iLoveBenefits: Industry News Blog

Patient spending increases as costs are shifted to deductibles and coinsurance

According to a recent blog in the Wall Street Journal by Kaiser Family Foundation’s Drew Altman, while worker’s wages increased 32% from 2004 to 2014, here’s what happend to patient spending during that time period:

  • patient spending on deductibles increased 256%
  • patient spending on coinsurance increased 107%
  • patient spending on copays decreased 26%

Source: “The Next Big Debate in Health Care,” The Wall Street Journal/Think Tank, June 30, 2016, http://blogs.wsj.com/washwire/2016/06/30/the-next-big-debate-in-health-care/

Health Benefits Cost $11,635 Per Employee in 2015

Mercer recently conducted the annual National Survey of Employer-Sponsored Health Plans. Here are some key findings from the report:

  • Total health benefits cost averaged $11,635 per employee in 2015.
  • Large employers experienced a 2.9% increase, while smaller employers experienced a 5.9% increase.
  • One fourth of all covered employees are now enrolled in a CDHP.
  • Employers predict that in 2016 their cost per employee will rise by 4.3% after making plan adjustments.
  • 24% of employers provided transparency tools in 2015, up from 15% in 2014.
  • 1 in 4 large employers encourage employees to track physical activity with a ‘wearable’ device.

Source: Mercer, November 23, 2015

2015 HDHP limits and 401(k) catch up contributions

The IRS released Revenue Procedure 2014-30 announcing the 2015 minimum deductible and maximum out-of-pocket limits for HSA-qualified high deductible health plans (HDHPs) and the maximum contribution levels for health savings accounts (HSAs).

The IRS adjusted the 2014 figures for inflation.

Effective for calendar year 2015:

  • The minimum annual deductible for an HSA-qualified HDHP plan will be $1,300 for self-only coverage and $2,600 for family coverage;
  • The maximum annual out-of-pocket limits allowable under an HDHP will be $6,450 for self-only coverage and $12,900 for family coverage; and
  • The maximum allowable annual contribution employees may make to their HSAs will be $3,350 for an individual with self-only coverage or $6,650 for an individual with family coverage.

The limit on catch-up contributions, allowed for those with HSAs who are age 55 and older, remains at an additional $1,000 per year.

For plan years beginning on or after January 1, 2014 (or upon loss of grandfathered status, if later), the Affordable Care Act ties annual plan out-of-pocket maximums (coinsurance, deductibles, copayments, and similar charges) for all types of plans (including plans that are not HSA-qualified HDHPs) to the above out-of-pocket limits.

You may access a copy of the Revenue Procedure at:

http://www.irs.gov/pub/irs-drop/rp-14-30.pdf

The Characteristics of People in Consumer Driven Health Plans

This week, the Employee Benefit Research Institute (EBRI) released a study examining the characteristics of people in “consumer-driven health plans (CDHPs).”  EBRI found that CDHP enrollees are more likely than traditional-plan enrollees to have higher incomes, be better educated, and report better health status.  About 26 million people with private insurance, or 15% of the market, have such coverage.

Full replacement – high deductible health plans

According to a recent
report, 49% of employers indicate they are extremely or very likely to make a
high-deductible health plan their only health insurance option.

Source: “Despite
delayed key provision, health care reform triggers benefits action among
employers,” Prudential News Release, March 3, 2014, http://news.prudential.com/article_display.cfm?article_id=6788

Insurance Plan Designs Are Changing Dramatically

Here is the evidence, because behind almost every Health Savings Account (HSA) there is a high deductible health plan –

 

According to a recent report:

  • 71% of workers with a health reimbursement arrangement (HRA) or health savings account (HSA) reported that their employers contributed to the account in 2013
  • Among workers with employee-only coverage and an employer contribution, the percentage reporting that their employers contributed $1,000 or more fell from 28% to 23% in 2013
  • 11.8 million adults ages 21–64 were enrolled in a plan with an HRA or HSA in 2013
  • 17.3%  of adults ages 21–64 with private insurance were either already in a consumer-driven health plan (CDHP) or covered by an HSA-eligible plan

Source: “Who Contributes—and How Much—to Health Accounts?”, Employee Benefit Research Institute Press Release, February 12, 2014, http://www.ebri.org/pdf/PR1062.HSAs.12Feb14.pdf

2014 Medical per capita claim cost increases

infoGraphoid: Forecast of Medical Per Capita Claims Cost Increases

High deductible health plans continue to gain market share

HSA-Qualified High-Deductible Health Plan Enrollment
Covered Lives, March 2005 to January 2012

Individual

Small Group

Large Group

Other Group

Other

Total

 March 2005

556,000

147,000

162,000

88,000

77,000

1,031,000

 January 2006

855,000

510,000

679,000

247,000

878,000

3,168,000

 January 2007

1,106,000

1,057,000

2,044,000

291,000

34,000

4,532,000

 January 2008

1,502,000

1,816,000

2,777,000

13,000

10,000

6,118,000

 January 2009

1,832,000

2,429,000

3,752,000

8,013,000

 January 2010

2,053,000

2,970,000

4,986,000

10,009,000

 January 2011

2,358,497

2,779,208

6,299,460

11,437,165

 January 2012

2,470,840

3,019,347

7,939,023

72,865

13,502,075

Source: AHIP Center for Policy and Research, 2005 – 2012 HSA/HDHP Census Reports
http://www.ahip.org/redirect/2012hsacensus.pdf

High deductible plans – at what cost

A Rand analysis published in the latest edition of Health Affairs found that consumer-directed health plans, which aim to encourage prudent health care spending through high deductibles, have the potential slow the growth of health care spending.  But those savings may come at the expense of needed care, the group concluded .

So what they are likely saying is more study is needed AND it is going to take some time for us to have a definitive answer… hmmm.

Cost of care is rising

Patients are paying more for the care they receive. The increase is in terms of premiums and the amount they pay for each service. How long will it be before consumers demand complete price transparency in health care?

According to a recent survey of American workers, respondents said that over the last 3 years, their employers had:

  • significantly increased the amount employees pay when they use health care services – 31%
  • significantly increased the amount employees pay each month in premiums for health care coverage – 29%
  • adopted a high-deductible health care plan – 29%

Source: “American Workers Seek More Security in Retirement and Health Plans,” Towers Watson, February 2012, http://www.towerswatson.com/united-states/newsletters/insider/6411

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