Health Insurance
High-Deductible Health Plan Enrollment Falls for 2nd Straight Year; Now Below 50%
Health insurance needs vary widely. One option is a high-deductible health plan (HDHP), which offers a trade-off of lower monthly premiums and higher deductibles for medical care.
Notably, the percentage of private-sector employees enrolled in HDHPs has fallen for the second year in a row. Before that, HDHP enrollment hadn’t dipped since 2013, according to the newest ValuePenguin study. Here’s a look at where enrollment has changed the most.
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Key findings
- For the second year in a row, the percentage of private-sector employees enrolled in HDHPs has fallen. 49.7% of these employees were enrolled in HDHPs in 2023, down from 53.6% in 2022. Dating to 2012, HDHP enrollment was highest in 2021 at 55.7% and lowest in 2013 at 30.3%.
- South Dakota has the highest rate of private-sector employees enrolled in HDHPs for the second year in a row. Here, 75.8% of these employees were enrolled in HDHPs. South Carolina (70.2%) and Utah (70.1%) follow, up significantly from the prior year.
- Hawaii ranks last for the second year in a row, with just 12.7% of private-sector employees enrolled in HDHPs. It’s the only state with a rate below 30.0%. The District of Columbia (32.6%) and California (34.0%) round out the bottom three.
- South Carolina saw the biggest percentage point increase in private-sector employees enrolled in HDHPs over the prior year. South Carolina saw a 12.0 percentage point increase in the rate of these employees enrolled in HDHPs — the only double-digit jump. Utah (9.5) and Vermont (9.4) follow.
- The rate of private-sector employees enrolled in HDHPs in Montana fell by 20.9 percentage points — the biggest drop of any state. In a distant second, this rate fell 14.3 percentage points in Massachusetts. Wisconsin (13.3) rounds out the bottom three.
HDHP enrollment falls for the 2nd year in a row
In 2023, 49.7% of private-sector employees were enrolled in HDHPs. That’s down from 53.6% in 2022, though those are still some of the highest enrollment rates by year. Enrollment peaked at 55.7% in 2021.
Before 2022 and 2023, HDHP enrollment had last declined in 2013.
HDHP enrollment rates by year
Year | % of private-sector employees enrolled in HDHPs |
|---|---|
| 2012 | 34.3% |
| 2013 | 30.3% |
| 2014 | 35.2% |
| 2015 | 39.4% |
| 2016 | 42.6% |
| 2017 | 48.7% |
| 2018 | 49.1% |
| 2019 | 50.5% |
| 2020 | 52.9% |
| 2021 | 55.7% |
| 2022 | 53.6% |
| 2023 | 49.7% |
Source: ValuePenguin analysis of the State Health Compare tool.
According to ValuePenguin health insurance expert Divya Sangameshwar, the significant changes are largely due to the COVID-19 pandemic.
"After the pandemic, Americans were rattled by the thought of being unprepared for an unexpected medical emergency," she says. Employees had a wider variety of health plans to choose from, including PPOs (preferred provider organizations), HMOs (health maintenance organizations) and high-deductible plans with expanded benefits and linked to HSAs (health savings accounts). "Unfortunately, those options are disappearing," she adds.
In fact, industry data from Willis Towers Watson (via HR Executive) shows a 33% decrease in the number of employers offering only high-deductible plans since peaking in 2020.
South Dakota has the highest HDHP enrollment rate
By state, South Dakota has the highest rate of private-sector employees enrolled in HDHPs for the second year in a row. In 2023, 75.8% of these employees were enrolled in HDHPs, up from 72.2% in 2022.
According to the State Health Compare tool, South Dakota has had rates above the national figure since 2012. Its 2023 figure is the highest yet.
South Carolina (70.2%) and Utah (70.1%) follow, up from ranking 19th and 13th, respectively, when we conducted this study last year. In 2022, 58.2% of private-sector employees in South Carolina and 60.6% in Utah were enrolled in HDHPs.
Affordability could play a role in enrollment here. South Dakota and South Carolina have median household incomes below the U.S. median. Because HDHPs are generally cheaper for those who don’t visit the doctor often, they may be more appealing than health insurance plans with high monthly premiums but lower copays and deductibles.
Conversely, Hawaii ranks last, also for the second year in a row. Here, 12.7% of private-sector employees enrolled in HDHPs — the only state with a rate below 30.0%. That’s down significantly from 21.8% in 2022.
The District of Columbia ranks second-lowest, again for the second year in a row, at 32.6%. That’s down from 36.4% in 2022. California (34.0%) joins the bottom three, down from 42.5% (fifth-worst) in 2022.
All three states have consistently had rates below the national figures since 2013.
Unlike the top-ranking states, the three with the lowest HDHP enrollment rates have median household incomes above the U.S. median. That means plans with higher coverage may be more appealing because residents may be able to afford those higher premiums.
Of note, Hawaii employers have to offer employees health plans compliant with the Hawaii Prepaid Health Care Act (PHCA). This has higher standard-of-care requirements than those federally mandated by the Affordable Care Act (ACA). Additionally, employers in Hawaii can't require employees to pay more than 1.5% of their monthly gross wages for self-only coverage. Few HDHPs would fall under this category.
