A Brief History of High Deductible Health Plans (HDHP)
Americans started witnessing a remarkable increase in the cost of healthcare since 2000. A report published in 2009 pointed towards an astonishing 135 percent increase in family premiums and 105 percent for individuals over the past decade. Between 2009 and 2013, the premium for both individual and family plans increased by about 78 percent. The figure has skyrocketed since then.
Earlier, employers saw health insurance plans for their employees as a way to save money. However, when the recession hit the country in 2008, employers started decreasing their expenditure. As a result of it, High Deductible Health Plans came up. In general, HDHP follows the simple rule of health insurance – the higher the deductible amount, the lower the premium.
In 2009, around 8 percent of workers were enrolled in employer-sponsored high deductible health plans. However, by 2016, the percentage increased to 29. It has been noticed that employers, who are not opting for HDHP, are increasing the deductible amount to lower the premium amount. In 2009, only 22 percent of workers had a deductible amount of over $1,000 for individual coverage. By the end of 2016, it reached 51 percent.
The Pros & Cons –
High Deductible Health Plans have their pros and cons. Here are those:
- Lower premiums than that of PPO or POS plans
- Networks are not narrowed like HMO
- Healthy people rarely using their health benefits can save money
- People, who are not on expensive medications, can enjoy lower monthly premiums
- Out-of-pocket expenses are at a negotiated rate between the insurance provider and healthcare provider
- HDHP policyholders can go for Health Savings Account to help cover out-of-pocket expenses
- Out-of-pocket expenses are higher for people with chronic illness
- Diagnostic tests, prescriptions, and office visit expenses will be out-of-pocket until the deductible amount is met
- In the case of surgery, it is necessary to reach the deductible amount first to get any health benefits
- The deductible amount can be quite high and can reach up to $13,000 for family coverage