By G. Edward Miller, Jessica P. Vistnes, Frederick Rohde, and Patricia S. Keenan
Health Affairs, August 2018
Over the past decade, employers have increasingly turned to high-deductible health plans (HDHPs) to limit health insurance premium growth. We used data from private-sector establishments for 2006 and 2016 from the Medical Expenditure Panel Survey–Insurance Component to examine trends in HDHP enrollment and heterogeneity in HDHPs by firm size. We studied insurance plan offerings along the following dimensions: whether employers fund accounts to help defray employees’ out-of-pocket health care spending, the availability of non-HDHP plan choices, and single and family deductible levels. We extend the literature by examining these characteristics by detailed firm-size categories and by including all plans with deductibles that met or exceeded Internal Revenue Service thresholds to be qualified for health savings accounts. We found that in 2016, 78.0 percent of HDHP enrollees in the smallest firms (those with fewer than 25 employees) lacked an employer-funded account, compared to 35.2 percent in the largest firms (those with 1,000 or more employees). Overall, HDHP enrollees in the largest firms had significant advantages relative to workers in smaller firms along all of the dimensions examined.
From the Discussion
Similar to previous studies, we found a rapid rise—in this case, from 2006 to 2016—in the proportion of private-sector enrollees in insurance plans with deductibles that met or exceeded IRS thresholds for HSA-qualified plans. Because the thresholds are indexed by the Consumer Price Index for All Urban Consumers, increasing enrollment in high-deductible health plans indicates that deductibles rose faster than general inflation and that household budgets were exposed to potentially higher out-of-pocket health care spending. Employer contributions to HSAs and HRAs can be used to defray some of these costs, but the share of HDHP enrollees with employer-funded accounts increased only among those in the largest firms (those with 1,000 or more employees) over this time period.
Other studies have identified lower health care utilization, even among plans with employer contributions to a savings account, and higher financial burdens for HDHP enrollees compared to enrollees in non-HDHP plans. Our results suggest that these effects may be larger for workers in small firms, who are more likely to have higher deductible levels and lack employer contributions to help pay for out-of-pocket expenses, compared to workers in larger firms.
By Don McCanne, M.D.
In order to control the cost of employer-sponsored health insurance, employers have increasingly turned to high-deductible health plans. This makes the up-front, high out-of-pocket costs unaffordable for many employees. To get around this hurdle, some employers will also help fund health savings accounts (HSAs) or health reimbursement arrangements (HRAs) to defray some of the upfront costs. How well is this working?
Large employers with over 1,000 employees will more often contribute to these accounts, but, even there, 35 percent of the employees of these large firms do not have an employer-funded account. Even worse, 78 percent of enrollees in high-deductible plans offered by firms with less than 25 employees lack an employer-funded account. Many of these employees without employer-funded accounts do not have the financial capability of funding those accounts on their own.
The literature is clear on the impact of high-deductible health plans on employees who do not have pre-funded HSAs. The financial barriers frequently prevent them from receiving health services that they should have, and when services are unavoidable, financial hardship often ensues. Neither of these are good outcomes. Yet the Trump administration is currently encouraging Congress to expand the use of HSAs.
We should not celebrate the fact that the majority of large employers do contribute to their employees’ HSAs, because all they have done is to dig the hole less deep. We need to get rid of private high-deductible health plans and replace them with an improved Medicare that provides first dollar coverage for everyone. We can control health care costs through much more patient-friendly policies that make health care affordable and accessible for all of us.
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