Full rankings
States with the highest/lowest HDHP enrollment rates
Rank | State | % of private-sector employees enrolled in HDHPs |
|---|---|---|
| 1 | South Dakota | 75.8% |
| 2 | South Carolina | 70.2% |
| 3 | Utah | 70.1% |
| 4 | Vermont | 68.2% |
| 5 | Nebraska | 66.5% |
| 6 | Texas | 62.6% |
| 7 | Iowa | 62.3% |
| 8 | Kentucky | 62.2% |
| 8 | Kansas | 62.2% |
| 10 | New Hampshire | 61.6% |
| 11 | Maine | 61.1% |
| 11 | North Dakota | 61.1% |
Source: ValuePenguin analysis of the State Health Compare tool.
HDHP enrollment jumped 12.0 percentage points in South Carolina
Looking at the states with the biggest increases, South Carolina saw the largest percentage point jump in HDHP enrollment between 2022 and 2023. Enrollment jumped 12.0 percentage points from 58.2% to 70.2%. That makes it the only state with a double-digit increase.
Utah follows, increasing 9.5 percentage points from 60.6% to 70.1%. Vermont rounds out the top three, jumping 9.4 percentage points from 58.8% to 68.2%.
States with the biggest increases in HDHP enrollment rates
Rank | State | % enrolled in HDHPs, 2022 | % enrolled in HDHPs, 2023 | Percentage point change |
|---|---|---|---|---|
| 1 | South Carolina | 58.2% | 70.2% | 12.0 |
| 2 | Utah | 60.6% | 70.1% | 9.5 |
| 3 | Vermont | 58.8% | 68.2% | 9.4 |
Source: ValuePenguin analysis of the State Health Compare tool.
Conversely, Montana saw the biggest decline in HDHP enrollment, falling 20.9 percentage points from 60.2% to 39.3%. Massachusetts ranks second, dropping 14.3 percentage points from 56.4% to 42.1%. Wisconsin rounds out the bottom three, with rates falling 13.3 percentage points from 65.4% to 52.1%.
Overall, HDHP enrollment rates grew in 19 states and fell in 32.
Full rankings
States with the biggest increases/decreases in HDHP enrollment rates
Rank | State | % enrolled in HDHPs, 2022 | % enrolled in HDHPs, 2023 | Percentage point change |
|---|---|---|---|---|
| 1 | South Carolina | 58.2% | 70.2% | 12.0 |
| 2 | Utah | 60.6% | 70.1% | 9.5 |
| 3 | Vermont | 58.8% | 68.2% | 9.4 |
| 4 | West Virginia | 51.3% | 60.4% | 9.1 |
| 5 | Nevada | 39.2% | 46.3% | 7.1 |
| 6 | Kansas | 55.4% | 62.2% | 6.8 |
| 7 | Missouri | 52.9% | 59.6% | 6.7 |
| 8 | Illinois | 48.1% | 54.6% | 6.5 |
| 9 | Mississippi | 47.6% | 54.0% | 6.4 |
| 10 | Rhode Island | 49.0% | 55.0% | 6.0 |
| 11 | Alabama | 37.3% | 42.1% | 4.8 |
| 12 | New Mexico | 43.9% | 48.5% | 4.6 |
Source: ValuePenguin analysis of the State Health Compare tool.
Enrolling in an HDHP: Top expert tips
It’s important to look beyond premiums when considering an HDHP. It may be a great option for some and a bad choice for others.
Who should consider an HDHP and why? Sangameshwar offers this:
- Those who are healthy. "If you’re in good health, have extra money to set aside in a health savings account and plan to use your insurance mainly for routine preventive screenings, an HDHP can help maximize your health care dollars," she says.
- Those who pay medical expenses up front. "If you pay up front for covered medical expenses, you may be charged a lower, negotiated rate between the health care provider and the insurance company," she says. "Preventive services like vaccinations, colonoscopies, mammograms and flu shots are also fully covered, so there’s no need to budget for these services."
Who shouldn’t consider an HDHP and why?
- Those who can’t afford the deductible. "A plan with deductibles you can’t afford may force you into skipping care altogether or not filling prescriptions because you worry about going into debt to afford care," Sangameshwar says.
- Those who don’t have or don’t plan to add an HSA. "HDHPs can become very expensive if they don’t come with an HSA," she says. "Money in an HSA can be used tax-free at any time to pay qualified medical costs."
- Those who have chronic conditions or illnesses. "An HDHP is not a good idea if you need regular care," Sangameshwar says. "You’ll need to pay your entire deductible out of pocket before you can get covered, making it extremely expensive to seek the life-saving care you need."
Finally, if your employer only offers plans with benefits that don’t meet your health care needs, Sangameshwar encourages shopping around.
"Either by looking at the plans offered by your spouse or partner’s employer or by shopping for a plan on HealthCare.gov, you can find one that meets your needs," she says. "Don’t get turned off by the high sticker prices of plans on the government exchange — most Americans qualify for subsidies that’ll reduce premiums to a more affordable level. You don’t have to take the plan your employer offers."
Methodology
ValuePenguin researchers analyzed data from the State Health Compare tool, which aggregates the rate of U.S. private-sector workers enrolled in high-deductible health plans (HDHPs) nationally and by state.