Companies that have yet to offer a high-deductible health plan — at least as a benefit option — are now in the minority in America.
Among the nearly 2,500 companies that responded to benefits consultant Mercer’s annual survey of employer-sponsored health plans, 59 percent said for 2015 that they offer a high-deductible health plan — also known as a consumer-directed health plan — up from 48 percent in 2014 and nearly triple the rate from 2009.
The annual survey that includes large and small U.S. employers offers a benchmark to the trends occurring nationally in health benefits.
Mercer projects the percentage of employers offering a high-deductible option to hit 75 percent by 2018, continuing the steady march by employers in the last decade toward lower-cost policies to help get a grip on the cost of employee health coverage.
Employers responding to Mercer reported that PPO health plans with a $1,000 deductible cost an average of $9,921 in 2015, versus a low-deductible PPO policy with a premium of $11,609 or a traditional HMO policy at $12,056. High-deductible health plans matched with health savings accounts cost $9,215.
A quarter of survey respondents say they will offer only a high-deductible plan two years from now. The rest intend to provide it as an option with other benefits packages and let employees decide which to choose, based on the cost and what works best for them.
In other words, insurance providers say low-deductible plans will not disappear anytime soon.
“A lot of the conventional wisdom is they (employers) should collapse to one plan, but we don’t see that happening. It’s all about choice,” said Mick Young, a principal and business leader at Mercer’s Grand Rapids office.
While a majority of survey respondents now offer a high-deductible plan, the adoption rate by employees, when given an option of which benefits package to select, has grown steadily as well, albeit at a slower rate. Twenty-eight percent of the employees were enrolled in a high-deductible plan in 2015, which compares to 23 percent in the prior year and 8 percent in 2009.
Despite the cost savings employers can generate — and the ability to have employees put some proverbial skin in the game by sharing the costs of their health coverage — high-deductible plans have their limits, Young said. Employers need to consider how much of the cost of coverage they reasonably can push across the table to their employees.
On average, employees at small companies surveyed by Mercer in 2015 were enrolled in plans with average deductibles of $1,738 for in-network coverage, compared to $1,113 in 2009. At large companies with a workforce of 500 or more people, deductibles last year averaged $833, versus $511 six years earlier.
And those are just deductibles: Employers for years have been steadily raising co-pays and requiring employees to share in the premium.
“We’re at the tipping point. How much more can you shift to employees?” Young said. “Wages have not gone up 50 percent in the last six years.”
The same question, he said, applies to employers: How much more can they pay before something has to give?
That points to the need for employers that either have moved or plan to move to a high-deductible plan option to act more proactively than merely changing benefit design and shifting costs.
This year’s report on the Mercer survey notes that employers that have incorporated 16 or more of the 28 best practices for health benefits experienced cost increases of 2.9 percent in 2015. Those firms that used seven or fewer best practices had a cost increase of 3.8 percent.
If your company is only following a few best practices, “you’re really missing an opportunity to take advantage of some of the more innovative strategies that are available,” said Andrew Milnes, director of business development for Mercer in Grand Rapids.
The report affirms the need for employers of all sizes to think strategically about their health benefits, just as they would about any investment or other aspect of their business.
“You can’t just sit still. You have to take an active approach to managing your claims cost,” Young said. “Not only is the cost lower but the trend is lower if you manage this issue.”