There was a time when benefit design was straightforward, consisting of a flat $20 co-pay and insurance covered the rest. Then, health care costs began to grow at an unsustainable rate, and new types of benefit designs sprang up as a result. Reference pricing, value-based insurance design (V-BID), centers of excellence (COEs), tiered and narrow networks, alternative sites of care, and many other programs have taken root across the health care industry.
In recent years, the high deductible health plan (HDHP) gained significant popularity. This benefit design requires consumers to pay a certain amount out-of-pocket – the deductible – before their full insurance coverage kicks in. Qualifying HDHPs can be paired with health savings accounts (HSAs) – a tax-advantaged savings option to help mitigate the initial out-of-pocket financial burden of the high deductible.
Sound complicated? It is. In fact, over half of U.S. adults have little to no understanding of the health care system, resulting in health plans spending approximately $6 billion annually to help patients navigate their benefits. Benefit managers not only have to deal with that complexity for their own health care needs, their day job is navigating this complexity on behalf of the population for whom they purchase health care, their “covered population.” Moreover, depending on the employer-purchaser, a covered population will span geographies, ages, industries, and perhaps most importantly, income.
When designing benefits in today’s health care environment, employers and other health care purchasers may want to pay more attention to the incentives different types of benefit designs create and how different groups of consumers within their covered population will react to them.
This is especially important because the story of rising health care costs – and the benefit design complexity that followed – is also a story of inequity: rising premiums have disproportionately affected workers in lower income brackets, squeezing the disposable income of families across the United States. The rise of high-deductible health plans, which are part of a trend toward promoting consumerism in health care, creates a daunting obstacle for low-income adults, who may delay or forego receiving both necessary and unnecessary care due to the upfront out-of-pocket costs imposed by this plan design. High-deductible health plans with their lower premium amounts may seem attractive at open enrollment, but they pose a risk of leaving employees underinsured.
Benefit managers across the country are rising to the occasion and getting creative with benefit design to make sure employer-sponsored coverage is meeting the health care needs of workers with lower incomes. Multiemployer benefit trust funds are leaders in this space. For example, 32BJ successfully rolled out a mandatory plan design featuring no premiums and no deductible for in-network care, paired with a large network. Additionally, Jeff Levin-Scherz and Steve Nyce recently identified 7 things employers can do to ensure better, more affordable care for all their employees, especially those who have been hit hardest by rising health care costs. CPR is here to support benefit managers in viewing employer-sponsored coverage through a health equity lens.