Giving Your HDHP Plans the Boot

“It’s expensive to be poor.”

Have you heard the phrase, “It’s expensive to be poor”? This concept is often illustrated by a pair of boots: an individual with less money can only afford an okay pair of boots for $30, within 2 months, they need to be replaced and another $30 is spent; a pattern emerges. An individual with more money can buy a good pair of boots for $100 and they may last for well over a year. In the end, people who have the money to spend a little more upfront often end up spending less in the long run. This same concept can be applied to many facets of life: buying a car, buying items in bulk, and, unfortunately, health insurance coverage as well.

High-deductible health plans, or HDHPs, are health insurance plans known to have the lowest premium but also having astronomical, often unattainable, deductibles. With a higher deductible, individuals are then responsible for a significant amount of out-of-pocket health costs before insurance coverage kicks in. While HDHPs are incentivized by their joint offering with an HSA savings account, which do boast incredible tax advantages (that very few know of or can even take advantage of), the plans are wrought with disadvantages as well.

The Problem with HDHPs: Care Avoidance

HDHPs particularly affect low-income individuals and families who struggle to afford the upfront costs of medical care. A recent study found that in companies employing low-wage workers, nearly 46% of those do not have sufficient savings to cover their annual deductible costs. Unfortunately, this has a domino effect.  While the insurance premium is more reasonable, the threat of additional costs looms dark overhead due to its complex nature and lack of transparent healthcare pricing. Almost 52% of adults could not afford an unexpected medical bill of just $500 without going into debt. As a result, those in HDHPs are less likely to seek medical treatment even for preventative care that would be covered by the plan because of the fear of unpredictable costs and a general lack of understanding of their benefits.

One could argue that the increased out-of-pocket costs could deter members from seeking out unnecessary care. However, those with chronic conditions, in which continuous care is critical, avoid treatment far outnumber the small sum of people deterred from seeking unnecessary care. According to a survey conducted by The Commonwealth Fund, “Thirty-eight percent of adults enrolled in HDHPs either did not fill a prescription; skipped a recommended medical test, treatment, or follow-up; or did not see a specialist when needed.” Additionally, the KFF found that 1 in 10 adults had said they have cut pills in half or skipped dosages due to the high cost of medications. 

Their reluctance to seek help for small, oftentimes preventable health issues can result in medical emergencies or lead to chronic conditions, thus ending up costing them more in the long run. They’ve bought the cheap boots and entered the endless cycle. 

An Employer’s Responsibility

While an HDHP is riddled with flaws, more and more employers are offering these plans to their employees as the least expensive option for medical coverage, despite employees largely being unable or unwilling to use the plan at all. According to Towers Watson, the jump from employers offering HDHP plans went from 54% in 2019, to 86% in 2023, with enrollment in these plans more than doubling from 20% to 43% in the same time frame.

I was one of the brokers offering and suggesting these plans to clients as a plausible solution. On the surface, it’s an attractive offering with the potential to solve many surface-level issues. I now see how short sighted that was since it isn’t possible for consumerism to exist in healthcare. Changing the plan design created immediate savings in premiums but changed nothing as it relates to the rising cost of offering coverage in the long run.

Unfortunately, once employers begin offering these plans, they become stuck in a loop themselves. As the cost of insurance plans rise, they’re forced to pass those costs onto their employees by increasing the premiums for the plans offered.  Employees who cannot afford the increased rate for “decent plans” settle for the cheapest, aka the HDHP plan. 

Breaking the Cycle

In short, our healthcare system is broken (in more ways than one). But one cannot “insurance their way out” of our broken system. Employers are struggling to pilot this mess on their own. They’ve become complacent in their offerings and relegate themselves to accepting things as they are because that’s how it’s always been. HR simply follows the status quo and leadership fails to challenge them to find alternate solutions. 

I often get questions about how SHARx can work with an employer’s HDHP plan; that’s not the right question. The question you should be asking is: how can I enhance my health plan offering by mitigating inflated, unpredictable costs to invest in plans that take the burden off employees?

By implementing SHARx, a pharmacy procurement solutions provider, employers can reverse course and use the impact of working with SHARx to enhance their health plans to get to a place where employees can understand and value the amazing benefits their employer is offering to them. By opting out of an ineffective plan structure (that is constantly decreasing in value), employers can break out of the endless cycle of simply providing the “cheap boots.”