Study: Employees often pick lower-cost health plans

• Employees opt for health insurance plans that feature higher deductibles
• Accountable Care Organizations a key element of the 2010 health care law
• Companies may make wrong assumptions on what plans employees want

WASHINGTON -- Sixty percent of employees allowed to choose between a traditional employer-sponsored health insurance plan and a cheaper, high-deductible or limited network plan opted for the lower prices, a study of employees released Tuesday shows.

The data from 2,503 employees in New York and New Jersey showed that 80% of people chose a plan other than their employer's traditional offering, even if the costs remained the same to the employee, said Alan Cohen, chief strategy officer of Liazon, which provides health exchanges to private employees.

The options included a traditional no-deductible plan, higher-deductible plans in conjunction with health savings accounts, and plans that limited employees to a care network built around one primary care doctor or a limited network around an accountable care organization.

"Most companies were offering high-cost plans and were paying for those plans assuming that's what employees wanted," Cohen said. "But when people see the real costs of these plans, they try to save money."

"With ACOs, they're barking up the right tree," Cohen said. "This shows they can be really attractive to people."The results, Cohen said, show an acceptance of a key part of the 2010 health care law -- Accountable Care Organizations, groups of care givers that work together to provide better care at lower costs. Many hospitals are moving toward them because of provisions in the health law that move away from fee-for-service care to coordinated care that discourages duplication, errors and unnecessary procedures.

Each plan's benefits were the same; just the payment structure differed. For example, Cohen said, if an employer had paid $600 a month in premiums and the employee $100 before, the employee could instead choose a plan that cost $400 a month with a lower employee premium but a higher deductible. The extra $200 a month from the employer could either go into a health savings account or toward another insurance policy, such as life, vision or dental. About half of the employees chose plans with health savings accounts.

"We've been seeing these results for more than five years," Cohen said. "People make completely different choices than what companies make on their behalf."

The number of people enrolled in health savings accounts (HSA) has more than tripled in the last six years from 4.5 million people in January 2007 to 15.5 million in January 2013, according to America's Health Insurance Plans, a trade association that represents health insurers.

"HSA plans encourage individuals to take an active role in their health care decisions while stretching their health care dollars," Karen Ignagni, AHIP president, said in a statement about the new numbers.

Medicare Shared Savings plans now include more than 250 ACOs, while at least 428 private ACOs have formed, according to Health Affairs journal. When the Affordable Care Act passed in 2010, there were 71 private ACOs.

However, Cohen said providing high subsidies through the health exchanges for people who make less than 400% of the poverty level could encourage people to spend more on insurance than they otherwise would.

"It also tells the government they should be concentrating on those bronze and silver plans," he said, referring to the "metal" payment structures that will be offered through the health exchanges. Health exchanges are websites where people will be able to purchase health insurance by comparing in an apples-to-apples way benefits and and prices. Gold and platinum plans have lower deductibles and co-pays, while bronze and silver plans have higher deductibles and health savings accounts.

In the future, Cohen said he expects to see several options used more widely to lower costs, such as rewards for low cholesterol or keeping diabetes under control, incentives to join gyms and benefits for participating in healthy lifestyle programs.

The data also shows that businesses could save money while providing their employees with more choices, he said. Some of those choices, such as closed-network programs or single primary-care physician-based programs, have been avoided in the past because the common wisdom is that people don't like being limited by what doctors they may see.