Health Care Cost Shifting Doesn’t Hold Up in the Long Term

Employees may be seeing less benefit in their workplace benefits.

When the Affordable Care Act became law in 2010, it prompted employer interest in consumer-driven health plan alternatives like employee cost sharing and high-deductible health plans. Over the years, this has led to increasingly higher out-of-pocket costs for employees, which has helped to decrease the value they place on their workplace health benefits, according to Gene Lanzoni, assistant vice president of thought leadership at Guardian Life.

Considering the state of the ACA now and the ongoing efforts to repeal and replace it, employers’ interest in these plans aren’t going to abate any time soon. Over half (52 percent) of employers offered HDHPs in 2016, up from 39 percent in 2015 and 28 percent in 2013, according to the Healthcare Trends Institute’s “2016 Healthcare Benchmark Survey” released in February, which surveyed 250 HR and benefits decision makers. The prevalence of consumer-driven health care is consistently rising, the survey said.

But something has to change, said Lanzoni. Using strategies like cost sharing and HDHPs are more short-term solutions in nature and aren’t sustainable in the long run.

high deductible health plans and HSAs

Consider incorporating HSAs when weighing the benefit of HDHPs.

“What we’re seeing is employers recognizing that some of these tactics they’ve deployed over the last few years as a way to rein in their medical plan costs, they may be paying in the long term in terms of the overall cost and productivity of the workforce,” he said

Only one in three employers say that traditional cost-containment strategies like cost-sharing and consumer-driven health plans have been successful in cutting costs, according to the Guardian’s fourth annual Workplace Benefits Study released in January, which surveyed 1,204 benefits decision makers across all industries and 1,439 full-time employees.

Guardian Life

Gene Lanzoni, Guardian Life

These strategies are not sustainable because eventually all the cost shifting begins to negatively impact the employees, said Lanzoni. At a certain tipping point employee behaviors may change as a result of the HDHPs. Many people will skip important doctor visits, X-rays or medical procedures, which could negatively impact their own health and productivity at work.

There is an upside to this. Now that these cost-containment strategies have been around for several years and employers can finally see the impact on workforce behavior and financial stress, employers are recognizing and acknowledging the need for a change in strategy than in prior years, Lanzoni said.

For example, health savings accounts are increasingly becoming more critical, he added. More employers will probably have to offer HSAs along with HDHPs, regardless of what happens with health-care reform.

“They’re not necessarily offered by all employers who have HDHPs, which is negatively impacting the out-of-pocket costs for working Americans in those plans,” Lanzoni said. “Seeing a greater prevalence of HSAs attached to these plans would help.”

There are other ways meant to address the problem from a long-term point of view, he recommended.

Education in the first two years when an employer is shifting to an HDHP can help. An employee may not realize how they’re supposed to contribute to a plan. This can be especially useful during the early months in the plan year, when they’re still well under their deductible. “You have to get educated and understand how to use the various tools and benefits being offered to you,” he said. “That’s where the industry is catching up.”

Supplemental health benefits, combined with the HSA and education push, can also fill whatever gaps in coverage an employee may encounter, he added.

[Related article: “Supplemental Health Coverage Makes Employees More Responsible”]

Finally, he suggested a smarter use of data sharing for employers who realize their HDHP is not sustainable. There’s potential to “reduce the medical plan expense by heading off the medical claim activity through the use of analysis and predictive modeling and looking at data from other plans,” he said.

By integrating its disability and medical plans, for example, a company can have visibility into potentially high medical claim costs and deal with it in the disability claim phase before it becomes a major medical issue. A company may identify a problem early and then adopt a strategy to address it. They could have early intervention, offer vocational rehabilitation when it’s appropriate and try to get those people back to work within a reasonable amount of time, suggested Lanzoni.

“By sharing data and looking across benefits, there are more opportunities to head off what might be much larger medical claims down the road,” he said.

Andie Burjek is a Workforce associate editorComment below or email at Follow Workforce on Twitter at @workforcenews.

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