Highmark to switch its workers to high-deductible insurance plans
Highmark Health, parent company of the state's largest health insurer and Pittsburgh's second-largest hospital network, plans to switch its 38,000 employees to high-deductible health plans.
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.
Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or email@example.com.
Add Alex Nixon to your Google+ circles.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Fifth Third Bank selling Pittsburgh branches to First National
- Alcoa putting $60M into Upper Burrell tech center expansion
- Pa. business interests decry EPA ozone proposal as economic albatross
- Trib Total Media puts 9 Western Pa. newspapers up for sale
- Just Mayo has egg industry in a panic, emails show
- Consumer Financial Protection Bureau gives alternative to customer service frustrations
- PPG’s new CEO to push organic growth with existing clients
- Stock indexes enter correction territory; bear market could be lurking
- Steelworkers union says ATI talks to resume
- U.S. stocks bounce back from precipitous drop
- Housing bright spot as Beige Book survey shows Pittsburgh region’s growth slight