New Report from DirectPath and Gartner Reveals Only 30 Percent of All Employer-Sponsored Health Plans are HDHPs
In stark contrast to the predicted adoption of high deductible health plans (HDHPs) by 2018, HDHPs today represent only 30 percent of the medical plans offered by employers, according to DirectPath and CEB, now Gartner’s, 2018 Medical Trends and Observations Report, unveiled today. With HDHPs proving not to be the “silver bullet” solution employers once hoped for, organizations are now recognizing that other solutions will be needed to rein in increasing health care costs.
Over the past few years, many employers have offered HDHPs to control health care costs. By shifting costs to employees, employers hoped their health care expenditures would be reduced. This strategy has proven largely ineffective, however, since most employees lack basic understanding of how health plans work, how to choose the most appropriate plan and how to use health coverage effectively. Employees’ health care illiteracy – coupled with their concerns about privacy – have led to lower utilization of employer-sponsored benefits like HDHPs and wellness programs. As a result, employers have not only experienced poor return on investment (ROI) on their health care investments, they’ve also been left with employees who are frustrated with their health care options – a frustration intensified by a growing expectation that benefits packages should be customized and care should be easily accessible and affordable.
This year’s data points to a recognition of this changing landscape, with HDHPs becoming just one of many choices offered by most employers.
Other key findings from the 2018 Medical Trends and Observations Report – which is based on an analysis of more than 900 employee benefit health plans – include:
- Voluntary benefits remain popular, but offerings shift: Supplemental life insurance, legal services, critical illness insurance and identity theft protection are among the top offered voluntary benefits in 2018. While voluntary benefits remain a popular element of employers’ benefits strategies, the types of voluntary benefits offered has changed since last year. Two of the most popular voluntary benefits of 2017, supplemental life and accidental death and dismemberment insurance, decreased in prevalence by 38 percent and 32 percent, respectively—perhaps signaling that more employers are offering these coverage as part of their ERISA plans.
- Costs for specialty drugs remain stable (for now): Despite media hype around mounting costs for “orphan” medications, the median copay for specialty drugs increased by a mere three percent from last year. However, with specialty drug costs expected to rise by nearly 18 percent in 2018 – and with specialty drugs projected to represent half of all drug sales by 2020 – employers will need to find ways to manage cost increases and utilization.
- Telemedicine is breaking out: 55 percent of employers are offering telemedicine as part of at least one of their health care offerings (up from slightly over a third of employers in 2017), and many organizations are covering them in full – at either 100 percent or for a $0 copay. The rise of telemedicine is likely driven by increasing employee interest in the program and state law changes that have eliminated known barriers to adoption. To encourage utilization of telehealth providers, the median copay for these visits has declined somewhat, and now equals that of a traditional office visit (roughly $20).
- Wellness incentives are waning: While more than half of employers offered wellness incentives in 2017, less than one-third are offering them today. This decline may be attributed to employer concerns about the future legality of these plans, as well as continued questions regarding the value of wellness incentives when it comes to controlling costs and improving health.
Brian Kropp, HR Practice Leader at Gartner, noted: “2019 will prove to be very interesting with the elimination of the individual mandate. We could see employers drop coverage, which could result in lost productivity should their employees become ill or injured. Or we could see employers pass increased premiums onto employees, which might cause employees to drop coverage and force organizations to absorb the increases and take a hit to their bottom lines. To get ahead of these challenges, employers are going to need to get creative in the ways they control costs.”
Kim Buckey, VP of client services at DirectPath, added: “There’s never going to be just one perfect solution when it comes to health care benefit offerings. Employers today need to combine creative plan design, robust employee education programs, and the ability to customize a benefits package to meet individual needs to manage plan costs – for both individuals and businesses. The good news is that there are resources available, like enrollment support, patient advocacy and transparency services, to help employers improve their employees’ health care literacy and steer them toward options that meet their health care needs at the right price. In 2018, we expect more and more employers to take advantage of these services to ultimately drive down costs while improving employees’ benefits satisfaction.”
To download the full 2018 Medical Trends and Observations report, please visit this page. DirectPath will present the report findings in a webinar today, March 6 at 11 a.m. EST. To register for the webinar, “Pulse on Medical Plan Trends and Observations 2018,” please visit this site.
The report is based on an analysis of more than 900 employer health plans drawn from The Lab®, the industry’s only medical health plan benchmarking database, powered by DirectPath and Gartner research. The Lab supplies real-time access to in-depth plan and pricing information, helping benefits teams compare their plans with other organizations by industry, geography and company size. DirectPath offers companies the ability to benchmark their plans against industry comparisons in its Lab.