- Consumers' cost-conscious health behaviors are changing. Employees with lower-deductible plans are now using cost-saving tools at the same rates or more often than their peers with high-deductible plans.
- Insurance benefits are shifting. While there is still a significant gap in deductibles between high-deductible and traditional plans, it has decreased in the last decade.
- Employee financial needs are more short-term. Assistance with day-to-day expenses is becoming a higher priority for workers, and employers are re-focusing benefit plans to accommodate.
The cost-conscious behaviors and research typically used by employees with high-deductible health insurance plans are becoming increasingly popular with traditional plan enrollees as well.
As of last year, high-deductible plan enrollees were no longer more cost-conscious when compared to their peers with traditional health insurance plans, according to new data from the Employee Benefit Research Institute (EBRI).
EBRI explored consumers' behaviors relative to their plan's deductible as part of its annual Consumer Engagement in Health Care Survey. Generally, traditional health insurance plans such as preferred provider organization (PPO) plans have lower deductibles. Some high-deductible plans, such as consumer-driven health plans, are paired with features like a health savings plan (HSA), while others simply offset lower premiums with higher deductibles. The IRS considers a plan to be high-deductible if its annual deductible is more than $1,600 for an individual or $3,200 for a family.
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Consumers with both types of plans were more likely to make cost-conscious decisions, such as comparing service costs at different facilities before receiving care, in 2023 compared to the year before. But the percentage of lower-deductible plan enrollees doing so increased so significantly that those employees were, for the first time, as likely or more likely to seek cost savings compared to high-deductible plan enrollees.
The reasons for this may be twofold, said Jake Spiegel, research associate, health and wealth benefits at EBRI. First, over the past decade, average deductibles for high-deductible, employee-only plans have trended downward, while traditional plan deductibles have increased slightly.
“There's still a gap, but there's some degree of convergence going on,” Spiegel said.
Secondly, inflation is hitting all employees hard, no matter the type of health plan they use. “People's budgets are stretched, so it's not a leap to read this data and see that people are looking for ways to trim their budget beyond just at the grocery store or gas station,” Spiegel said.
Cost-Saving Behaviors and Resources
In 2023, traditional plan enrollees were as likely or more likely than high-deductible plan enrollees to engage in the following, according to EBRI's research:
- Check whether their plan would cover their care or medication.
- Ask for a generic rather than name-brand medication.
- Check quality ratings before receiving care.
- Check the price of a visit, medication or service before receiving care.
- Talk to their doctor about other treatment and prescription options and costs.
- Use an online cost tracking tool.
- Decline all or part of a medical procedure due to its cost.
- Develop a budget to manage their health care expenses.
Several companies and nonprofits offer healthcare cost transparency, quality rating and price comparison tools, and most insurance companies do as well, Spiegel said. Some of these can be integrated with businesses' benefit portals.
“Insurers themselves are sitting on a treasure trove of data,” he said. “They know how much they're paying for procedures and how much providers are charging.”
Integrated price transparency and comparison tools can also help employees compare health plans by exploring scenarios and needs and finding a health plan to match, said Sander Domaszewicz, principal and healthcare consultant at Mercer.
Companies can help move the needle further on health cost savings by encouraging widespread use of these tools and providing access to an individual who can help employees navigate them, he added.
“When [more employees] use these tools — should I get an MRI at the hospital or a freestanding imaging facility for a fifth of the cost? — it gets ingrained into the system,” Domaszewicz said. “That also applies to employees talking about this and sharing information.”
Exploring Health Benefits Through a Financial Wellness Lens
In the past few years, short-term financial demands such as paying for monthly expenses — including health-related costs — have risen to the top of employees' list of concerns and are driving employer benefit offerings, according to recent research from both EBRI and Mercer.
“People think of health insurance as one issue, retirement as another issue and emergency savings as another issue, but they're all highly interconnected,” Spiegel said.
While retirement benefits will continue to be a core offering, employers are exploring financial wellness-related benefits that can make a more immediate impact for workers.
“That includes cost-sharing affordability, social determinants of health, diversity, equity and inclusion — making the right kind of care available to all of their populations, not just some of them,” Domaszewicz said. “Affordability for lower-paid folks is a top priority for employers.”
Benefit options in this area include emergency savings support, HSA contributions, voluntary benefits such as disability insurance, or access to legal assistance to create wills or health care directives. In some cases, employers may offer to front-load HSA contributions for the year if an employee has a large medical cost at the beginning of the year, Domaszewicz said.
“There are financial well-being tools you can get employees to take advantage of,” he said. “Can you do matching dollars and get people who might not have put a dime in their HSA to contribute? Companies are using some of the same methodology they've used for 401(k)s for years to try to get people to be better long-term savers and stewards for their healthcare.”
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