PPO vs. HDHP - High Deductibles and Health Care Consumerism

Is Today's PPO Just an HDHP in Disguise?

Higher deductibles are one of the driving forces behind the evolution of health care consumerism. When subscribers have to pay more before their insurance kicks in, they’re more likely to be prudent in their health care decisions and much less likely to overuse the medical system. As employers, insurers and our government attempt to rein in health care spending, we’ve been seeing dramatic shifts in health plan design to feature higher deductibles.

This trend was reinforced in the recently released State of Employee Benefits 2016, Midsize Employer Edition, where we looked at anonymous enrollment activity across nearly 2,400 midsize employers (100-999 employees) on our platform to provide insight for the 2016 plan year.

Not surprisingly, we found that high-deductible health plans (HDHPs) lived up to their namesake, carrying an average deductible of $2,382 for individual coverage and $4,889 for family coverage. But while these numbers are certainly higher than their counterparts in the traditional, copay-based PPOs, deductibles for those health plans are by no means low.

In fact, PPOs may now just be a lighter form of HDHPs. Our mid-market research revealed that, for 2016, the average PPO plan carries a $1,415 deductible for individual coverage and a $3,403 deductible for family coverage - exceeding the minimum deductible levels for HDHP designation by the IRS ($1,300 and $2,600, respectively). 



It seems that nearly everyone is experiencing the push toward health care consumerism. And that's probably a good thing. Theoretically, the responsibility for higher out-of-pocket costs can create positive behavior change that leads to less total health care spending and an overall healthier workforce. The question is: are employees prepared to take on this financial burden?

Our research suggests they may not be. Download the full State of Employee Benefits 2016, Midsize Employer Edition to learn more!