Open enrollment begins November 1 for insurance shopping on the ACA exchanges (healthcare.gov in Pennsylvania). You can switch plans or enroll in one for the first time. Many plans offer lower premiums in return for higher co-pays and deductibles. However, new research suggests this may be a bad trade-off – for you and for public health.
Two regular contributors to the Field Clinic blog, Bob Doherty of the American College of Physicians and David Grande, MD, MPA of the Perelman School of Medicine at the University of Pennsylvania, offer their perspectives.
High-deductible plans cut costs at patients' expense
Are high-deductible plans causing people to forgo getting needed care? A growing body of evidence suggests that they do.
A recent study examined a large self-insured firm that shifted more than 75,000 of its employees from a zero-deductible health care plan to a high-deductible health plan. The company also contributed a $3,750 subsidy for employees to set up a health savings account that they could use for any health cost, along with online tools to look up prices.
The shift saved the firm a lot of money, as expected – a decline of about 15% in a single year. But, here's the bad news: these savings didn't happen because people became "better shoppers", they just received less medical care—including fewer preventive services like recommended cancer screenings. The plan didn't create smarter shoppers – it risked creating sicker patients.
Other studies have reached similar conclusions. A 2007 survey found that 29% of people with high-deductible health plans delayed or skipped care because of cost compared to 16% of those with low-deductible plans. A systematic review of studies of patients who had or were at risk of developing cardiovascular disease concluded that cost-sharing may reduce medication adherence among people of lower socioeconomic status.
Yet plans with deductibles almost always have higher premiums, unless other cost controls are imposed, many of which would be controversial and unpopular. Employers and government programs could exclude coverage for expensive drugs and procedures, but this would open them up to charges of "rationing" care. The government could impose more regulations to limit out-of-pocket expenses—the Affordable Care Act already caps total annual out-of-pocket expenses —but this would be heavily opposed by employers and insurers. The federal government could directly subsidize premiums and cost-sharing, as the ACA does for people with lower incomes, but any expansion of the ACA would face huge political obstacles.
Nevertheless, given the growing evidence that high-deductible plans are forcing people to forgo needed care, it may be time to put the brakes on them. There are better ways to reduce health care costs than simply shifting them onto patients, such as bargaining with providers for lower prices and reforming the ways they are paid; paying more attention to whether a new drug or treatment is cost-effective before it becomes a covered benefit; and opposing anti-competitive insurer and provider mergers and consolidation.
Patients should be the last ones to bear the burden of cost cutting, not the first.
The author appreciates Ryan Crowley's assistance in researching this topic.
Last week, the Obama administration announced that the number of new sign-ups on the ACA insurance exchanges will be well below original projections. According to the Administration, some of the slow-down in enrollment is because the remaining uninsured are simply harder to reach. But the announcement also comes amid speculation that the cost of health insurance, including the amount individuals are forced to spend "out-of-pocket" for care, may be too high to attract many of the people who still need coverage.
The affordability question is a challenging one. Making health insurance plans more generous (meaning less cost-sharing and out-of-pocket spending) means they will cost more. When individuals choose a plan, they face the question of whether they want to pay more up front in the form of higher premiums or risk having to pay more out-of-pocket when they need care.
Ironically, when Obamacare was first rolled out, many complained that the coverage was too generous and would cause people to buy more coverage than they needed. There were even calls for skimpier "copper" plans which would cover, on average, just half of all health care expenses. Now the conversation is about struggles with the high deductibles and cost-sharing that accompany the plans with the lowest premiums. Many consumers are wondering if they are really insured.
It's not just the Obamacare plans that are using high deductibles to hold down premiums. Nearly one quarter of workers are now signed up for these plans through their employer. While these plans may hold down premiums, the question is whether they are good for health and reduce wasteful spending.
A new research study helps to answer this question. After switching many of its workers to a high-deductible plan, a large employer found that its costs went down, but it was not because the workers shopped around for their care. These employees (who on average earn more than $100,000 per year) used less of every kind of care. They cut back on MRIs, which are often used wastefully, but they also cut back on necessary preventive care like mammograms. They cut back across the board, even though their employer deposited money in a health savings account for them – funds they could use for out-of-pocket costs.
So, while policymakers and HR managers hope these higher deductibles act like a scalpel and cut out the waste, they seem to act more like a hammer and cut some of everything.
The take away - that high levels of cost-sharing mean consumers use less health care – has been known for a long time. But the basic premise of high-deductible health plans – that by having more "skin in the game", consumers will be savvy shoppers of health care – has been called into question. Perhaps over time consumers will start to shop around for care and force high cost providers to lower their prices. But the early results of this experiment in cost cutting show we are a long way from this.
If the objective of health insurance is to make and keep people healthier at a reasonable cost, insurers and HR managers will need to play a much more active role in helping consumers shop for lower prices and separate out high-value and low-value health care. Until then, it appears high deductibles, although a seductive solution to keeping insurance premiums lower, may just be a blunt way to lower spending at the expense of better health.
David Grande, MD, MPA
Editor's Note: Dr. Grande's comments are cross-posted on the Health Policy$ense blog of the Leonard Davis Institute of Health Economics of the University of Pennsylvania.
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