Back in 2010 when few employees had heard of high-deductible health plans, I met with an HR rep at my new job to discuss health plan options.
In the past, I took a “whatever” approach to choosing benefits, but that’s when I was young and in peak health and had only me to worry about. Now with a family and several hospital visits behind me, choosing the right medical plan seemed like a much bigger deal.
The human resources person handed me the enrollment materials and explained my various options, which included an HDHP.
“What’s that?” I asked her, wondering why anyone would choose a plan touting a high deductible.
She sighed. “If you pick that one, I’ll have to give you a number to call.”
I asked her why.
“I don’t fully understand it and we want to make sure that employees know how this plan works, so I’ll have to refer you to someone else.”
Aside from the hassle of calling a special number to hear an explanation, I didn’t think a plan with high out-of-pocket costs was the way to go given my situation, so I picked a PPO. But that was six long years ago. How times have changed.
Since then, the popularity of HDHPs has soared with a growing number of employers offering them as the only plan option. Most HR pros and benefits managers have a firm grasp of HDHPs, and you probably won’t be met with a blank stare and a referral to an 800 number either.
In 2009, 8 percent of workers were enrolled in an HDHP compared with 24 percent in 2015, according to a survey by the Kaiser Family Foundation, which defines HDHPs as plans with deductibles of at least $1,000 for single coverage and $2,000 for family coverage. They are typically paired with a tax-protected savings account to help employees meet their deductible.
The appeal for employers is clear: Studies show that substantial cost savings can be realized when employees pay a greater share of their health care costs and become more prudent consumers.
But as these plans become more commonplace, I wonder if employees are prepared for the downsides. Employers often talk about empowering workers to take charge of their health care, which sounds great until you’re hit with a $2,000 medical bill that you must pay upfront.
I’ve been writing about this trend for a couple of years now and have interviewed a good number of benefits consultants and HR professionals, but few talk about the possibility that the HDHP trend could backfire. With deductibles rising faster than wages and more Americans saddled with medical debt, it’s a realistic consequence.
Annual out-of-pocket costs per employee rose 230 percent between 2006 and 2015, according to Kaiser, and many employees enrolled in HDHPs report forgoing or delaying care as a result. A 2014 Gallup poll found that among those with insurance, 34 percent indicated that the cost of seeking care led them to put off seeing a provider. That number is up from 25 percent in 2013.
A recent poll conducted by The New York Times and Kaiser found that about 20 percent of people under age 65 with health insurance reported having problems paying their medical bills over the past year. This led 63 percent of them to use up all or most of their savings, and 42 percent to take on an extra job or work more hours.
Employees saddled with medical debt are not likely to bring their best game to work, and employees who avoid seeking medical care because they can’t pay their deductible will likely result in higher health care costs down the road as chronic conditions become serious health problems. Employers can’t afford to ignore or sugarcoat these realities. Those that do are doing themselves and their employees a disservice.
But there are things employers can do to prevent this, like fully covering preventive care with no deductible, contributing to employees’ HSAs and paying the monthly fees, and providing training to employees who enroll in an HDHP so that they fully understand what they’re getting into. No one wants to get blindsided by a medical or prescription drug bill.
If HDHPs are the future of employee benefits, employees will not be the only ones facing greater responsibilities; employers will be, too. Though the days of a blank look and 800 numbers are hopefully a thing of the past, they still must make sure that their workers are prepared for the realities that lie ahead.
Ruta Pyrillis is a writer in the Chicago area. Comment below or email email@example.com.