HDHPs Driving Higher Employee Medical Costs

new study by the Employee Benefit Research Institute (EBRI) found that workers with employer-sponsored health insurance are paying an increasing share of their health care costs. This is driven, primarily, by the growth of the High Deductible Health Plans (HDHPs). These increased in popularity between 2013 and 2019 as employers moved to HDHPs as an option to reduce their costs for employee health care. According to EBRI, employers may have felt increasing plan deductibles was easier than changing carriers or moving to lower cost provider networks, changing drug formularies, or adopting other strategies to keep costs in check.

HDHP enrollees with medical expenses saw their average out-of-pocket costs increase from $737 in 2013 to $906 in 2019. Those in the 75th percentile saw average costs rise from $826 in 2013 to $1,030 in 2019; in the 90th percentile, the increase was from $2,792 in 2013 to $3,295 in 2019. (Spending varied significantly among patients based on different underlying medical conditions.)

Based on research by the EBRI’s Jake Spiegel and Paul Fronstin, PhD, employee deductibles in employer-sponsored health plans have increased dramatically in recent years. Those with individual (non-family) coverage saw increases rise from an inflation-adjusted $650 in 2002 to an average of $1,945 in 2020 – up 336%. Family coverage deductibles were up 289% in the same period – increasing from $1,395 in 2002 to $3,722 in 2020. As a point of comparison, the Consumer Price Index rose 47% during this same period.

Partially offsetting higher deductible costs for employees with HDHPs is the increasing availability of Health Savings Accounts (HSAs) in the workplace. According to Kiplinger, a Devenir Research report says new HSAs increased by eight percent in 2021, and the trend upward is expected to continue. In just two years, more than 38 billion HSAs are forecast, with assets expected to exceed $150 billion.

Premiums Going Up in 2023

In addition to higher deductibles, employers and employees with HDHPs – or other plan types – may be paying higher premiums in 2023. A Kaiser Family Foundation report in July found that early rate submissions by insurers were averaging 10% rate hikes for ACA plans. Covered California said in July that its 2023 rates, while lower than national averages, will increase an average of six percent in 2023. Individual carrier increases range from a reduction of nearly 12% in part of one Southern California county to an increase of 11.7% in three California counties.

Group rates for 2023 are pending for some of Word & Brown’s carrier partners; however, we’ll share information when it becomes available.

Biden Administration Touts Fewer Uninsured

According to information released in early August by the Biden Administration, the uninsured rate in America has fallen to a record low of eight percent.

In a speech on August 2, President Biden touted his successful efforts to build on the Affordable Care Act (ACA), which was signed into law while he was Vice President during the Obama Administration in 2010.

“This progress did not happen by accident,” the president noted. “More than 35 million Americans are enrolled in Affordable Care Act related coverage – the highest total on record. This includes over 21 million people who are enrolled in the ACA’s expansion of Medicaid, coverage that is denied to nearly four million Americans who live in states that have refused to expand Medicaid. And, since the beginning of my Administration, five million more people have gained health insurance coverage – in significant part because of the improvements to the ACA in the American Rescue Plan.”

The American Rescue Plan Act, enacted in 2021 in response to the COVID-19 pandemic, included ACA premium assistance, COVID-19 stimulus funds, and money to support public transportation and other projects. Further ACA premium assistance is planned as part of the Inflation Reduction Act recently approved by Congress and signed into law by President Biden.

Stay up to date on the latest ACA and health insurance news in Word & Brown’s Newsroom.


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