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High-Deductible Health Plans More Common On Employers' Menus
Health plan deductibles keep inching up.
When employees sign up for coverage this fall during their company's annual enrollment period, nearly a quarter will face annual deductibles of at least $1,000, according to a recent employer survey by the Kaiser Family Foundation (KHN is an editorially-independent program of the foundation.)
At small companies, the high-deductible option, often served with a tax-preferred savings account, may be the only choice. But larger firms are more likely to offer at least one traditional PPO or HMO plan alongside a high-deductible choice.
Now, though, even very big companies are beginning to move all their employees into high-deductible coverage, perhaps signaling even wider adoption of these types of plans.
Take GE. Last year, the congolomerate that makes everything from refrigerators to jet engines, moved 85,000 salaried employees and retirees under age 65 into high-deductible plans. Next year, the company's remaining 40,000 union and hourly employees will make the switch.
The company offers employees three plan choices, with deductibles ranging from $800 to $4,000 depending on the plan and the number of family members insured.
For two of the options, the company contributes between $600 and $1,200 to a tax-preferred account that the employee can use to pay for medical expenses. The third plan is linked to a tax-qualified health savings account. Employees must fund that account on their own. But unlike the other accounts, the money belongs to the employees even if they leaves the company.
Like many employers, GE turned to high-deductible plans in the hope it would reduce overall spending and get employees to pay attention to the true cost of care. When GE employees were asked in focus groups why they would go to the emergency room rather than the doctor's office, they often answered, "Why not? It's only a $30 higher copay," says Ginny Proestakes, GE's director of health benefits.
But in reality, emergency room is one of the priciest places to go for health care. "What we learned is that copays obscure the cost of care," she says.
The company is giving employees a helping hand as they shift to these new plans with support tools such as a calculator for health care costs, and recommendations on cost and quality to help people pick the best provider for the money.
Many preventive services are free, and some drugs for chronic conditions and serious illnesses such as cancer aren't subject to the deductible, depending on the plan.
This is the first big change to health insurance benefits for both groups of GE employees since 1989, says Proestakes. And while it's too soon to know precisely how the shift is affecting overall costs, "There's no question it's helping us with the trend lines," she says.
But is it helping workers? It's hard to say. When out-of-pocket health costs rise, research has shown that people skimp on needed care, not just the frills. While some employees may well enjoy having more decision-making responsibility over their health care, as Proestakes claims, it comes at no small cost.