High-Deductible Plans May Not Be What They’re Cracked Up to Be

Early evidence of their ability to drive down health care costs while increasing quality is mixed.

A sign giving direction to The University of Miami Hospital's Emergency Department hangs on a wall on April 30, 2012 in Miami, Florida. As people wait to hear from the United States Supreme Court on its decision of the constitutionality of the Affordable Care Act, some experts say that if the act is overturned, a decision expected later this year, people that now have insurance will no longer be eligible and will be kicked back into a system where the emergency department is their first visit when sick.
National Journal
Darius Tahir
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Darius Tahir
Oct. 2, 2013, 5:11 a.m.

You can get soph­ist­ic­ated sur­gery, with the most ad­vanced devices in the world and the most fam­ous doc­tors, for a small co-pay if you have the right in­sur­ance plan. Sounds great, right? But did you need all that? Would still want all of that if you had to stake your own money?

Con­ser­vat­ive re­formers say that if con­sumers have to spend their own money, they will forgo use­less or un­ne­ces­sary care and fo­cus on the things that mat­ter to them, such as qual­ity, cost, or bed­side man­ner. These re­formers ad­voc­ate for health in­sur­ance plans with high­er de­duct­ibles or great­er cost-shar­ing to sub­ject health de­cisions to fin­an­cial dis­cip­line. And while these ideas are gen­er­ally touted as an al­tern­at­ive to the Af­ford­able Care Act, high-de­duct­ible, low-premi­um plans are gain­ing in pop­ular­ity as the law is im­ple­men­ted. It’s just not clear that they are bet­ter at mak­ing pa­tients more con­scien­tious con­sumers of care than their lower-de­duct­ible coun­ter­parts.

High-de­duct­ible plans, typ­ic­ally defined as those with a de­duct­ible (the amount a pa­tient has to pay out of pock­et be­fore the in­surer steps in) in ex­cess of $1,000, have sprouted in re­cent years. A pa­per by Katy Kozhi­man­nil, a pro­fess­or of pub­lic health at the Uni­versity of Min­nesota, and oth­ers pub­lished in the Au­gust is­sue of Med­ic­al Care es­tim­ates that 34 per­cent of in­sured work­ing Amer­ic­ans have high-de­duct­ible plans, and that the num­ber has tripled since 2008. With their lower premi­ums, the plans are at­tract­ive to em­ploy­ers and pa­tients, who save money each month — as long as they don’t have to seek ex­pens­ive med­ic­al care. The new Obama­care in­sur­ance mar­ket­places, which give con­sumers the abil­ity to shop for health cov­er­age on­line, are pro­jec­ted to fur­ther the pro­lif­er­a­tion of high-de­duct­ible plans for the same reas­on.

As you’d ex­pect, in­creas­ing the cost of care does de­crease con­sump­tion. An April re­port from Mas­sachu­setts’ at­tor­ney gen­er­al de­scribes a Blue Cross Blue Shield ana­lys­is of the pa­tients in its high-de­duct­ible plans. Their use of health care ser­vices de­creased between 1 and 5 per­cent, de­pend­ing on their de­duct­ible, from 2008 to 2010, and they used more pre­vent­ive ser­vices and cheap­er gen­er­ic pre­scrip­tions. That’s ex­actly how cost-shar­ing plans are sup­posed to drive be­ha­vi­or.

But pre­lim­in­ary data from 2010 and 2011 for two oth­er health plans in Mas­sachu­setts re­vealed that, when ad­jus­ted for health status, the costs of high-de­duct­ible plans over­all were ac­tu­ally high­er than stand­ard plans. The re­port doesn’t make clear why this might be the case and urges fur­ther study. But some health policy ex­perts say such high­er costs could be the res­ult of pa­tients put­ting off ne­ces­sary care and al­low­ing health prob­lems to fester, ne­ces­sit­at­ing more pricey treat­ment in the end.

Kozhi­man­nil ex­amined how men and wo­men in high-de­duct­ible plans in New Eng­land used health care between 2001 and 2008. Wo­men re­duced the num­ber of emer­gency-room vis­its for low-sever­ity prob­lems (say, a flu) by ap­prox­im­ately one-quarter, but main­tained rates for in­ter­me­di­ate- and high-sever­ity is­sues. Men, on the oth­er hand, re­duced all emer­gency-room vis­its, while de­creas­ing high-sever­ity emer­gency care the most, by nearly one-third.

The study says this is “con­sist­ent with the hy­po­thes­is that men who trans­ition to [high-de­duct­ible plans] may fore­go needed care … res­ult­ing in delays or in­creased sever­ity of ill­ness when care is later sought.”

An­oth­er study by Har­vard Med­ic­al School pro­fess­or J. Frank Wharam and oth­ers, pub­lished in the Au­gust is­sue of Health Af­fairs, found that poorer pa­tients in Mas­sachu­setts also re­duced high-sever­ity vis­its by as much as one-third in a giv­en year. The high de­duct­ibles were dis­cour­aging the most ne­ces­sary care.

Des­pite these early con­cerns about high-de­duct­ible plans, some as­pects of their philo­sophy, if the plans pro­lif­er­ate as ex­pec­ted un­der Obama­care, might nudge pa­tients in­to be­ing sav­vi­er health care con­sumers. Hard data — for price and for qual­ity — are cur­rently lack­ing, mak­ing shop­ping around dif­fi­cult. What stand­ard­ized qual­ity meas­ures there are can be mis­lead­ing: A hos­pit­al that does poorly on one in­dic­at­or (say, death after sur­gery) may have very un­healthy pa­tients rather than a prob­lem with its care. The met­rics and in-depth re­views that are avail­able in many areas of the eco­nomy are gen­er­ally un­avail­able with­in the health care sys­tem.

As Obama­care con­trib­utes to the rise of high-de­duct­ible plans, it might push reg­u­lat­ors to make this data avail­able. In­deed, a few states have taken ac­tion on price trans­par­ency in re­sponse to re­cent health re­forms. North Car­o­lina and Mas­sachu­setts each passed bills man­dat­ing that hos­pit­als pub­lish the prices they ne­go­ti­ate with in­surers, which might help pa­tients se­lect af­ford­able care.

Mak­ing more and bet­ter data avail­able to con­sumers has the po­ten­tial to change the health care sys­tem for the bet­ter. High-de­duct­ible plans, with their fo­cus on con­sumer choice and ex­pec­ted growth un­der the health re­form law, could en­cour­age that to hap­pen.

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