Ever since High Deductible Health Plans (HDHPs) emerged on the health insurance scene combined with the myriad of savings accounts as solutions to stem the increase in health care costs, an underlying and essential ingredient for success also poured into the mix.
We would need people to engage in the right kind of consumer behaviors in order to help slow down or decrease health care trend. If people felt like they were in control of their health insurance and of the money being spent on their health care, then they might would be motivated to change their behavior to make cost-effective and quality-related decisions on their treatment. Could they get the most value for their out of pocket spending?
Results are in. The vast majority of people have not been engaged in consumer behavior as it relates to their health insurance and health care, and the future doesn’t look good. While 40% of privately insured Americans are enrolled in a high deductible health plan1, all Americans could potentially benefit in the long-run from engagement in consumer behaviors.
What exactly are these consumer behaviors?
- Saving for future health care services
- Discussing costs with a provider
- Comparing prices
- Comparing quality
- Trying to negotiate a price
The March 2019 edition of Health Affairs published the results of a comprehensive study illustrating opportunities to enhance consumer behaviors. As a benefits professional, I can attest at least anecdotally and empirically that there are significant opportunities to enhance consumer behaviors. Generally speaking, each of these five consumer behaviors are aspirational, at best, given how our current health care system is designed.
The financial burden most Americans experience when faced with health care issues is real. Conquering health insurance is at the crux of it all. Americans enrolled in these HDHPs are on the hook for a lot of the out of pocket, at least initially, because of high deductible levels.
As of 2020, a medical plan is considered a HDHP if it has a minimum $1,400 individual deductible and a $2,800 family deducible. Minimum. We know from the 2019 Kaiser Family Foundation’s Employer Health Benefits Survey that the average deductible is actually much higher.
with an HRA
with a HSA
Average Employer Contribution
HRA – HSA
||$572 – $1,713
$1,062 – $3,255
Health Reimbursement Arrangement (HRA): Health Reimbursement Arrangements (HRAs) are employer-funded group health plans from which employees are reimbursed tax-free for qualified medical expenses up to a fixed dollar amount per year.
Health Savings Account (HSA) A Health Savings Account (HSA) is a tax-exempt trust or custodial account set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur. You must be an eligible individual to qualify for an HSA. Please visit the IRS site to learn more.
According to Kaiser, only 30% of Americans enrolled in a HDHP have either the HRA or HSA included. This means that another 10% of those enrolled in a HDHP do not have the luxury of an HRA or HSA. Having these types of savings vehicles allows for individuals and employers to make tax-advantaged contributions to help offset the out of pocket costs associated with the first-dollar responsibility a deductible requires each of us to pay.
It’s great that some employers deposit funds into savings account to help offset costs. However, the majority of Americans do not benefit from this strategy. Additionally, people with significant health care issues typically have out of pocket costs that go well-beyond their deductible.
Why are so few Americans engaging in health care consumer behaviors?
A number of challenges and impediments are faced by patients, providers and health care systems adversely impacting people from deploying the right consumer behaviors.
Patients who face high cost-sharing may forgo medical services or may not fill a needed prescription. This can limit adherence to treatment, reduce the chance of health improvements, and even result in even more costs. Health care providers would then see debt due to uncompensated care. What often happens in the U.S. health care system in these situations is a transfer of costs over to those Americans who can pay their bills or to health insurance plans in the form of higher premiums subsidized; services are inflated to cover the uninsured or uncompensated services.
Health insurance literacy among Americans is low. People are not always aware of what services are subject to their deductible, what is routine or considered chronic care. As a result, they are not able to predict or expect what their costs may be in the future.
One could also argue that it is not realistic for a person to actually choose where to get their treatment performed, let alone shop for the best price.
Shopping for the best price requires access to price comparison tools. While health insurance carriers may offer online tools, this requires we also know what we’re researching in the first place. It’s not very common for a medical provider to offer an itemized bill in advance. If they did, then maybe we could properly search costs using CPT or procedure codes. Even then, medical treatment often involves multiple providers, facilities, testing labs, and ancillary providers. It’s not realistic to expect anyone to pull all of this together while also managing their own health to understand their total cost picture.
Providers must also be willing to negotiate. Enough said on this point.
The impediments of consumer behavior go beyond having tangible tools and practices in place to assist people. Personal or psychological barriers to consumer behavior are at play. The perception of futility is very real and can influence one to feel apathetic to the whole process. They may feel that their engagement in the first place would not have changed their decisions or outcomes.
The other 60% of Americans enrolled in a medical plan that isn’t a HDHP would still benefit from consumer behaviors that could lead to getting the most value out of their plan. These Americans could still be required to pay large sums of money out of their pocket, whether through deductibles, coinsurance, and copays, as well as through ever increasing payroll contributions just to be enrolled in the plan.
What can be done to enhance consumer behavior?
Right now, emphasis is on the consumer to change their behavior and take control. Unfortunately, until the system changes, people need to do their homework, pay attention and ask questions of their providers and health insurance plans.
Employers and health plans can do more to promote, educate and facilitate health insurance literacy.
Health care providers could develop practices to engage patients on the costs of treatment options.
- A Survey of Americans with High-Deductible Health Plans Identifies Opportunities to Enhance Consumer Behaviors, Health Affairs March 2019.