Doing Health Care

Like the song made popular by Frank Sinatra, “I Did It My Way,” more employees are managing healthcare their way, choosing consumer-directed health plans with high deductibles and health savings plans. In fact, a study by AON Hewitt, reports that employees are choosing these plans over HMO’s. An article in Forbes, "HMOs Decline, Consumer Plans Rise As Health Insurance Option," reports that while PPOs are still the preferred health care option, 58 percent of the 2,000 employers studied offered consumer-directed health plans in 2011, up from 41 percent in 2010. The number of employers offering HMOs dropped from 41 percent in 2010 to 38 percent in 2011.

The shift to a higher-deductible plan that puts more of the risk on the employee seems to go against the current economic situation. Why are consumers willing to  take more risk when salaries are down and the job market is unstable at best? There are a number of factors that make these higher risk plans attractive.

1. PPOs, or Preferred Provider Organizations often come with a hefty price tag. You pay for flexibility and a higher level of benefits, lower co-pays and other add-on services not available with an HMO or consumer-directed plan. Consumer-directed plans often come with a lower monthly premium, which means more dollars in the paycheck available for gas, rent or the mortgage payment. Employees can make choices on how to spend their money and keep more of it for other expenses.
    
2. Consumer-directed plans allow employees to set aside some of their earnings in a health savings account similar to an IRA that is invested and can earn interest. Some companies match the employee’s contributions in some measure, adding to the funds available for health care needs, deductibles, prescriptions and other costs, depending on the plan provisions. In some cases, the health savings account can equal the amount of the plan’s deductible. Some health savings accounts or HSAs are portable or may be converted to a regular IRA if an employee leaves the job.
    
3. Employees are more discerning with their “own” money. There’s a psychological difference in just filing a claim with the insurance company and watching their balance of a health savings account dwindle. The study found that employees considered the types of medical procedures and services and how the cost could exhaust or deplete their accounts.
    
4. Employees are more involved in managing their health care. Making good choices that cost less, like changing diet and exercise. They are also utilizing preventive health care services and smoking cessation programs that are less than expensive surgeries or treatments. They also help keep employees well and on the job. 
    

While the article stated that two-thirds of employees still choose a PPO healthcare plan, more large organizations are offering  consumer-directed health plans. Lower premiums and a measure of control over the cost and delivery of healthcare services are a plus for both the employee and employer. As healthcare evolves with the Affordable Health Care Act in 2014, employers and employees may have new choices and options to consider. Until then, employees can choose to “do it (healthcare) their way.”