When Is a Deductible Too High

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When Is a Deductible Too High
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Calendar20 November 2014

The Commonwealth Fund released findings from its Health Care Affordability Tracking Survey, which focused on those with private insurance between the ages of 16 and 64. The primary finding was that three out of five privately insured adults with low incomes, and half of those with moderate incomes, reported that their deductibles are difficult to afford. The survey also found that some individuals delayed or avoided care as a result.

While small firms are more likely to have very high deductibles than large employers, Mercer’s newly released National Survey of Employer-Sponsored Health Plans found that large employers raised the individual in-network PPO deductible by 15% in 2014, to nearly $800 on average. At the same time, enrollment in high-deductible consumer-directed health plans rose from 18% to 23% of all covered employees. As employers shift more financial accountability to employees, finding tools and resources to package with high-deductible health plans becomes an important consideration.

From the employer perspective, high-deductible plans are attractive because they are less expensive but still meet the minimum criteria for what must be offered under the ACA to avoid assessments. But, thinking about these plans from the employee perspective, there are two key concerns. First, if you’re providing a choice of plans, how do you make these plans attractive to employees? For them, the essential question is “what is a smart buy?” As deductibles get higher, employees will weigh how much they are willing to pay for health insurance when the deductible is so high that they may never get any value from it other than preventive care. That’s an especially important decision for low-paid workers. A second concern is whether plan design will result in employees delaying or avoiding care. While it might be penny-wise to forgo a physician visit when a health problem is first detected, in the event the problem is serious, the savings pale next to the higher cost of more intensive treatment at a later stage, especially when early treatment offers the potential for a better outcome.

So what can employers do to help employees manage higher deductibles and make good decisions, for both their finances and their health?

During open enrollment — the point of purchase for health insurance — decision-support tools can be very helpful in facilitating good financial decisions. Not only can employees model the cost of the care they expect to need and their total out-of-pocket expense, some tools will suggest amounts to contribute to supplemental accounts such as a Health Savings Account. The most advanced tools utilize an individual’s medical claims from the prior year to illustrate their out-of-pocket expense had they been enrolled in the currently available plan options.

Even after open enrollment, there are ways that employers can help plan members with high deductibles stretch their health care dollars and become better health care consumers. Suggestions include:

  • Encourage healthy behaviors by paying incentives into accounts that can be used to cover deductible expense.
  • Provide access and promote use of a nurse line, concierge, and/or health advocate for members to consult about care needs, provider recommendations, and the approximate cost of various options for care.
  • Provide access to transparency tools — technology that members can use to research cost for office visits, lab tests, and prescription drugs from different providers.
  • Sponsor and promote access to lower-cost care options via telemedicine and convenience care clinics for more routine health care needs.
  • If you have on-site occupational health professionals, consider transforming their role to include primary care and wellness support.
  • Expert medical advice is a helpful service to help navigate members to qualified second opinions and referrals to centers of excellence.

While the navigating the health care delivery system is still daunting to many, we have seen big advances in the availability of tools and resources to help us all become smarter shoppers for health care. And there is much more to come.

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