High-deductible health plans (HDHPs) shift cost to employees and families, often with distressing health and financial impacts. HDHPs were introduced years ago by the legacy insurance carriers as a way to deflect responsibility for rising healthcare costs away from themselves.
To do this, they devised an ingenious marketing spin: the solution to stemming increasing healthcare costs was to make employees have “skin in the game” with much higher deductibles. The insurance companies told employers and benefits broker-advisors that costs could be curtailed if only employees could be “better healthcare consumers.”
Never mind that healthcare has never been shoppable like other goods and services, not even by health benefits experts or doctors and nurses themselves. The result of this deception is that employees are often forced to take money away from other basic needs, put off healthcare for themselves and their families, and take on medical debt.
After two decades, this ruse has been normalized. The reality is that outdated monopoly insurance carriers have done nothing material to curb rising costs, which actually fuels the continued ratcheting upwards of this employee financial risk exposure.
Advisors and employers execute a yearly ritual of determining how to apportion the annual increase between the organization and employees. For many employer health plans, employees are paying half or more of the total cost when their payroll contributions and out of pocket costs are combined.
A Nationwide Scandal
Forbes goes so far as to call HDHPs “Americas’s biggest hustle” and likens them to three-card monte with employees as the “mark.” Except this hustle is legal and continues to grow across the country. In 2021, nearly 56% of private sector employees were covered by HDHPs—an increase of 62% since 2012 that will likely continue unabated.
Unfortunately, these plans have taken the insurance out of health benefits, creating untenable financial risk for the majority of American workers. They do not improve healthcare buying behavior. In fact, they contribute to care-seeking avoidance, which turns minor, early health issues into larger, more serious problems.
HDHPs perpetuate the myth of “consumer-driven healthcare” as a solution to ever-rising costs. “Consumerism” is impossible without an accessible, transparent, openly competitive, cost-effective healthcare system where the average person can be an active purchaser as they are for most other goods and services. We are a long way from that.
The Financial Insecurity of Legacy Plans
A survey commissioned by revenue cycle firm AKASA fielded responses from thousands of Americans, including those with employer-sponsored HDHPs, and almost all with legacy insurance carriers. Here’s what they found:
- 50% received a surprise medical bill
- 53% received a bill that did not match the upfront price estimate
- 34% of those with HDHPs have been harassed by a medical debt collector
- 44% of those with HDHPs have experienced financial hardship from medical bills
Additionally, outdated insurance carrier plans expose members to out-of-network and surprise charges while members in reference-based health plans often suffer provider balance billing. This can lead to debt collection and credit damage. The Vitori Health member experience is very different with unexpected billing less than 0.25%, no providers out of network, and zero liability for balance bills.
Employees Have No More Skin to Put in the Game
Employer plan sponsors have the power to protect their workers from financial insecurity, income and savings siphoning, medical debt, and healthcare avoidance today. By working with a modern health plan administrator that’s not beholden to legacy insurance revenue streams and conflicts of interest, they can offer employees the better benefits coverage that was available years ago at a similar cost.
It’s time to gain a competitive advantage in a talent-driven, inflationary market.