Consumer Alert: High Health Deductibles Coming
Life + Money

Consumer Alert: High Health Deductibles Coming


More than one in five Americans who are privately insured are now part of high-deductible plans, a figure that’s at an all-time high and growing rapidly according to a new survey by the Employee Benefit Research Institute (EBRI).

While this should be encouraging news to those who want consumers to have more skin in the game as a primary way of holding down health care costs, recent research suggests there will be a later price to pay for making individuals respond to price signals when purchasing care. Higher co-pays are causing people to stint in preventive care, which could translate into higher health care costs down the road, a recent Rand report shows.

The EBRI online survey of 4,703 privately insured adults showed that 16 percent of Americans who get health care coverage from their private or public employers are now in high-deductible plans. A high-deductible plan was defined as one where the coverage didn’t kick in until individuals spent more than $1,000 a year or $2,000 for a family.

Another 7 percent of adults responding to the survey were in so-called consumer-driven plans, which have the same deductibles. But in consumer-driven plans, employers encourage workers to set up health savings accounts to pay for first-dollar coverage. Not all employers provide contributions for HSAs. As a result, among the estimated 19.3 million individuals who now have high-deductible plans, 38 percent or 7.3 million individuals have not set them up through their employers or local financial institutions.

Jump in Participation
The latest survey showed a sharp jump in participation in such plans, which are often offered as an option. EBRI’s 2010 survey showed just 14 percent of covered workers were in high-deductible plans and 5 percent were in consumer-driven plans. “It will continue to grow because at many firms it’s not just an option anymore,” said Paul Fronstin, a senior research associate at EBRI. “Many large employers are moving to offer nothing else but high-deductible or consumer-driven plans.”

There may be a downside to the movement. The financial incentives associated with such plans may be dissuading people from seeking out preventive care. It’s part of a broader backlash against prevention, some of it witting, some of it not. The Republican-controlled House on Tuesday, for instance, gutted prevention spending as part of its plan to pay for legislation that would extend the payroll tax cut and unemployment benefits and raise physician salaries.

A Rand study that appeared earlier this year in the American Journal of Managed Care found that overall health spending on families in high-deductible plans dropped an average of 14 percent, when compared with similar families in traditional health care plans. But as families began pinching pennies on first-dollar coverage, they eliminated beneficial care, especially prevention.

For instance, vaccination rates for children dropped when families had to pay the full fee for the shots. So did rates of mammography, cervical cancer screening and colorectal cancer screening. Even in high-deductible plans that offered free preventive services, which some do, rates of these preventive measures dropped.

“High deductibles may deter patients from seeking care for health problems that would prompt a referral for some preventive or screening procedure,” RAND health researcher Amelia Haviland speculated. But she couldn’t rule out that “some patients may have sought preventive care outside their plan – through an immunization clinic, for example.”

The Patient Protection and Affordable Care Act – dubbed Obamacare by its critics – requires health plans to waive deductibles for preventive treatments before they can qualify for listing on the state-based health care exchanges. “This fact needs to be clearly communicated so that Americans increase their use of preventive care,” Haviland wrote.

Of course, it’s too soon to tell if the growth of high-deductible plans and possible reductions in spending on preventive care will have a negative impact on public health. “There’s little doubt that [the growth of high-deductible plans] will affect the use of health care,” said Paul Ginsburg, executive director of the Center for Studying Health System Change.

“There’s a theoretical presumption that cutting necessary and valuable care will impact health, but it would take a very long and involved study to actually find out,” he said. “If you don’t manage your diabetes well, it will take some time before the impact on health shows up.”