evenly distributed over time, such as traditional health care plans with lower deductibles. When plans have higher deductibles, patients may have lower costs overall but will have less predictable month-to-month spending, a pattern that can be difficult for low-salary workers without substantial savings, the study says.

Prescription Drug Use Rises for the Newly Insured

A survey of more than 3,000 U.S. employers finds that 54% are paying at least 5% more for employee medical insurance this year. Nearly one in four has seen increases of at least 10%, according to a study by Arthur J. Gallagher & Co. Sixty-seven percent say that medical and pharmacy benefits are the cornerstone of their employee benefit package and an important tool to recruit and retain talent in a tightening labor market. Telemedicine, now used by 24% of employers, is predicted to reach 42% in 2018. Narrow network healthcare plans show a growth trend from 18% to a predicted 27% in 2018. A rise in adoption of consumer directed health plans is expected from 36% to 51% in 2018. Self-insuring is expected to grow from 28% to 38% in 2018. Fewer than 5% of employers have used a private exchange, but that figure is expected to triple by 2018. Employers that excel at healthcare cost management take a comprehensive, data-driven and multi-year approach to compensation and benefit planning. However, just 8% of employers do multi-year planning with multiple data inputs. Seventy-six percent plan their benefits year-to-year, which puts them in a reactive position and less able to manage costs. For more information, visit ajg.com/NBS2016.

How States Might Use Obamacare Waivers

State leaders face the quandary of losing federal funding if they act to control health care spending, according to an analysis from the National Institute for Health Care Reform (NIHCR). Section 1332 of the Affordable Care Act (ACA) allows states to request federal waivers of many key ACA provisions. The catch is that alternate state reforms must achieve the same or better health coverage and affordability for state residents and be budget-neutral for the federal government. The study by the RAND Corp., explores two approaches. The first approach is to enroll almost all state residents automatically into a universal coverage plan. The plan would be financed by a federal lump-sum payment to the state and a new state payroll tax. A key stumbling block would be the high tax rate required to fund a single-payer plan, particularly if it offers coverage that is more comprehensive than today’s norms.

The second approach involves a coordinated-waiver that would replace marketplace subsidies and the Medicaid and Children’s Health Insurance Program (CHIP) for lower-income children and non-disabled adults. Instead, there would be a voucher to purchase private insurance—an individual plan in the marketplaces or tax-preferred coverage from an employer. In some states, projected funding levels for Medicaid and the marketplaces could support a broad-based voucher program. In other states, a voucher-based approach would face challenges in meeting the ACA Section 1332 coverage and affordability standards. States pursuing a voucher approach could tap into additional federal funding if they agreed to implement the ACA Medicaid expansion as a base for the waiver. In general, states that develop a single-payer approach or a voucher approach would face an easier path if their waiver plans included substantial and effective cost-control components.

The two state-based waiver options outlined in the analysis are likely to appeal to polar opposites of the political spectrum. Nevertheless, they share key features. State-based plans would convert open-ended federal payments under the financing system into a lump-sum federal contribution. Such an approach would better position a state and its residents to reap the rewards of system-wide cost-containment efforts, according to the report.

Medicaid Patients Use, Not Abuse Emergency Rooms

Medicaid enrollees visit the emergency department appropriately like most patients, but have more complex health needs and less access to primary care, according to a report from the Medicaid and CHIP Payment and Access Commission (MACPAC).  Non-urgent visits accounted for just 10% of Medicaid visits to the ER, which is very close to that of the general population – about 8%. Most have serious and complex medical problems that can only be addressed in the emergency department. Given Medicaid’s historically low reimbursement rates, the shortage of primary care physicians accepting these patients isn’t surprising. The lack of access to primary care is even more acute for Medicaid patients with disabilities who are disproportionately represented on Medicaid rolls. Alex Rosenau, DO, FACEP, president of the American College of Emergency Physicians  said, “The lack of access to primary care certainly contributes to Medicaid patients’ use of the ER, but for Medicaid patients with serious mental illness, multiple illnesses and homelessness, even having a primary care physician is no bar against appropriate emergency department use. In general, the combination of poverty and illness present challenges with few genuinely simple solutions, despite misplaced beliefs that significant health care costs could be saved by keeping patients out of the ER. Efforts by various states to deny payment for Medicaid visits to emergency departments are dangerous and wrong.” For more information, visit www.acep.org.

Last Updated 05/25/2022

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