Open enrollment season: A time to show your employees you care

As open enrollment season approaches, the media is full of stories about the increasing cost of health care premiums, but much less attention is paid to the increased shifting of other health-related costs to employees. We all want lower premiums, but employers need to look at whether the steps they take to achieve lower premiums could be increasing the overall cost of health care for valued employees.

When health care costs go up, health care usage goes down, and that can create a host of avoidable problems. When people delay annual screenings because of cost, serious conditions such as cancer may go undetected until the disease is advanced and harder to treat. If employees with chronic conditions like diabetes don’t follow their treatment regimen due to high out-of-pocket expenses, they can get sicker and even wind up in the hospital.

Employers can help avoid these unintended consequences by ensuring that the benefit plans they offer focus on keeping employees’ out-of-pocket costs low, and by ensuring that their employees understand what’s included in their plans and how they can access their benefits in the least costly way.

For example, most health insurance plans cover preventive care such as annual physicals and screenings on a pre-deductible basis, meaning that these exams do not cost the employee anything out-of-pocket. What’s less known is that High Deductible Health Plans (HDHPs), which generally do not cover any health care services until the full deductible of at least $1,500 is met, can cover these critical services on a pre-deductible basis. HDHPs may also cover certain treatments for chronic conditions such as diabetes, heart disease, asthma, and depression without requiring meeting the deductible first. Make sure that any HDHPs offered include pre-deductible coverage for all qualified preventive and chronic condition treatments and – just as important – make sure that the employees enrolled in such plans understand their coverage.

Avoid Cost-Shifting

Employers should take care to avoid other cost-shifting measures that can decrease treatment adherence such as overly restrictive prescription drug formularies. They might be surprised to learn that the three largest Pharmacy Benefits Managers (PBMs), which collectively process approximately 85% of U.S. prescription drug claims, routinely leave generic drugs off their formularies while covering the brand-name equivalents. Why? Because PBMs typically exchange a preferred spot on a formulary for cash-back rebates on a drug’s list price. In other industries this would be called “pay to play,” but in drug pricing it’s a common practice that clearly ranks patients’ needs last.

When designing benefit plans, include an “open” formulary that allows all FDA-approved drugs to be covered as appropriate and medically necessary. Require that all rebates — or at least a designated percentage — be passed on to patients to decrease their out-of-pocket costs.

And look at other ways to minimize out-of-pocket costs for patients with chronic conditions, such as offering copay-only plans for prescription medications. Many higher-tier medicines require “co-insurance,” which is based on a percentage of a drug’s list price rather than a flat copayment. Percentage-based cost sharing can quickly become out-of-reach for most patients, resulting in decreased medication adherence and worse health outcomes.

Today’s health insurance market is a complicated landscape where what you see is not always what you get. Trying to balance the high cost of health benefits with the needs of employees means asking tough questions: Are promised cost savings actually the result of employees not using health care services? Do savings in one benefit category (such as prescription drugs) lead to increased costs in another (such as medical services)?

Related: Brokers, employers see a need for more options in coming open enrollment season

Employers can show their employees they care through better benefits. Your employees want to know that you have their backs and open enrollment season is a time to show you do.

Patricia J. Goldsmith is Chief Executive Officer of CancerCare. A frequent speaker at national meetings and symposia, Goldsmith was named in 2021 to Forbes Magazine’s 50 Over 50 Vision List, honoring women making an impact on society and culture.