Will the next open enrollment on the health insurance exchanges include alternatives to high deductible health plans (HDHPs)? Currently, HDHPs make up 60% to 80% of exchange plans. And according to a Health Affairs Health Policy Brief, nearly 90% of individuals on the public exchanges are enrolled in a high deductible health plan. And that’s not likely to change if group (employer-based) plans continue to adopt the high deductible health plan model.

Employers Reluctant to Throw Out High Deductible Health Plans

Health Insurers and brokers design health plans with employer costs in mind, not individual employees. That means they design plans that allow employers to pass along any cost for health insurance to employees. To let their employer clients know that they have factored in the bottom line, they trot out their displays showing what the Employee Pays and the Employer Pays. Most workers receive an abridged version of these charts that typically only list what the Employee Pays. These employer-based plans then become the default plan health insurance companies and brokers sell to individuals.

Even with the negative publicity high deductible plans have received since the rollout of the exchanges, employers, health insurers and brokers have shown no desire to back away from this type of plan design. In fact, they seem to be doubling down on these plans by increasingly making them the only plan option available to employees. However, there is indication that employers realize that employees won’t be able to bear the movement from high deductible to very high deductible health plans that is already taking place.

Employers Are Slowly Starting To Tinker With High Deductible Health Plan Design

Although employers continue to use HDHPs in increasing numbers, they are looking for ways to make them more palatable to employees. One way they are doing this is to use value based insurance (health plan) design. With value based health plan design, a health plan may provide cash or premium reduction incentives to participants that get an annual check up. It may waive the deductible, coinsurance or copay amount for certain prescriptions drugs and other care that has proven to have high value. Low value services would have higher cost sharing.

It sound a lot like a wellness program and it may be no more or less effective than a wellness program. Still it is a way for employers to potentially control health care costs and reduce individual cost sharing. Reference pricing and narrow networks are two other design strategies plans are using to control health care costs. Reference pricing is when a plan pays a fixed amount or range for a particular health care service, such as a hip replacement. Narrow networks restrict the number of doctors and other health care professionals in a plan’s network of participating providers (presumably those more willing to accept the insurer’s negotiated rates).

Recently, and lastly, I read about an emerging plan design—high deductible health plan with a health reimbursement account. These plans are designed to limit an employers’ fixed and variable health plan cost. They also require employees to assume a lot of responsibility for understanding this type of plan design and engaging in time consuming and difficult health care price comparisons.

Conclusion

Some individuals benefit from certain health plan designs more than others. High deductible health plans work best for healthy people who can afford to set aside money in a tax-advantaged health savings account. High deductible health plans don’t work so well for workers that have chronic medical conditions AND cannot afford to pay a high deductible. Unfortunately for this last group, high deductible health plan design is not changing in a way to benefit them. At least not yet…

Who will design a health plan that offers financial relief to the sickest and the poorest and when? Who Knows…

Tags: HIgh deductible health plans, Exchanges