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.

How Benefit Structures Affect Utilization and Spending

Health insurance benefit structures, particularly cost-sharing, can encourage or discourage patients from seeking care, according to a recent study by the National Institute for Health Care Reform (NIHCR). NIHCR looked at contracts between the International Union, UAW, and Fiat Chrysler, Ford, and General Motors in 2011, which significantly changed autoworker health benefits. There was expanded coverage of outpatient physician visits and additional cost sharing for emergency department visits unless the patient was admitted to the hospital. The changes contributed to higher spending in these areas:

  • Advanced imaging
  • Diagnostic tests
  • Minor procedures
  • Prescription drugs

Lower patient cost sharing for physician visits resulted in substantially higher spending as a result of more physician visits and increased diagnostic services and procedures. However, higher cost sharing did not significantly decrease emergency department visits or expenditures.

Medical Homes Improve Care and Reduce Costs

Primary care patient centered medical homes are delivering results, according to a report by the Patient-Centered Primary Care Collaborative. This team-based health care delivery model is led by a primary-care physician. Researchers looked at peer-reviewed studies, state government program evaluations, and industry reports. Sixty percent of the studies report cost reductions, and 92% report improvements in utilization. All seven state government reports reveal reduced costs, and six show improved utilization. Four of seven industry studies show cost reductions, and six show improvements in utilization.

Christopher Koller, president of the Milbank Memorial Fund said, “In order for the patient centered medical home to be sustainable, we need greater investment in primary care and less reliance on the fee-for-service payment system.” Justine Handelman, vice president, legislative and regulatory policy at Blue Cross Blue Shield Association said, “Spending more than one in five medical claims dollars in value-based care programs located in virtually every state, the Blues are creating innovative models that align incentives, support care coordination, and put patients first.”

Study examines post-ACA health care utilization

ACAAmericans with individual health insurance plans used more health care services in the third quarter of last year than those with group plans, according to an analysis of National Association of Insurance Commissioners data by Katherine Hempstead, an analyst at the Robert Wood Johnson Foundation. Higher utilization might have been due to pent-up demand among the previously uninsured or because the Affordable Care Act has opened access to coverage, Hempstead says. Plan design changes and care management strategies in the group market might be reducing utilization, she says. National Underwriter Life & Health (1/21)

Spending Is Up While Utilization is Down for the Privately Insured

Privately insured Americans used fewer medical services in 2013, but spent more on these services, according a report by the Health Care Cost Institute. There was a 3.9% increase in spending for enrollees of employer health plans, continuing the moderate growth trend that began in 2010. “Price growth for medical services and brand name drugs remained strong in 2013. Health spending grew moderately, but that was only because consumers used fewer services,” said HCCI Executive Director David Newman.

Spending averaged $4,864 per enrollee in 2013, up $183 from the year before. Out-of-pocket costs remained stable including co-payments and deductibles. In 2013, there was a decline in the use of brand prescription drugs, inpatient admissions, and outpatient services. Yet average prices increased for all three categories, and at higher rates than in 2012. Acute inpatient hospital admissions fell 2.3% while prices rose 6.7%, causing inpatient spending to rise 3.8%. The average price per-admission grew by $1,101, in 2013 to $18,030. Outpatient visits declined 0.8% while prices rose 6.4%. Total outpatient visit spending grew 5.5%.

The use of brand name prescriptions (filled days per 1,000 insureds) dropped 15.5% while the average price per filled day grew more than 21.2%. Total spending on brand name drugs grew 2.4%. The use of professional services grew in 2013, including office visits and lab tests. The use of generic prescriptions grew 4.5%. Preventive visits to primary care physicians and contraceptive hormone use both rose 5%. Antidepressants dominated generic prescription drug use, accounting for over 10% of all generic drugs used in 2013.

In 2013, consumers spent an average of $800 out-of-pocket — a 4% increase over 2012. Women 19 to 25 spent an average of $662 out-of-pocket — the same as the year before. This was almost completely due to a drop in out-of-pocket spending on generic and brand hormone contraceptives. Hormone contraceptives are generally covered without cost sharing, a provision of the Affordable Care Act that went into effect January 1, 2013. “This is the first time we have seen flat out-of-pocket spending growth by any group of the privately insured,” said HCCI Senior Researcher Amanda Frost.

In 2013, out-of-pocket spending for medical services went up (especially for acute inpatient admissions), but went down for brand and generic prescriptions. In 2013, women 19 to 54 used more outpatient and professional services compared to men. But after 54, the gender gap narrowed, as mens’ use of radiology, laboratory, and pathology services increased.

Adults 19 to 25 visited the ER more often than did adults 55 to 64. However, older adults had a higher average price for their visits, due partially to use of more intensive care. Spending on ER visits averaged $314 per capita for older adults, compared to $310 for young adults.

Anti-depressants account for 10% of generic drug use. In fact, anti-depressants were the most commonly filled class of CNS generic prescriptions and the most used generic drug class for young men, intermediate men, middle age women, and pre-Medicare women. For more information, visit

Last Updated 06/29/2022

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