More and more Americans are enrolling in health-insurance plans that require them to pay large deductibles before the plan starts footing the bills. But recent studies suggest they’re not being diligent about getting the most from their dollars — or their care.
More than 40% of American adults now have a high-deductible health plan (HDHP), according to the Centers for Disease Control and Prevention. Such plans, which require members to pay at least the first $1,350 of their own costs, or $2,700 for families, are typically paired with a tax-protected health savings account to help people stash away money to pay for their future care needs.
“Affordability is a big decision for employers, and the big movement today is toward high-deductible health plans,” said Robert Cummings, managing principal of American Benefits Group in Northampton. “That’s really becoming a predominant option because of the cost factor.”
Indeed, high-deductible plans have claimed an increasingly large share of all plans, growing exponentially from just over 1 million such plans in 2005 to almost 20.2 million in 2016 (see box, page 17). They’ve received an extra jolt of life in the Affordable Care Act era, as the various state insurance exchanges usually emphasize high-deductible options. And the trend keeps accelerating; an August survey of 600 U.S. companies by benefits consultancy Willis Towers Watson finds that, by 2018, nearly half will offer these plans exclusively.
In Massachusetts, Cummings explained, the deductibles on HDHPs can be as high as $3,000 for an individual and $6,000 for a family, while in other states, the out-of-pocket maximums could be as high as $5,000 and $10,000.
Typically, accompanying HDHPs is a product called a health savings account (HSA), by which a plan enrollee — and, in some cases, his or her employer — contributes money tax-free to an account that can be used to pay healthcare expenses. The product operates like a 401(k) for health expenses, in that an employee can contribute, an employer can match it, and the employee can take it to another company if he or she changes jobs. Any unused balance at the end of the year is not lost, but rolls over into the next year.
“There are a lot of strategies in terms of the creativity within these plans,” Cummings told HCN, noting that, even though insurance rates in Massachusetts are largely set and regulated, employers have some flexibility with how much they contribute to employee plans to meet workers’ needs and fit the company budget. “The employer and employee both have control, and because they’re individually owned, they can be rolled over and invested like a 401(k), so they can take it with them wherever they go.”
Despite those advantages, however, 43% of insured people report having trouble paying their deductible, up from 34% in 2015, according to a Kaiser Family Foundation survey released in 2017.
That seems to translate into action — or, more accurately, inaction. The advocacy group Families USA recently reported that more than one-quarter of people in high-deductible plans delayed some type of medical service such as a doctor visit or diagnostic test. Meanwhile, according to a Commonwealth Fund study, 44% of adults with high out-of-pocket expenses put off medical care.
Finally, a study by researchers at the University of California-Berkeley and Harvard University found that people with high-deductible plans spent 42% less on healthcare before meeting their deductibles, primarily by reducing the amount of healthcare they received, not by shopping around for a better price.
Meanwhile, according to a recent study published in JAMA Internal Medicine by a team from the University of Michigan Institute for Healthcare Policy and Innovation, “most Americans in HDHPs are not doing things that can help them get the care they need at the lowest possible cost, and even those who are doing so could realize more benefits,” said Dr. Jeffrey Kullgren, an assistant professor of General Medicine at Michigan and the study’s lead author.
The study, based on a national poll of 1,637 adults under age 65 who had HDHPs for at least a year, noted that employers often encourage members to put away money for when they need it, to research costs and quality ratings at different providers and healthcare facilities, to talk with their doctors and other providers about costs, and to negotiate prices for services they need. But the researchers found they’re not often engaging in these ‘consumer’ behaviors.
For example, while 58% percent of poll participants said they had an account to put aside money for future medical expenses, typically an HSA, only 40% of the entire sample had actually saved any money. Among those who had saved money for their medical care, just over half said that these savings had helped them get needed care in the past year.
Meanwhile, only 25% had talked to a healthcare provider about the cost of a service, 14% had compared prices for the same service or product, or the quality ratings for different providers, and just 6% had tried to negotiate the price of a healthcare service, either in advance or after they received a bill for a service they’d received.
Kullgren noted that other research has shown that people in HDHPs often use less healthcare than people with other types of insurance, and they tend to use less of the care that might be most effective for them.
He and his colleagues are studying what tools, interventions, and policies can be used to help encourage more consumer-like behavior among people in HDHPs. Using research on health-related behavior, and the value of particular types of care for patients with specific conditions, they hope to go beyond information and education.
“Given the continued growth in these plans, we have to figure out how to better help consumers,” Kullgren said. “And if we only focus on the consumer side, we circumvent the role of doctors and other providers as an agent for the patient — we shouldn’t expect patients to be their own doctors.”
Other types of products exist to help employees save money for medical expenses, Cummings noted, incouding health reimbursement accounts (HRAs), in which employers fund and maintain an account where employees can be reimbursed for medical expenses by submitting receipts; and flexible spending accounts (FSAs), employer-sponsored, tax-advantaged accounts (typically using a debit card) which employees can use to save for medical expenses of all kinds, but cannot be rolled over from year to year.
“The other strategy really focuses on HSAs, which is more of a long-term accumulation vehicle where people can build money for future healthcare expenses and pay expenses throughout their lifetime. The challenge with this is that people aren’t even maxing out their 401(k) because they can’t afford to,” he noted — which is why HSAs too often go underfunded. “It’s a great tool as long as there’s a funding strategy.”
That said, Cummings noted, employers need to think hard about the way they craft their health-coverage plans, especially in a strong market for job seekers.
“Benefits are the biggest expenses after payroll, and an employer of choice is going to be an employer who has a robust and well-rounded benefits program, and who looks at it as an investment in their employees,” he told HCN. “That is critical for recruiting and retaining superior people in today’s marketplace.”