More and more employers are shifting their employees to high-deductible health plans. According to the PricewaterhouseCoopers Health Research Institute, in the next three years, 44 percent of employers are expected to offer a high-deductible health plan as the only benefit option for employees.
And it makes sense.
With these types of plans, employers are able to reduce their health care spending by 5 to 14 percent, according to a Robert Wood Johnson Foundation survey.
But cutting costs doesn’t mean that employers can wash their hands of employee health care all together.
“There is a lack of education out there about health care benefits,” said Marcia Otto, vice president of pricing and transparency applications at Health Advocate Inc. “There is a huge disparity between costs and quality of care, and employees need to be cognizant of it.”
The lack of education is quantifiable. The Public Agenda released a report in March 2015 that said 57 percent of Americans don’t believe that some doctors listed under the same insurance plan charge more than others.
The problem, Otto said, is that employees are not used to making their own health care decisions. They don’t know what questions to ask or where to look for information to make sure they’re getting the best deal on care, and, as a result, they often end up overpaying.
Health advocacy and assistance agencies, such as Health Advocate, offer transparency tools that allow employees to compare costs and physician ratings to select a doctor that is right for their procedure. The problem, however, is that very few employees take advantage of the service.
“But transparency tools alone are not enough,” said Tevi Troy, CEO of the American Health Policy Institute. “It must be meaningful, and companies must have the tools and proper benefit design to help manage employee health care spending.”
The way that benefits programs are designed often discourages employees from seeking out different physicians and hospital systems, Otto said.
“Take colonoscopies as an example,” Otto said. “The price with health insurance nationally for a diagnostic colonoscopy is between $1,300 and $4,000. If an employee’s deductible is $1,300, they’re not incentivized to shop around for a less expensive option.”
Reference-based pricing provides a solution. According to the model, employer groups provide a cap on pricing for what insurers will pay for a certain procedure that cannot be exceeded. If employees go over that total, then they forfeit the right for the insurer to pay any of the cost.
The California Public Employees’ Retirement System follows this model. Joint replacements for seniors in California can cost between $15,000 and $150,000, Otto said. CalPERS set a cap of $30,000 for the procedure. Every dollar spent over the cap would be paid by the participant out-of-pocket and that cost would not count toward their out-of-pocket maximum. In addition to saving $2.8 million, the state found that it made an impact on the public health system.
“The number of hospitals offering joint replacements for under $30,000 rose from 46 percent to 72 percent after the cap was put in place,” Otto said. “They actually changed the health care system.”
In addition to changing program design, incentives are key when trying to get employees to use transparency tools.
“Putting more skin in the game will help employees embrace price transparency and start using these tools,” Troy said.
Try rewarding employees with gift cards for opening up transparency tools and playing around with the technology, Troy recommended. The more familiar they are with the tool before they need to use it, the more likely they are to return to it when a nonemergency medical situation arises.
Investing a small amount of money upfront has the potential for big payoffs. The American Health Policy Institute did an independent analysis of Castlight Health data and found that if 3 percent more employees used employer-provided transparency tools each year, employers could save $16 billion in total health care costs from 2016 to 2020. More importantly, individual employees can expect to save $3.6 billion in out-of-pocket expenses in 2016.
“Employers have asked employees to shoulder a greater percentage of their health care costs,” Otto said. “In return, they need to act to ensure that employees are capable of making the health care decisions that are best for their physical and financial well-being. Offering a tool alone is not enough. Employees have to know how to use it.”