Employers curb high-deductible plans, even as insurance costs rise
Large employers and their employees will pay more for health coverage in 2019. Despite that, some companies are dialing back their use of high-deductible health plans to control spending.
Employers are projected to pay $14,800 per employee for health coverage in 2019, an increase of 5% from $14,099 this year, according to the National Business Group on Health's annual employer-sponsored health insurance survey released Tuesday. Per-employee health insurance costs have risen about the same amount each year for half a decade.
"This is consistent with the last five years, but consistent doesn't mean good. Top line medical trend is still running two times wage increases and three times general inflation, which continues to threaten affordability for all Americans," the group's president and CEO, Brian Marcotte, said in a news briefing Tuesday.
Employers pick up about 70% of the tab for health coverage, while their workers pick up 30%, or $4,400, through premium and out-of-pocket expenses, such as copayments or coinsurance. The cost of specialty prescription drugs, high-cost individuals and the cost of treatment for specific diseases, including cancer and musculoskeletal conditions, are driving spending higher.
The survey included 170 employers who provide coverage to more than 19 million employees and their families. Three-quarters of the companies surveyed had over 10,000 employees.
Even though costs are rising, study results suggest employers are starting to back away from using high-deductible health plans paired with health savings accounts as a way control their share of the costs.
About 91% of employers offer at least one high-deductible plan. But for the first time in four years, the number of employers offering those plans as the only option is projected to decrease from 39% this year to 30% in 2019.
The use of high-deductible health plans coupled with HSAs has been growing in prevalence since the inception of the Affordable Care Act. Companies rushed to implement these plans to avoid being hit by the Cadillac tax—a 40% excise tax on high-cost employer coverage—that was initially supposed to take effect in 2018. But that tax, which is loathed by employers, has been postponed several times, most recently to 2022.
"There's a view that it may continue to be kicked down the road, so I think employers are relaxing their move (toward high-deductible plans) from that perspective," Marcotte explained, adding that the war for talent could also be playing a part.
But this could change if Congress enacts legislation to expand the drugs and medical services that employees can pay for with HSAs.
"There's a lot of rigidity around what you can and can't do if you have a health savings account," Marcotte said. "Building back in flexibility, employers would like to start covering more value-based services."
Other points from the survey:
- The number of companies entering into direct contracts with health systems or other providers to offer health coverage to workers is projected to increase to 11% in 2019 from just 3% in 2018.
- Employers are experiencing higher prescription drug costs and absenteeism, and 12% reported employee deaths related to opioid drug abuse. They are working with their healthcare partners to limit the supply of opioid prescription drugs available to workers, and are increasing access to alternative pain management treatment, such as acupuncture and chiropractic services.
- Employers are not happy with pharmacy benefit managers—the middlemen that handle prescription drug benefits and secure rebates for self-insured employers and health insurers. The majority of employers said they do not believe rebates are an effective tool for helping drive down pharmaceutical costs. A growing number—27%—are adopting capabilities to provide point-of-sale rebates to consumers in 2019, and another 31% are considering doing so in the next two years.
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