High-Deductible Health Plans Equal Less Healthcare

Americans who have high-deductible health plans tend to not get necessary medical treatments whether they are low-income people with chronic health problems or healthier or higher-income people, according to a study by RAND, a non-profit research group, and Towers Watson, a consulting firm.  The researchers analyzed healthcare claims data from 59 large companies, examining first-year experiences with high-deductible plans comprised of more than 800,000 families nationally between 2003 and 2007.

Medical spending declined among all families with high-deductible and consumer-driven health plans, compared with those in traditional plans, according to the study published by the journal Forum for Health Economics & Policy. Families who live where the median income is 200 percent less than the federal poverty level, and those with one of the five most costly chronic conditions — cancer, diabetes and heart disease — spent approximately the same on healthcare than families with high-deductible plans.  The families all had at least one member working full time in a job that included health benefits, the researchers noted.

“One important issue is whether high-deductible health plans will leave low-income and chronically ill patients with inadequate access to healthcare,” Amelia Haviland, the study’s lead author and a RAND statistician, said.  “The evidence suggests that non-vulnerable families, low-income families and high-risk families are equally affected under high-deductible plans.  We discovered that costs go down dramatically during the first year people are enrolled in high-deductible health plans, as long as the deductible is at least $1,000 per person.  “But we also found concerning reductions in use of preventive care. This suggests people are cutting both necessary and unnecessary care.”

The researchers determined that deductibles of at least $1,000 per person led to an average of a 14 percent decrease in spending when compared with families who had lower deductibles.  The RAND study notes that “The drop in preventive care happened even though the high-deductible plans in the study waived a need to pay a deductible when receiving such care.  This suggests that enrollees in high-deductible plans either did not understand this part of their policy or some other factor discouraged them from getting preventive care.”

According to the RAND study, “High-deductible and consumer-directed health plans have been gaining favor as one way to help control health care costs.  By 2009, about 20 percent of Americans with employer-sponsored health coverage were enrolled in such plans.  A 2010 survey found that more than 54 percent of large employers offered at least one high-deductible health plan to their employees.  Healthcare reform is expected to further encourage enrollment in high-deductible health plans as such plans are expected to be a key offering in the insurance exchanges being set up in many states to help the uninsured find health coverage.”

As families cut their medical spending, they eliminated some forms beneficial care, the researchers found.  Although childhood vaccination rates rose in families who had traditional health plans, they fell among families in high-deductible health plans.  Mammograms, cervical cancer screening and colorectal cancer screening also declined among those with high-deductible health plans.

Writing on Kaiser Health News, Jonathan Cohn, Senior Editor of The New Republic, says “Conservatives think traditional health insurance provides too much financial protection from medical expenses.  They also think that the Affordable Care Act will make this situation worse.  That’s one reason they want to repeal it.  The problem, according to the conservatives, is that insurance dulls the average person’s consumer instincts.  When medical care is cheap or free, people don’t bother to shop around for the best prices — and they don’t think twice before seeing the doctor.  In other words, they end up with too much care at too high a price.  Insurance and government programs spread that cost around, so that eventually all of us end up paying more in the form of higher premiums or taxes over which we have little individual control.  The solution, as this argument goes, is to redesign insurance so that it forces people to pay more out-of-pocket expenses.  And, within reason, it’s not a bad idea.  Most economists, even those on the left, would agree that excessive coverage leads to higher health care spending.”

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