Researchers Say High-Deductible Plans (HDHP) Reduce the Dominance of Preferred Provider Organizations (PPO)

According to Milliman, many consumers prefer traditional PPO coverage for a host of reasons, mainly because they know they understand how such plans work and are comfortable in the design. There is also the fear of high deductibles. All told, the reluctance by some employees, even when shown the possible financial benefits of moving to an HDHP with higher employer contributions, is a challenge for employers looking at full replacement.

A Kaiser Family Foundation Study indicated that there is an employer shift in health care costs to consumers. According to researchers, only 55% of plans had a deductible as recently as 10 years ago. Now, enrollment in HDHPs has nearly doubled since 2010, up to 24% in 2015. Kaiser said deductibles have increased 67% over the past five years, with the average deductible for single coverage growing from $917 to $1,318.

Mercer expects to see growth continue from the 48% offering HDHPs now for those employers with greater than 500 lives to 66% doing so over the next three years. The increase in HDHP enrollment has been sharp, according to Mercer’s figures, with membership in such plans at 23% in 2014 from just 8% in 2009.

Our own experience agrees with the findings of Milliman, Kaiser Family Foundation and Mercer. The majority of our health care clients now offer HDHP plans and expect to see a higher number of their employees choose these plans going forward.

As cost sharing with employers continues to grow, we expect more employees to start looking at the public exchanges as an option. Eventually we may see only subsidies from employers for the purchase of health care benefits. You can be certain that consumers going forward will be expected to share more of the cost of their health care benefits.