Are HDHPs Supplanting Traditional Health Plans? Not Quite Yet.

Are HDHPs Supplanting Traditional Health Plans? Not Quite Yet.

A recent data brief from the Centers for Disease Control and Prevention illustrates the growth in popularity of high-deductible health plans (HDHPs) over the past decade. Between 2007 through 2017, the CDC data show, the percentage of adults 18–64 with employer-provided health insurance who were enrolled in an HDHP with a health savings account increased from 4.2 percent to 18.9 percent, while the percentage enrolled in an HDHP without an HSA rose from 10.6 percent to 24.5 percent. In 2017, enrollment in HDHPs was highest among adults aged 30–44 than among other age demographic.

The greater an individual’s family income level and educational attainment, the more likely they were to be enrolled in an HDHP with an HSA, the CDC found, while the likelihood of enrollment in both traditional health plans and non-HSA high-deductible plans decreased as income and education rose. This may reflect a greater understanding of the investment value of HSAs among higher-earning and more educated employees.

Other recent data tells a similar story: Last year, Bank of America Merrill Lynch’s Plan Wellness Scorecard found that more employers were offering HSAs, more employees were using them, and their account balances were growing. That report also found that employees were using about 70 percent of their HSA contributions to cover health expenditures during the year and saving the other 30 percent for future expenses.

However, while the adoption of HDHPs has certainly grown over the past decade, our benefits research at Gartner shows that their popularity has been leveling off over the past three years, when deductibles for individual plans have actually been trending downward. (Gartner Total Rewards Leadership Council clients can view our full report on medical plan trends and observations for 2018 here.)

What is less clear from the CDC data is to what degree employees are opting for HDHPs among a range of health insurance options or whether the increase mainly reflects that more employers are offering high-deductible plans as a means of managing growing health care costs. In a growing number of cases, they are the only health insurance option available to employees, Employee Benefit News points out:

The uptick in high-deductible plans may have to do with employers offering them more, sometimes as the only health insurance option, according to Paul Fronstin, director of health research at the Employee Benefit Research Institute. The plans, he says, are especially attractive to employers looking for easier ways to decrease insurance premiums or slow premium growth. Rather than change health insurer, network, or services provided under traditional plans, it’s much easier to increase deductibles.

“Relative to everything else, it’s easier. You’re not going to affect employee relationships with their doctors if you change networks or insurance companies,” Fronstin says.

HDHPs and HSAs are also popular with the Trump administration and Republicans in the US Congress, who have sought to promote their adoption as they attempt to unwind the regulations associated with the Affordable Care Act. A replacement for the ACA proposed by the GOP last year would have expanded the allowable size of HSAs and flexible spending accounts, among other changes, but this legislation ultimately failed to pass both chambers of Congress.