At Work

High deductible health plans boon or bust

Back in 1961 I ran a health plan with a $100 deductible per person. As you can see below, today we call a plan high deductible if it reaches $1,300 and yet if you apply health care inflation to that $100 it is equal to $2,024.34 in 2016. Our so-called high deductibles haven’t even made up the losses over the years. 

And now look at the reported cost conscious behaviors of people enrolled in HDHPs. Trying and checking are hardly going to move the cost curve. The only concrete action indicated was using a generic drug. Now, if participants had reported say, I questioned my doctor about the real need for tests or scans, etc., or I sought out and engaged the lowest cost doctor and hospital or I took my child with a 104 degree fever to a local urgent care center instead of the emergency room, we may have something. But you see, all the hype about free markets and consumer driven only takes us so far because as I have said all too often … obtaining health care is too emotional to be truly objective when purchasing (the more complex the situation the truer that is), and Americans do not see spending their own money on health care a valid budget item in their lives. 

Health plans with high deductibles are increasingly common. Fourteen percent of privately insured adults were enrolled in a consumer-driven health plan (CDHP)—a health plan associated with a health savings account (HSA) or health reimbursement arrangement (HRA); 14 percent also were enrolled in a high-deductible health plan (HDHP)—a plan with a deductible of $1,300 or more for single coverage; at least $2,600 for family coverage—not linked to an HSA or HRA; and 73 percent were enrolled in more traditional coverage. Among individuals with traditional coverage, a growing number have the option to choose a CDHP. Those who choose a CDHP are also remaining enrolled for a longer time. 

Consumer behaviors are linked to CDHP enrollment. Adults in a CDHP and those in an HDHP were more likely than those in a traditional plan to exhibit a number of cost-conscious behaviors. For example, those in a CDHP were more likely to say that they had checked whether the plan would cover care (54 percent CDHP vs. 44 percent traditional); asked for a generic drug instead of a brand name (48 percent CDHP vs. 37 percent traditional); and that they had used an online cost-tracking tool provided by the health plan (31 percent CDHP vs. 20 percent traditional). CDHP and HDHP enrollees were also more likely than traditional-plan enrollees to report that they tried to find cost information before getting care. Nearly one-half of HDHP enrollees, and 43 percent of CDHP enrollees said they had searched for the cost information, compared with 32 percent among traditional-plan enrollees.

Excerpt: Research report from the EBRI Education and Research Fund © 2017 Employee Benefit Research Institute

High deductible health plans, typically higher than mentioned above, can impose a financial hardship on families of modest income, especially if they do not prudently use premium savings toward out-if-pocket costs. 

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