Average deductible goes up while more people struggle to pay medical expenses

National Mercer study shows big increase in deductibles and consumer-directed plans

Deductibles and out-of-pocket expenses are going up while consumers are forced to make tough decisions about their health care in bad economic times.

Mercer just released its annual National Survey of Employer-Sponsored Health Plans.

It shows:

• The median deductible required by employers for individual coverage in PPO health plans jumped to $1,000 in 2008, up from $500 last year
• Employers held health benefit cost increases to about 6 percent in 2008 for a fourth straight year – but that has meant shifting more cost to employees
• Consumer-directed health plans are offered by 20 percent of large employers, up sharply from 14 percent last year and more large employers add incentives to encourage health-conscious behavior

Meanwhile, national media is reporting about how Americans are making tough choices with their health care when their budgets are in trouble. This article from the New York Times reports that prescription sales have gone down for the first time in over a decade. While some other factors are in play, many people simply can’t afford their maintenance medication. This is from the article:

“People are having to choose between gas, meals and medication,” said Dr. James King, the chairman of the American Academy of Family Physicians, a national professional group. He also runs his own family practice in rural Selmer, Tenn.

“I’ve seen patients today who said they stopped taking their Lipitor, their cholesterol-lowering medicine, because they can’t afford it,” Dr. King said one recent morning.

Not taking maintenance medication or forgoing on routine medical care is exactly the opposite of what we want employees (really, all people!) to do. Consumer-directed plans are intended to make employees savvier about the care they get and how they get it, but are never intended to encourage employees to cut out necessary or preventive medical care. Unfortunately, that is sometimes what happens, especially when a family can’t afford a high deductible or steep copays on prescription drugs.

HSA-eligible high-deductible plans can be especially troublesome because they require an aggregate deductible (meaning, you pay the whole family deductible even if only one individual needs care) and they include prescription drugs within the deductible (meaning, you pay the full cost of all prescriptions until the deductible is met). Even without an HSA-eligible plan, many employer plans have much greater deductibles than ever before, which means your employees may be hit with a harsh wake up call in January.

So, what is an employer to do to encourage employees not to skimp on health care even when their budgets are hurting? Here are some suggestions:

• Plan design: many employers have plan designs that include lower premiums or lower out-of-pocket costs for low-income workers. Consider this if a large portion of your company falls into that category. I think this is a very ethical and rational approach to employer health care and when you communicate it well, can create loyalty among all your employees.
• By all means, make sure preventive care is paid 100%—not subject to deductibles. You can do this with all plans, even HSA-eligible high-deductible health plans
• Educate, educate, educate. Make sure employees understand what they are enrolling in and how the combination of premium + out-of-pocket costs adds up. Too often, employers skimp on enrollment education and employees choose the low-cost option, not understanding the out-of-pocket implications. Now is a great opportunity to review your employees’ elections for 2009 and see if they make sense when compared with those employees’ income.
• Give employees incentives to participate in plans like flexible spending accounts or Health Reimbursement Accounts. Nothing works better than cash in that account or cash in hand.
• Help your employees save. Chances are, you have benefits that are worth thousands of dollars to your employees that they are not using. Likewise, you have all sorts of plans, including the FSA and discount programs, that help them save money. You also have financial planning resources and mental health support through your EAP. Make sure your employees are using them. And, make them easy to use.
• Help your employees manage their chronic conditions. Disease management programs and care coordination can help educate your employees about their health and make sure they understand how to manage issues like high cholesterol, diabetes, hypertension, cancer risk, etc. When they understand how to manage their condition, hopefully they will understand that short-terms savings (like skipping their prescriptions) will have longer-term implications that are not worth it.
• Use your data. Your PBM and health plan should be able to tell you if employees are discontinuing important maintenance medications. Ask them for those reports and then ask them how they are going to intervene.

Times like this can be great opportunities to win the loyalty and respect of your employees—especially when you show that you are looking out for their best interests and helping them make good decisions.