Health care has reached a tipping point—it’s a $3.4 trillion industry, meaning about one out of every six dollars we spend as consumers goes to health care. And, the cost of care continues to rise. In response to these rising costs, employers are increasingly gravitating toward consumer-directed, high-deductible health plans (HDHPs) as cost-saving mechanisms.
As a result, many employees who also feel an urgency to combat rising care prices have started to adopt HDHPs. In addition, the shift to higher out-of-pocket health care costs has given rise to new financial benefits related to health care spending, with employers now offering benefits far beyond traditional medical insurance to help fill in any financial gaps for their employees, creating a “horizontal” benefits explosion.
Benefitfocus’ The State of Employee Benefits 2018 – Industry Edition, analyzed anonymized data from 540 employers in health care, education, manufacturing and retail, showing employers in all industries are using a variety of tactics to drive selection of HDHPs, with varying levels of adoption from employees. So, what did the report find as the key emerging enrollment trends in the health care industry?
Consumer Driven Plans in the Health Care Industry Have Nearly Doubled in Two Years
Within the health care industry, 73% of employers offered at least one HDHP for the 2018 plan year, up from 41% in 2016—and it puts the health care industry slightly above the average HDHP offering rate on the Benefitfocus Platform (70%).
Health care employers are also above average with respect to health savings account (HSA) contributions and voluntary benefit offerings, both of which can make HDHPs more manageable for employees from a financial risk perspective. Employers in this industry understand that offering a choice on how consumers spend their health care dollars beyond medical insurance is key: from core health, to pet insurance, to financial protection and beyond.
Employees Aren’t Fully on Board with Consumer-Driven Health Care
Over the past two years, health care employers transferred a significant amount of premium costs for traditional/PPO plans onto their workers, likely to drive more employees into adopting HDHPs. The average employee premium contribution for a single-coverage traditional plan is up 24% and the average contribution for family-coverage is up 10% from 2016.
Despite these efforts to steer them away from traditional plans, employees in the health care industry only selected a HDHP 27% of the time for 2018. While that represents a slight increase from 2016, it still puts them below the Benefitfocus Platform’s average of 35% HDHP participation. When it comes to HSA contributions and voluntary benefits participation, employees have also shown a below-average willingness to buy in. In 2018, 38% still selected a traditional health plan and 80% of employees didn’t elect any type of voluntary benefit plan, showing employees in this vertical still aren’t fully committed when it comes to consumer driven health care.
How Can Health Care Employers Adapt?
As health care costs skyrocket, consumerization will likely continue to drive the tremendous growth of voluntary benefits and the popularity of HDHPs among employees looking for ways to manage costs. What employers in every industry will also continue to have in common is the struggle to economically provide the best plans and care for their employees. There’s no magical “one-size fits all” plan when it comes to benefits for every workplace, but employers in the health care industry are better off pairing a traditional plan with a high-deductible health plan, along with wealth, lifestyle, voluntary and ancillary benefits, so their employees can continue to decide what’s best for them.
Rob Piazza is Product Manager of Core and Advanced Analytics at Benefitfocus, a suite of decision support tools that leverage claims integration to enable healthcare cost control strategies. Piazza manages the products throughout the product lifecycle, oversees design to ensure alignment to vision, and leads cross-functional teams including Product Ownership, User Experience, Quality Assurance, and Engineering to deliver market-driven solutions.
Prior to joining Benefitfocus, Piazza spent 10 years at Humana within their Clinical Care Services organization. He is passionate about making a real change in healthcare and preaches the concept of Population Health Management; leveraging analytics to improve group healthcare outcomes while also controlling costs.
Connect with Rob: LinkedIn.com/in/robpiazza