The move would be implemented in 2016 at the earliest, Maureen Cahill, a senior vice president at Highmark who oversees the company’s employee benefits, revealed on Thursday at a forum sponsored by the Pittsburgh Business Group on Health.
Limiting employees to a high-deductible plan would substantially increase their out-of-pocket health costs but will help Highmark reduce its health insurance expenses.
It signals to employers and their workers that high-deductible plans, which are an increasingly popular option for some companies, are poised to become the only health plan offered in workplaces, experts said.
“I think consumer-directed health plans are here to stay,” Cahill said during the meeting of the business group, which represents many of the largest employers in Western Pennsylvania. “We need to embrace that and figure out how to make it work.”
She said the decision was made several years ago to move all employees to high-deductible plans but has been delayed by “tumultuous” events at the company, including CEO changes, the establishment of hospital system Allegheny Health Network and a contract fight with UPMC.
High-deductible plans allow employees to pay a lower premium but require them to pay a higher deductible for medical treatment than traditional health coverage plans before insurance kicks in. Many companies, including Highmark, offer both options and allow employees to chose.
Highmark employees in high-deductible plans — about 3,800 workers this year — face out-of-pocket payments of $1,250 to $1,750 a year for medical treatments before insurance kicks in and covers most of the cost, said Lynn Seay, a Highmark spokeswoman.
After reaching the deductible, insurance covers 90 percent of costs until employees hit an out-of-pocket maximum of $2,500 to $3,500, depending on the specific coverage, Seay said.
Traditional plans have a higher premium, but the deductible is typically lower or there is none. These plans often carry a fixed co-payment for office visits, prescriptions and hospital treatment, unlike the percentage share required by a high-deductible option.
Highmark’s decision to move all employees to the plans is likely to influence other companies to do the same, said Lorin Lacy, a health care consultant with Buck Consultants, a Downtown benefits firm.
“I think it certainly does add to the signals we’ve seen out there for the last couple years,” Lacy said. “Highmark as a major driver in this area. That certainly sends a message to the community.”
The lower premiums associated with high-deductible plans can be financially beneficial to younger workers who are healthy and rarely use medical services. But for older or sick workers, the plans can discourage treatments, cause people to skip needed medications, and lead to worsening of chronic conditions and greater long-term expense, said Beth Capell, a lobbyist for Health Access, a consumer advocacy group in Sacramento, Calif.
“There’s no question that high-deductible health plans undermine access to care,” she said. “They reduce premiums because they reduce utilization. They reduce both inappropriate and appropriate care.”
The plans can cause financial problems for hospitals, said A.J. Harper, president of the Hospital Council of Western Pennsylvania, a Warrendale-based trade group.
Many patients end up in the hospital unexpectedly and are unprepared to pay a bill for thousands of dollars, Harper said. Collecting on those bills can be a challenge for hospitals — which squeeze already tight profit margins.
“It has a major impact (in the) short-term on cash flow,” he said.