A partner in Mercer’s Employee Health & Benefits consulting business in Atlanta, Jay Savan advises large organizations on the design, financing, administration, and communication of their employee health and benefit plans.
As recently announced, Mercer’s National Survey of Employer-Sponsored Health Plans found that enrollment in consumer-directed health plans (CDHP) grew at a record pace in 2014. This is no shock to industry observers who’ve watched the space and appreciate the dynamics driving this activity and the need to engage participants in managing their health and health costs. On the other hand, the growing momentum behind CDHPs has not silenced their critics, who’ve long pointed out the real and perceived deficiencies of these plans — but unfortunately largely dismiss the opportunity to improve on a design construct with which they fundamentally disagree.
For example, the American Academy of Pediatrics recently issued a policy paper discouraging coverage of children in high-deductible health plans (HDHP) and even suggesting the federal government should prohibit parents from enrolling their children in an HDHP. Aside from several factual inaccuracies and misstatements, the paper repeatedly asserts children receive inferior care under HDHPs, yet references no empirical evidence to support the claim. Below are a few assertions taken from the policy paper with my response to each:
- The 2010 Patient Protection and Affordable Care Act continues to provide for HDHPs in its lower-level plans on the health insurance marketplace and provides for them in employer-offered plans.
An HDHP is not necessarily a “lower level” plan; in fact, like a traditional PPO, their design is actually quite flexible. An HSA-compatible HDHP can have an actuarial value as high as 86.1% in 2015 ($1,300/$2,600 deductible and 100% post-deductible plan coverage) according to the HHS Minimum Value Calculator. That would qualify as a Gold-level plan in the public exchange.
- Because the ill pay more than the healthy under HDHPs, families with children with special health care needs bear an increased cost burden in this model.
Actually, the ill pay more than the healthy under just about any health insurance model, given their greater exposure to cost-sharing features like deductibles, copays and coinsurance. However, when premiums are factored in, which they arguably should be, the overall cost an individual or family may experience in a plan with higher cost-sharing can easily be less than a more traditional, low-deductible/low-copay model.
- HDHPs discourage use of non-preventive primary care and thus are at odds with most recommendations for improving the organization of health care, which focus on strengthening primary care. HDHPs reduce the resources that could and should be invested in primary care.
In fact, employer contributions to health savings accounts (or HRA accounts) essentially represent 100% first-dollar coverage for non-preventive services in these respective designs. HDHPs do not generally reduce the resources for primary care; they redirect the resources from premiums to employee accounts, so empowered participants are economically encouraged to maintain their health, seek appropriate care when needed, ask questions, and inform themselves about cost and quality, and generally behave as they do in every other aspect of their economic lives, where third-party reimbursement is non-existent and they enjoy or bear the consequences of their decisions.
The simple reality is that many initiatives and plan structures intended to lower cost and improve quality have produced mixed results over the past several decades. While account-based models are not perfect, when thoughtfully designed, effectively communicated, and supported by tools and services that help participants understand their health options and plan for their needs, they have demonstrated an ability to engage participants in managing their health and the financial resources devoted to it in a way traditional insurance arrangements have not.
To view these plans as monolithic and dismiss their structure outright is to ignore their demonstrated performance and potential. Given their growing presence in the health insurance landscape, it would be more useful to focus on making these plans workable for all segments of our society, engaging all as thoughtful stewards of their health and empowered managers of their risks and financial assets.