Small company employees with high-deductible plans get less help with out-of-pocket costs
Employees in small companies with high-deductible health plans are at a disadvantage compared to people who work for larger companies, according to a new report in Health Affairs.
The study by Agency for Healthcare Research and Quality researchers found that more than three-fourths of HDHP enrollees in small companies didn't have an employer-funded account that helps them pay for out-of-pocket costs. Slightly more than two-thirds of those at large companies have such accounts.
The common HDHP traits of lower healthcare use and higher financial burdens are more of a concern for people working for small companies, the authors said.
HDHPs have become a standard benefit design for employers and payers. They made up only 11% of employer-sponsored members in 2006, but that percentage jumped to more than 46% in 2016. The plans have successfully contained health costs by shifting more costs onto members, but they haven't pushed people to become better healthcare consumers.
HDHPs have helped bend the health insurance cost curve. A recent Mercer survey found that employer-sponsored health insurance costs have increased about 3% annually since 2012. That’s compared to yearly increases of at least double that the previous decade.
But the cost shift has left patients with larger healthcare bills. It's only a matter of time before health coverage becomes unaffordable on that path. With that in mind, Mercer said employers are eyeing other cost-saving strategies over the next five years, including monitoring and managing high-cost claimants, better managing cost for specialty pharmacy and focusing on creating a culture of health.
The new study, which used the Medical Expenditure Panel Survey - Insurance Component data from 2006 to 2016, found that HDHP enrollees in the biggest companies have "significant advantages" compared to people in small companies. These advantages included employer-funded accounts, alternative plan options, deductible levels and choice of providers.
The researchers found that employer contributions to health savings accounts (HSAs) and health reimbursement arrangements (HRAs), which members use to pay for shouldering more healthcare costs, are lacking for small employers. In 2006, small companies were more likely to provide an HSA or HRA than a large company, but now large companies that have at least 1,000 employees are much more likely to offer one of those savings accounts.
Overall, the study found that an HDHP covered 23% of employer-sponsored enrollees in 2016 that had an employer-funded account. Most of those were HSAs, which allow the employee to take the money with them when they leave. With HRAs, however, the companies own account and the employee loses the money when they leave the job.
Large companies with HDHPs also had much lower deductibles for individual plans than smaller companies ($2,154 mean deductible for large companies and between $2,717 to $2,801 for smaller companies). Family coverage was much of the same — $4,280 for large companies and $5,173 to $5,873 for smaller businesses.
The report also found that larger companies have a higher percentage of employees in preferred provider organization (PPO) plans. Plus, employees in small companies are more likely to have only an HDHP option. That leaves no choice for consumers.
"Consistent with other studies, we also found that the percentage of enrollees in PPOs generally increased with firm size for all non-HDHP and HDHP enrollees, including those with and without employer-funded accounts. And we found that within each firm size category, non-HDHP enrollees were less likely than HDHP enrollees to be in a PPO," the researchers added.