An industry analyst sees indications that employer HDHPs may continue to spread but also that employers are wary of increasing the amount of the deductibles in such plans.

Nov. 16—The share of privately insured who are enrolled in high-deductible health plans (HDHPs) reached records highs in 2017, according to new federal data.

In the first sixth months of 2017, 42.9 percent of the pre-Medicare population with private health insurance was enrolled in an HDHP, according to new data from the Centers for Disease Control and Prevention (CDC). That was an increase from 39.4 percent in 2016 and from 25.3 percent in 2010.

The CDC defined HDHPs in 2017 as health plans with annual deductibles of at least $1,300 for individual coverage and $2,600 for family coverage.

The increase in HDHP enrollment occurred among both employer-sponsored plans and those purchased on the individual market. HDHPs increased from a 39.6 percent share among people with employer-sponsored plans in 2016 to 43.5 percent in 2017. Much more widely used in the individual market, HDHPs sold there increased from covering 51.9 percent of enrollees in 2016 to 53.5 percent in 2017.

The findings appeared to run counter to surveys earlier this year that indicated HDHP enrollment was flat or declining. For instance, a comprehensive Kaiser Family Foundation (KFF) survey of employer-sponsored insurance found that the share of workers enrolled in HDHPs declined from 29 percent in 2016 to 28 percent in 2017.

A November employer survey by Mercer found that enrollment in consumer-directed health plans—HDHPs with a health savings account (HSA)—was nearly flat in 2017, at 30 percent of all covered employees

Room to Grow

Ana Gupte, managing director at Leerink Partners, said in an interview that she saw room for the use of HDHPs to expand.

“It’s less than one-third penetrated, so there’s room there,” Gupte said about the KFF and other employer surveys.

HDHPs also may continue to increase through the individual health insurance market, where bipartisan legislation to provide cost-sharing reduction payments also would allow all enrollees to purchase high-deductible Copper plans. Under current law, only enrollees under 30 can purchase those plans.

Gupte sees indications that employers may be less interested in increasing the amount of the deductibles in HDHPs.

For 2017, the ACA set maximum allowable cost-sharing levels (including out-of-pocket costs for deductibles, copayments, and coinsurance) for spending on in-network essential health benefits at $7,150 for self-only coverage and $14,300 for families.

Among employer-sponsored plans, the average annual out-of-pocket maximum in 2017 for single coverage was $4,083 for HDHPs and $4,271 for HSA-qualified HDHPs, according to KFF data. The average 2017 deductible was $2,304 for single-coverage HDHPs and $4,527 for HDHPs with an aggregate deductible for family coverage.

“I don’t see any increase in the size of the deductible; there is some sympathy about the pressure that puts on the worker who is making $50,000, $60,000, or $70,000—[the deductible] is a lot of money and you can’t keep pushing that,” Gupte said.  

The deductible burden was significantly larger on many enrollees in plans sold through the ACA marketplaces. The average deductible for 2017 Bronze plans was $6,092 for individuals and more than $12,000 for family plans, according to a HealthPocket analysis. Silver plans, the most popular in the marketplaces, had average deductibles of $3,572 for individuals and $7,474 for families.

IRS rules for 2018 define HDHPs as plans with deductibles of at least $1,350 for individuals and $2,700 for families.

Concerns Linger

The increasing enrollment in HDHPs tracked increasing public complaints about the ability to afford the cost of deductibles. The share of Americans reporting difficulty with affording their deductible increased from 34 percent in 2015 to 43 percent in 2017, according to a separate KFF survey. In comparison, 37 percent said it was difficult to afford premiums and 31 percent complained about their ability to afford copays for physician visits and prescription drugs.

Echoing previous research, a new Health Affairs study found an association between HDHPs and lower healthcare costs as a result of a reduction in the use of services, including appropriate services. 

Among the policy changes aimed at addressing this issue was an August proposal by the Bipartisan Policy Center to allow greater use of HSAs to cover deductibles. The group recommended temporarily increasing the HSA annual contribution limits for self-only and family coverage to match the out-of-pocket limits for HSA-qualified HDHPs. The proposal was part of a two-stage approach to first stabilize the individual-insurance market and then address fundamental structural challenges in the healthcare system.

Hospitals have long complained about the financial impact of having to absorb the cost of HDHP enrollees who cannot afford their deductibles. Hospitals recently have seen an increase in uncompensated care, Gupte said.

“It’s hard to say how much of it is because of HDHPs and the lack of affordability of the deductibles versus a little bit of attrition happening on the [ACA] exchanges,” Gupte said.

The Advisory Board’s latest revenue cycle survey found that hospitals in states that enacted the ACA’s Medicaid expansion had better performance on bad debt but that the rise of HDHPs increased unpaid patient obligations across all states, regardless of Medicaid expansion status. The survey included senior executives at 90 acute care hospitals and health systems.

The finding indicated a need for a greater focus on patient collections, especially at the point of service (POS), according to Advisory Board analysts.

The median share of collections at POS has increased from 0.24 percent of net patient revenue to 0.8 percent over the past six years, according to the Advisory Board. For a 350-bed hospital, that is equivalent to an increase from $800,000 to almost $3 million.

“Organizations that collect a higher percentage at POS tend to offer patient discounts for full payment up front, resulting in a 90% increase in POS collections compared to organizations that do not,” according to the Advisory Board.

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Thursday, November 16, 2017