Are Employees Bearing Too Much Burden in Health Plan Choices?

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By Genevieve Douglas

Employees are increasingly bearing the burden of making health-care decisions as employers turn to “consumer-driven health plans,” but making informed, educated decisions about one’s care is a challenge for many.

How much is too much responsibility for the average employee to make informed medical decisions? A number of studies have found that low-wage workers respond to these consumer-driven health plans—which come with a high deductible—by receiving less care, even care they need, Cheryl Fish-Parcham, private insurance program director for FamiliesUSA, told Bloomberg Law Nov. 3. This could lead to an increase in emergency department visits because people have put off care, Fish-Parcham said. FamiliesUSA is a consumer health-care advocacy group.

“Individual patients don’t know what is good care and what is bad care, and they can’t navigate the system even with the best of information,” Allison Hoffman, a professor of law at the University of Pennsylvania Law School specializing in health-care law and policy, told Bloomberg Law Nov. 3.

People don’t have the health literacy to be able to decipher the terms of their plans and medical care, and instead of navigating the complex health system, “we see lower rates of adherence, lost preventative care, and lower prescription drug adherence,” she said.

As a result, employers are investing in health plan incentives and health advocacy services to help steer employees to value-based care and quality-based health models, according to Mercer’s National Survey of Employer-Sponsored Health Plans. Mercer found that 82 percent of employers with 500 or more employees now provide a “transparency tool”—meaning an online resource to help members compare prices and sometimes quality ratings of different health-care providers.

Employers are also attempting to reduce health-care spending by promoting access to lower-cost telemedicine services, which offer access to health-care providers by phone, web portal, or video, according to Mercer. In 2017, 71 percent of employers with 500 or more employees offered these services, up from 59 percent in 2016, the survey found.

There’s a part of health care that employees can be reasonably asked to shop around for, such as when there are wide price variations for routine medical treatment, Beth Umland, Mercer’s research director for Health, told Bloomberg Law Nov. 2. However, when someone has a serious medical condition, it’s much more difficult to do the necessary research, she said.

“Employers are realizing they need to address both ends of the medical spectrum: routine and emergent care,” and health advocate services have been effective in helping employees navigate these choices, Umland said.

Rise of Consumer-Driven Plans

In an effort to rein in costs, employers have shifted toward consumer-driven health plans over the past five or so years, and Mercer research reveals that health plan costs are, in fact, holding steady, Umland said. Today, “employers really seem to be wedded to giving employees choice in their benefits” and that wasn’t necessarily the case five years ago, Umland said. Consumer-driven health plans generally have higher deductibles and are often combined with accounts for employees to pay for medical expenses with pretax dollars.

And the cost-saving strategy appears to be having an effect. According to Mercer’s survey, the average total health benefit cost per employee rose by 2.6 percent in 2017, following a similar increase of 2.4 percent in 2016. In the prior five-year period, cost growth averaged 6.2 percent. Enrollment in account-based high-deductible consumer-driven health plans has also held steady in 2017 at 30 percent of all covered employees, Mercer found.

Additionally, employers can save money and also relieve employees of the responsibility by offering high-deductible plans and fully funding health savings accounts, so that employees don’t incur additional expenses, Fish-Parcham said. Employers could also stop offering low-value care services or services that are too costly, both strategies that will likely “not be as harmful to employees in the long run,” Hoffman said.

Larger Cost Targets

“The cost problem in our system isn’t consumer-driven demand, it’s prices for each item, and then the cost of specialty care, tech services, and the general structure of our health-care system,” Hoffman said. Moreover, a large part of the cost of health spending is made by the percentage of the population that is the sickest, “and they won’t be price sensitive consumers anyways,” she added.

Drug benefit costs are a primary culprit, which rose by about 8 percent annually among employers with 500 or more employees, driven by an average 15 percent increase in spending on specialty drugs, Mercer found.

Medical advances have brought more treatments, more medication, and more options, which is driving up costs, Umland said. “That is going to be the next frontier for employers: figuring out how to manage these million-dollar claims,” she added. “That’s the future that employers are going to have to plan for now.”

To contact the reporter on this story: Genevieve Douglas in Washington at gdouglas@bloomberglaw.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

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