High-deductible health plans were introduced to curb rising health care premiums and costs with the aim of giving employees more control over spending and driving a consumer-driven approach to care. Yet over time, HDHPs have shifted from being a strategic choice to a default option for millions of Americans: today, 58% of privately insured individuals are enrolled, compared to just 38% in 2015. As HDHPs have come to dominate the market, they have transformed how employees interact with the health care system, often at a steep personal cost.
There’s no doubt – HDHPs are here to stay, as they should. By design, HDHPs keep premiums lower, but for many employees, the resulting out-of-pocket costs have made these plans unaffordable. The fact is that health care costs continue to rise, and the supposed cost savings have largely shifted the burden onto both employees, who face substantial out-of-pocket costs before coverage begins, and also providers, who are on the hook to collect a larger share of the cost from patients; effectively making them more collection agent than caregiver.
The unintended consequence: Delayed care and mental health strain
HDHPs were intended to reduce unnecessary spending, but in practice, they can magnify financial strain, especially for low and medium-income employees. Research finds that switching to an HDHP leads to a $921 annual increase in out-of-pocket costs. Half of US adults cannot cover a $500 emergency bill, making average deductibles nearly unattainable. Another study reveals that lower-income families are twice as likely to delay care due to cost and their inability to access payment to afford that cost. Delaying care often means health problems worsen leading to more expensive interventions later, erasing short-term savings. This means those already vulnerable face even greater barriers, further entrenching inequalities in outcomes and opportunity.
The financial stress created by HDHPs doesn't just threaten wallets; it presents a direct challenge to mental health. The financial uncertainty of HDHPs causes additional financial stress and creates significant worry when debating the ability to afford a doctor’s visit (or possibly to buy groceries or pay rent).
Financial stress is linked to poorer self-care, increased absenteeism, and lower productivity at work. Nearly half (43%) of U.S. adults say money negatively affects their mental health, at least occasionally, causing anxiety, stress, worrisome thoughts, loss of sleep and depression. For employees already living close to the financial edge, one unexpected bill can trigger a spiral – postponing care, worsening conditions, and deepening debt.
A recent study found that more than 1 in 3 workers (37%) have taken a loan, early withdrawal and/or hardship withdrawal from their retirement plans. And, 1 in 5 of those withdrawals (22%) have been to cover medical bills, sacrificing long-term financial security and diminishing other critical benefits. As more providers require payment information before delivering elective care, these barriers make vulnerable populations even more likely to delay or avoid necessary treatment.
The fix: Making the cost of care manageable for employees
A rising trend in health care payments has emerged that can mitigate the impact HDHPs have had on employees’ wallets. A host of alternative health care payment solutions are now available to help workers afford higher out-of-pocket costs, and HR/benefits professionals would benefit by learning more about these options. Programs that help employees spread out payments over time without interest charges or credit impact are available. This enables employees across financial situations to access care when they need it, not when they think they can afford it or only in an emergency.
The most important considerations when evaluating these options are to look for solutions that don’t require added fees, interest, or credit checks. The more advanced solutions use technology to pool an employee base’s risk (much like insurance) and allow the financing provider to take over the payment relationship for all parties. They pay the health plan’s providers upfront, up to the employees’ out-of-pocket maximum. Then they simplify billing to the employee with consolidated monthly statements. The payments to the provider will cover all approved charges, and then the employee can arrange for a reasonable interest-free repayment plan based on what they can afford monthly.
An additional option for employers to consider is to factor in health expenses beyond medical care, such as prescriptions, dental bills, vision and eye care, and even pet care expenses. Employees receive a payment card to use for these other costs and can spread repayment through payroll or bank account deductions. The employer can decide what costs to cover and set a max limit (typically around $1,500 per year) that replenishes as the balance is repaid. This additional layer of support is also interest-free and encourages employees to focus on their overall health and wellness.
With these solutions, employees are protected from financial shocks and the anxiety that often comes with unexpected medical bills. Flexible repayment empowers workers to focus on wellness and work performance rather than worrying about how to pay for care. This prevents minor conditions from becoming serious, expensive emergencies and boosts adherence to recommended care.
By pairing an interest-free financing solution with flexible repayment plans, employees can access care when they need it, providers get paid, and employees are able to manage their families' out-of-pocket health care costs with HDHPs. This eliminates the need to forgo care and promotes preventative care, thus reducing the need for costly emergency care or avoided care that becomes a much higher acuity problem when addressed too late.
Balancing care, costs, and plans
The appeal of these tools is that they don’t require employers to raise premiums or lower deductibles, both of which erode the cost savings that drew them to HDHPs in the first place. With these tools, repayment responsibility lies with the employee, but it mitigates the financial strain and limits the snowball effect of delayed treatment.
HDHPs are likely here to stay but pairing them with robust support systems can protect employees from financial strain and care avoidance, striking a better balance between cost control and health outcomes.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.