You already knew that health care is insanely expensive. What you might not have known is how large companies and their employees are responding to the rising costs.
According to a trove of data released Feb. 16 by Benefitfocus, an online benefits management platform based in Charleston, South Carolina, the overwhelming answer is through high-deductible health plans. Fifty-two percent of large employers now offer at least one HDHP (plans with a deductible of at least $5,000).
In addition, 41 percent of employees are choosing an HDHP over a traditional plan. This is especially true for younger employees. HDHP adoption rates are highest among millennials--a group Benefitfocus broadly defines as those born between 1980 and 1998--at approximately 44 percent. Enrollment in HDHPs decreases with each older generation, bottoming at 22 percent for a group Benefitfocus calls "traditionalists"--employees born in 1948 or earlier.
These results are based on data from about 500 of Benefitfocus's large customers--that is, customers with 1,000 or more employees. All told, the findings encompass a sample of more than 700,000 employees from a diverse set of industries. (You can download a copy of the report here.)
Are the findings that surprising? It depends whom you ask. Certainly, it's no surprise millennials can be thrifty. Moreover, it's common sense that one employer and employee response to rising healthcare costs would be turning to plans in which the lofty deductible offsets the exorbitant premiums--especially among younger employees who, generally speaking, need medical services a lot less than their older coworkers.
While Benefitfocus wasn't shocked by the overall trend of HDHP growth, the 41 percent figure was high enough to catch their attention. "In advance of this data, my assumption was always that the average U.S. employee selected healthcare like the non-educated American picks wine--just by price," says Jeff Oldham, vice president of Benefitfocus's Benefitstore unit, which specializes in voluntary benefits (e.g. coverage for things like critical illness, hospital indemnity, and accidents). "That 41 percent tells me people are realizing, 'hey, maybe I've been over-insured for years.'"
Leaders at large companies--especially company owners and human resources executives--are likely to find the specific numbers in the report's appendix of interest as a resource. The appendix offers specific financial figures about the costs of premiums for employees and employers. If those figures are lower than what you and your employees are paying, you can potentially use them as leverage to negotiate with your brokers.
For example, for an HDHP family plan in Benefitfocus's data set, the average annual cost for the employee is $2,815. The average annual cost for the employer is $11,501. For an HMO family plan, the average annual cost for the employee is $3,493. The average annual cost for the employer is $11,415. For a PPO family plan, the average annual cost for the employee is $4,262. The average annual cost for the employer is $11,436.
What you can glean from these figures, too, is that it doesn't cost much more--on a per employee basis--for an employer to offer an HDHP plan. So if your workforce is skewing younger, offering an HDHP is likely a cost-effective way to give your workers a more affordable and fitting benefits package. And surprise, surprise: The folks at Benefitfocus know just where you can find one.