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Rising Healthcare Costs and Todays Employer

As many of your clients can attest to, rising health care costs are at the forefront of many of their employees' minds today. In a recent Pew Research Center Survey (Public’s Top Priority for 2022: Strengthening the Nation’s Economy), they found that 61 percent of adults rate reducing healthcare costs as a top policy priority for the President and Congress to address, led only by strengthening the economy (71% of those surveyed) . In addition to countless surveys, there is plenty of evidence available that supports spending on health care goods and services has outpaced other types of spending. As a portion of GDP (gross domestic product) , spending on health care has dramatically expanded to 19.7 percent in 2020 (Centers for Medicare and Medicaid Services 2020).

As these numbers have increased, employees have been feeling the weight of inflating deductibles, which have increased significantly in recent years as employers attempt to mitigate climbing health care costs of their own. For your clients, elevating medical plan deductibles might have seemed to be the easiest way to alleviate these costs. In the past, employers were educated by brokers and plan administrators that increasing plan deductibles could prove easier than changing carriers, looking to budget friendly health care providers, seeking affordability-based health plans, changing prescription formularies, and other commonly used strategies for keeping healthcare costs under control.

While the cause of these increases are debatable, workers deductibles in employer sponsored health plans have exponentially increased in recent years. Insured’s with individual coverage have seen median deductibles rise from the inflation adjusted amount of $650 (2002) to $1,945 at the close of 2020, an increase of 336%. Those with family coverage have seen average deductible increases as well, increasing nearly 289% from an inflation adjusted $1,395 in 2002 to $3,722 today.

With employers' continuing to integrate high-deductible health insurance plans and the rise in the cost of deductibles, this has caused out-of-pocket costs paid by employees to increase in recent years, offsetting the positive impact of financial wellness initiatives many organizations have adopted.

According to a recent Employee Benefit Research Institute issue brief, “Recent Trends in Patient Out-of-Pocket Cost Sharing,” the share of costs paid by employees escalated from 17.4% in 2013 to 19% in 2019, before the COVID-19 related decline to 16.4% in 2020. The research indicates people enrolled in a number of different health plan types, including:

Exclusive Provider Organizations (EPO)

Health Maintenance Organizations (HMO)

Preferred Provider Organization (PPO)

Point-of-Service Plans (POS)

Consumer-Directed Health Plans (CDHP)

High-Deductible Health Plans (HDHP)

According to research associates with EBRI, from 2013 and 2019, “the share of expenditures that patient’s pay out of pocket increased”. The out-of-pocket cost increases between 2013 and 2019 were due to the exorbitant amount of people switching and increasingly enrolling in HDHP plans with increasing deductibles, which ultimately resulted in employees paying more out of pocket.

EBRI’s brief also indicates, deductibles for employees in employer-sponsored health plans have risen significantly since 2002. Individual coverage deductibles, with adjustments for inflation, were a staggering $1,945 in 2020 compared to 2002 with an average of $650, a 336 percent increase. The increases were astronomical for family coverage as well. With deductibles increasing nearly 289%, from $1,395 in 2002 to $3,722 in 2020.

Juxtaposed, according to the Federal Reserve, the Consumer Price Index for All Urban Consumers, the measure used to calculate inflation and pricing levels, increased by nearly 50% over the same indicated time.

As indicated above, due to price increases across nearly our whole economy, Employers are constantly facing a growing economic strain between controlling their balance sheet’s impact on health care costs and providing employees with avenues to obtain some form of financial wellness. As a recruitment and retention tool, employers are increasingly implementing financial wellness programs as a means to improve their employees' financial wellbeing. Offsetting this however, in a continuous effort to combat increased costs in health care, employers have been guided by administrators and brokers to raise their health plan’s deductibles, in most cases resulting in the reduction of the positive impacts implemented with financial wellness initiatives.

While EBRI’s research found that the share of costs clients and their employees are paying out of pocket has increased, there is an indicator for this reasoning. The increase in the share of expenses paid out of pocket observed between 2013 to 2019 and continuing through to today appears to be driven by an increase in the number of employers offering and workers enrolling in HDHP plans with higher deductibles, with some going full replacement, offering only high-deductible plans.

