Workers Putting ‘More Skin’ in the Health Care Game
The name pretty much says it all: high-deductible health insurance plans.
Higher deductibles, cheaper premiums.
But if you think the surprises end there, brace yourself for one more: Proportionally, these plans are growing faster than any other type in the United States. In 2006, only 10 percent of workers with employer-based insurance were enrolled in a high-deductible plan. Today, it’s closer to 31 percent, according to the Kaiser Family Foundation.
It’s a “quiet revolution,” said Dr. Drew Altman, president of the foundation. “It’s a big change in what health insurance is, which has been happening under the radar screen in our country without a lot of scrutiny, attention or debate.”
On the PBS NewsHour on Friday, health correspondent Betty Ann Bowser will explore what’s behind the “revolution,” how it’s impacting the health of employees and why some analysts say it may help bring down health care costs across the system if patients have “more skin in the game.”
But first, some visuals. Click each graphic to see a larger version.
Deductibles of $1,000 or More
Accounting for 50 percent of the employee insurance plans at small businesses, high-deductible plans are almost “commonplace” these days, said Matthew Rae, a senior policy analyst for KFF and one of the authors of the foundation’s 2011 Employer Health Benefits Survey.
Why the sudden spike in all of these plans? In a nutshell: “The cost of premiums has just really gone up,” Rae said. “Employers have been trying to find ways for them to lower premiums. And offering a high deductible is one of those ways.”
In 2001, the average insurance premium for a family of four would have been $7,000. Today, it’s about $15,000. The average premium for a high-deductible plan is about $13,000.
Deductibles of $2,000 or More
Can’t wrap your head around a deductible that high? Some employees actually prefer it, Rae said.
“Many times, if a worker has a choice, they go with the high-deductible plan just because they want to have a smaller premium contribution,” he said. “If you’re healthy and you don’t plan on using a lot of medical care and you’re just hoping to avoid a catastrophe situation, then that plan would make a lot of sense for an individual worker.”
Since the early 2000s, employers are increasingly coupling high-deductible health plans (HDHP) with health “savings” accounts that help workers to partially — or sometimes completely — match the deductible.
Known as Health Reimbursement Arrangements (HRAs) or Health Savings Accounts (HSAs), both of these options allow for the tax-free deposit and withdrawal of cash for qualifying medical expenses.
In an HRA, the company finances and controls the account, often allowing remaining funds to roll over from year to year. But when an employee leaves the company, the money usually returns to the firm.
HSAs, on the other hand, allow both workers and employers to deposit money tax free. Employees also get to keep the account after they leave their job, allowing for easy transfer between companies.
On average, U.S. firms that contribute to HRAs chip in $861 for individual coverage and $1,539 for family coverage. For HSAs, the average is $611 for individual coverage and $1,069 for families.
Forecast: More of the Same?
Among large firms with employer-sponsored health benefits, 41 percent now offer at least one high-deductible health plan with one of the two savings options (HDHP/SO).
While the total percentage isn’t quite as large for small companies, it’s still a significant shift, Rae said.
“For small firms — especially very small firms — many are likely to only sponsor one plan type,” he said. “For more and more of them, that one plan type is a high-deductible health plan with a savings option.”
And Rae doesn’t see those numbers changing any time soon.
“With the costs of premiums continuing to increase, there’s no reason to think that we’re not going to see that kind of increase over the next couple of years,” he said.
Do you have specific questions about the benefits and drawbacks of high-deductible health insurance plans? Submit them in the comments sections, by email at email@example.com, or on Twitter @jasokane. We’ll have financial experts from the insurance and consumer-protection worlds answer those questions next week on our Health Page.