Lower wages change utilization, even in employer-sponsored insurance plans

Workers who make $24,000 or less annually, but still have employer-sponsored health insurance, have higher hospital and emergency department admissions rates and lower utilization of preventive care compared to higher-paid coworkers.

The study, led by Conduent HR Services medical director Bruce Sherman, was published in the February 2017 issue of Health Affairs. The goal was to examine the association between earnings and utilization of healthcare services among those with employer-sponsored commercial coverage. To do so, Sherman and his coauthors used data from nearly 43,000 employees of four self-insured employers that share a private insurance exchange.  

“This study of private exchange enrollees provides direct evidence that the health care delivery system is used differently by subpopulations along the continuum of wage categories, particularly at the extremes,” Sherman and his coauthors wrote.

The lowest-wage group, making $24,000 or less per year, spent only slightly less per patients than those who had $70,000 or more ($4,835 per year versus $5,094). But compared to the top wage earners, they had half the usage of preventive care (19 percent versus 38 percent), almost twice the hospital admission rate (31 individuals per 1,000 versus 17 per 1,000), more than four times the rate of avoidable admissions (4.3 individuals per 1,000 versus 0.9 per 1,000), and more than triple the rate of emergency department visits (370 individuals per 1,000 versus 120 per 1,000).

“Despite the comparatively higher health care spending as a percentage of wages borne by low-wage workers, they did not appear to be savvy consumers of appropriate care,” the study authors wrote. “Rather, their utilization patterns reflected a more reactive approach to health care, perhaps as a result of either necessity or choice.”

The highest-wage group also had different patterns of utilization. Their rates were higher for using outpatient services and prescriptions, while comparatively lower for emergency department and hospital admissions.

“These observations are consistent with behavior by higher-wage earners who treat health services as an investment by placing greater emphasis on consuming health services that are likely to produce health benefits in the future,” Sherman and his coauthors wrote.

The results raised questions about how optimal care can be defined when low-wage earners underutilize more cost-effective services and higher-wage earners overuse them for “peace of mind.” Utilization issues could be remedied, at least partially, by offering on-site clinics or education about appropriate use of healthcare services.

If the problem is driven mostly by financial constraints, however, the authors said there’s no easy solution as employer-sponsored insurance moves more costs onto employees in an effort to keep premiums down.

“Based on our analysis, current benefit design strategies do not appear to be effective in engaging lower-wage workers in their own health care and might actually be creating access barriers to high-value services,” Sherman and his coauthors concluded.