The Tension is Real

With retention, recruitment, and overall employee wellness on the minds of employers, they are increasingly embracing financial wellness strategies to help diminish their employees’ financial stress. However, a trend being recognized here and showing to be counter productive to these efforts is the employers’ selection of health insurance that requires workers to increase their share of payment for medical expenditures. Asking or in some cases leaving no other option for workers to pay a higher share of their medical expenditures may prove to be counterintuitive to the trend of employers placing additional emphasis on their employees’ financial well-being.

This tension creates a conundrum for employers looking to provide true value in benefits to their employees.

Many in the C-suite look only at cost, whereas there are plenty of medical plan strategies they can employ which don’t take long to implement and see impact. A number of these plans can ultimately ultimately lower costs in general from the top down.

While some may say there is not a single thing in particular that employers and plan sponsors can do to strike the very delicate balance between fostering their employees’ financial wellness and providing an affordable and usable medical plan benefit, we disagree. Affordability-based medical plans are available that do afford employers the best of both worlds; the ability to assist in financial wellness for their employees and provide a viable benefit option that is affordable without increasingly high deductibles.

We recommend brokers take a long term approach and perform a true market check to find a balance and not use what is perhaps what may appear to be the easy strategy; high-deductible health plans. There are a suite of health plan options available that can cut health costs while still remaining affordable.

We offer Affordability Based Medical Insurance Plans

Coterie Advisory Group’s Fundamental Care® programs are Affordability-Based Medical Plans which are designed for various niche-markets, including: small business and their employees, part-time, hourly, seasonal employees at enterprise-level companies, independent contractors, gig-economy workers, and association members.

Fundamental Care is designed to meet the needs of the underserved, by providing access to unique and affordable health insurance benefits on a guaranteed issue basis. Limited-Day and Limited-Benefit Indemnity plans can be customized and structured with affordable premiums and no deductibles. Coterie Advisor's can also provide Minimum Essential Coverage (MEC) and bronze-level Minimum Value Plan (MVP) options for client's needing a solution for their full-time equivalent employees.

The combined offering of the Fundamental Care plans is unique to the marketplace. Through Coterie's Affordability Based Medical Plan Strategy, the plans not only provide needed healthcare to the insured employees but also offer companies a strategy to improve recruiting and reduce turnover by rewarding a carve-out class or more-tenured employees.

Fundamental Care offers two Affordability-Based Medical insurance options which can assist:

An employer-sponsored, level-funded, Limited-Day Health Plan for small to mid-size employers and carve-out classes of large employers. Plans cost 30-40% less than HDHPs with no deductibles. A near-comprehensive plan that both employers and employees can afford.

  • An employer-sponsored, level-funded, Limited-Day Health Plan for small to mid-size employers and carve-out classes of large employers. Plans cost 30-40% less than HDHPs with no deductibles. A near-comprehensive plan that both employers and employees can afford.


  • An affordable Bronze MVP plan – with no deductible

  • An affordable mid-range MEC plan with limited days of hospitalization– with no deductible

  • A Value priced outpatient expense MEC plan- with no deductible

  • A Limited-Benefit Indemnity Plan for large employers with part-time, hourly, and seasonal employees; and for associations and affinity groups. An affordable option for the uninsured that provides coverage for basic medical expenses.

  • Available with or without Minimum Essential Coverage (MEC) and Minimum Value Plans (MVP)

With an understanding of the unique challenges that organizations face across the different classes of their employee populations. To aid in decision support, we gather data, provide customized Statistical Modeling Reports to help guide decision support, and determine the appropriate benefit levels and the right price-points for our potential clients' product offering.

Both can be customized and structured with affordable premiums and no deductibles. The plans are high in potential coverage, guaranteed issue, and include upfront, day-one benefits.

Coterie Advisory Group, Inc. is a National insurance program manager and consultative advisor who delivers Affordability Based Medical Plan Strategies to help benefit brokers, consultants, employers, and associations in the benefits industry.


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