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Survey: One-third of Hoosier workers in high-deductible plans

November 25, 2013

An annual survey by the benefits consulting firm Mercer found that, among 75 Hoosier employers, 34 percent of workers are already enrolled in consumer-directed health plans.

And that number is only going to go up, as employers try to tamp down expenses in the face of health insurance costs that continue to rise faster than inflation and the new requirements of the Affordable Care Act, also known as Obamacare.

Consumer-directed plans come with high deductibles designed to make patients more sensitive to the cost of health care services, and are often paired with a health savings account or health reimbursement arrangement.

The percentage in Indiana was nearly twice as high as the rate nationally, where 18 percent of workers are enrolled in consumer-directed health plans, according to Mercer’s survey of 2,842 employers with at least 10 workers. The survey had a margin of error of 3 percent.

In Indiana, the 75 mostly large employers that participated in the survey are not enough to make the results statistically meaningful. Only eight of those employers had fewer than 50 workers and 42 of them had 500 workers or more.

Nevertheless, the results do jibe with other analyses, which also show consumer-directed health plans continuing to be more popular in Indiana than in the rest of the country—even though the participation in such plans is rising everywhere.

Employers are embracing high-deductible health plans as one of several ways to keep costs lower to counter some of the effects of Obamacare and to duck a tax the law will assess on employers beginning in 2018.

Employers in Indiana would have faced increases in health benefits costs of 9.3 percent per worker next year, if they made no changes to their plans. But most employers expected changes to their health plans to keep those increases to just 4.7 percent.

Nationally, employers worked to trim what would have been an 8-percent increase next year, without changes, to be just 5.2 percent. Such an increase would be the highest since 2011, according to Mercer’s survey data.

“If you think about it as the health care reform hurricane, employers continue to batten down the hatches,” said Andrew Rosenberg, the office leader of Mercer’s health and benefits practice in Indianapolis.

One reason employers are being cost-conscious this year is that they expect Obamacare’s requirement that all individuals obtain health insurance to increase enrollment in their health plans. The median increase employers expect, just from higher enrollment, is 3.5 percent, according to Mercer’s survey.

“The Affordable Care Act continues to create challenges and add costs for employers,” Rosenberg said.

An analysis conducted by Indianapolis-based Apex Benefits Group projected that employer costs would rise 9 percent next year solely because of new provisions in the law. The regular increase in health insurance premiums, which has been rising at about 4 percent per year recently, would be on top of that amount.

Continued annual increases could cause some employers to trigger an Obamacare excise tax on so-called Cadillac health plans in 2018 that are valued at $10,200 or more for individual coverage. So a lot of employers are making changes now to avoid paying that 40-percent tax, Rosenberg said.

Health benefits costs averaged $10,779 nationally this year, according to Mercer’s survey. In Indiana, where health care costs and use have been higher for decades, the average was $11,296, about 4.8 percent higher than the national average.

In Indiana, employers appear to have embraced consumer-directed health plans at the expense of HMOs, or health maintenance organizations. Whereas 18 percent of employees nationally are enrolled in HMOs, just 3 percent of Hoosier workers are, according to Mercer’s survey.

The lion’s share of workers are still in health plans based on preferred provider organizations, which have more modest deductibles and limit patients' costs on most health care services to a modest co-pay. Nationally, 64 percent of workers are in PPO plans, compared with 63 percent in Indiana.

Rosenberg cited three reasons for the higher take-up of consumer-directed health plans by Hoosier workers. First, more employers offer them—59 percent in Indiana versus 40 percent nationally.

Second, Indiana employers have been aggressive at promoting consumer-directed health plans and how they could be a better value for their workers.

Third, Hoosier employers have more quickly embraced price-transparency tools to help their employees shop for health care services.

One example is Tennessee-based Healthcare Bluebook, which has signed up clients in Indiana, such as the Archdiocese of Indianapolis, and is now being promoted statewide by Advantage Health Solutions Inc., an Indianapolis-based health insurer.

Another example is California-based Castlight Health, which has signed up a slew of large employers in Indiana, including Indiana University, Purdue University, Cummins Inc., OneAmerica Financial Partners Inc. and CNO Financial Group Inc. Indiana is Castlight’s largest market.

Rosenberg said the growth in consumer-directed health-plan participation will only increase the growth of such services.

“This will continue to be a trend, trying to arm employees with transparency tools,” he said.

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