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Better Health Through Better Education

February 7, 2017

By Karla Hignite

Are high-deductible health plans (HDHPs) here to stay? Standard preferred-provider organization (PPO)/point-of-service (POS) health plans with deductibles of less than $1,000 remain the most prevalent option provided by college and university employers; they are offered by 87 percent of institutions participating in the most recent Sibson Consulting College and University Benefits Study (CUBS). Yet, health plans with deductibles greater than $1,000 are quickly gaining ground. According to the CUBS report, HDHPs were offered by 59 percent of institutions in 2015, up 11 percent from 2014. And, these plans represented 30 percent of all medical plans available to employees, up from 19 percent in 2014 and surpassing health-maintenance organization (HMO)/exclusive-provider organization (EPO) plans, offered by only 26 percent of institutions in 2015, down from 30 percent in 2014.

Norman Jacobson, senior vice president at Sibson, predicts that employer-provided HDHPs will see slower but continued growth going forward. He estimates that such plans could be offered by 80 percent of higher education institutions within the next five years.

HDHP MOMENTUM

A variety of factors explain the upsurge in HDHPs, notes Jacobson. “One simple answer for their increase is that these plans do offer some attractive advantages to employees, including what is typically a lower employee contribution requirement.” Then, too, the financial strain that institutions have been experiencing in general in this economy, including skyrocketing health-care costs, have led more college and university employers to offer high-deductible plans as part of their employee benefits packages in conjunction with a variety of cost-sharing provisions.

Another factor helping pave the way toward greater adoption of HDHPs had been growing concern about implementation of the Affordable Care Act’s “Cadillac tax” (now scheduled to be implemented in 2020) on traditional high-cost health plans, says Jacobson. “Higher education benefits committees understood that they could no longer afford to simply maintain a traditional approach to employee health-care benefits and that they must proactively address rising costs for their institutions and for their employees.” Of course, the Cadillac tax may be eliminated or repealed under the Trump administration, but the problem of rising health-care costs will remain a focus for higher education institutions, notes Jacobson.

Yet another driving force behind the rise of employer-provided HDHPs has been an assumption that these plans create better-informed consumers, since employees are motivated to take greater control of their health-care decisions, says Jacobson. Yet, a potential downside of these high-deductible plans is that, because of high out-of-pocket costs, employees may be inclined to skip needed care or postpone follow-up visits, delay tests or treatment, or forgo filling prescription medications. This underscores a strong need for better education to ensure employees fully understand plan coverage, says Jacobson. “This can’t simply be a plan design change.”

EDUCATION REQUIREMENTS

Institutions have varying success with implementing HDHPs, depending in large part on the commitment of leadership and benefits committees to present information to employees, observes Jacobson. “Especially for institutions that offer HDHPs as a primary plan, communication and education are essential,” he adds. “For instance, it’s important to help employees understand how to research the best rates for various health-care services and treatments as well as to compare ratings for quality of services and care providers.” A variety of tools are available to help employees become better health-care consumers, says Jacobson. 

Education and communication efforts can also go a long way in combatting resistance from employees who perceive a lowering of quality and access in health-care benefits with these programs, says Jacobson. As with traditional health plans, many routine and preventive health services, prescriptions, and screenings are free for employees covered within an HDHP, yet employees often don’t know this and are not getting the preventative care they need. Effective communication can significantly improve compliance with required preventative standards, reducing the health risk of the employees, while raising their appreciation for their HDHP. And, where HDHPs are paired with a cost-savings vehicle such as health savings accounts (HSAs), they can be significantly more advantageous for employees by helping them better manage how they pay for out-of-pocket health-care costs, notes Jacobson.

SAVING FOR HEALTH

Whereas some employers offer a health reimbursement arrangement (HRA) for employees that can be used to reimburse employee health-care expenses, more prevalent and popular are HSAs, which belong to employees, offer significant tax benefits, and allow for investments that can accumulate and grow over time. “HSAs are increasingly popular for the benefits they provide for the average health-care consumer,” says Jacobson. “Here again, education is crucial to ensure that employees know how to maximize the benefit and understand the range of procedures and services they can pay for with these funds.”

According to the third annual update of the Employee Benefit Research Institute health savings account database (Health Savings Account Balances, Contributions, Distributions, and Other Vital Statistics, 2015: Estimates from the EBRI HSA Database), nearly 30 percent of employers offered an HSA-eligible health plan in 2015, with enrollment in high-deductible, HSA-eligible health plans estimated at between 20 to 22 million policyholders and their dependents. The analysis also shows that the vast majority (85 percent) of HSAs are relatively new, having been opened since 2011. In fact, while uncertainty remains about forthcoming changes to employer-based health care under the Trump administration, there is general consensus that HSAs are likely to continue to gain prominence, notes Jacobson. 

WELLNESS LINK

Continued cost pressures associated with employer-provided health care will further focus employers on increasing employee participation and engagement in making good decisions about their health, says Jacobson. “This includes leveraging wellness programming and continuing to draw the link for employees between proactive wellness participation and the ability to lower health-care costs.” While the landscape of wellness programming itself is changing to focus on all aspects of total well-being, including financial well-being and retirement readiness, as it relates to physical well-being, the focus is on engaging individuals to form habits that will move them from higher risk to lower risk and to sustain these behavior changes to remain as healthy as possible for as long as possible, says Jacobson.

Among the participating institutions in Sibson Consulting’s CUBS, 82 percent offered wellness programs in 2015. According to the report, most institutions cited wellness programming (81 percent) as their top strategy to control increases in health plan costs, followed by educating participants about cost-effective use of their health benefits (77 percent). 

Controlling health-care costs will continue to be a major challenge for higher education institutions. High costs, coupled with the fact that employee appreciation for this generous benefit has eroded as the cost to participate has become harder to afford, makes it imperative to focus on improving employees’ health and knowledge of the health-care cost engine, notes Jacobson. As a result, institution initiatives to educate and enable consumerism have become prominent and will continue to be emphasized going forward. Jacobson believes that focusing on communication and education, and incorporating behavioral economics principles to enhance the effectiveness of wellness programs will lead to a healthier employee population and, ultimately, lower plan costs.

Karla Hignite, editorial consultant to NACUBO, is editor of NACUBO's HR Horizons; e-mail: karlahignite@msn.com