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The Effects of High-Deductible Health Plans

By May 16, 2022Commentary

As many of you probably know, over the last decade many employer health plan offerings have switched to high deductible designs, which require members to pay a substantial sum out-of-pocket before the health plan pays anything for most services.  Preventive health services are generally exempted from the deductible.  The plans are often paired with some form of health savings accounts, which provides employees with an opportunity to build up cash to pay deductible amounts.  Those savings accounts often have employer contributions as well as those from the employee.  While there is high deductible, there also is typically a significantly reduced monthly premium.

The theory behind high deductible plans is that they cause people to become more sensitive to the costs of the health care they use, resulting in less use of low-value services.  That is a dubious proposition because the average person doesn’t know how to evalutate whether they need certain services.  I think the switch was mostly driven by attempting to control costs for employers.  Use of these plans has plateaued.  As you might imagine, there has been significant research to evaluate both the cost and quality implications of the designs.  They obviously might lead to worse health outcomes if people avoid or defer needed health care.

The latest research piece examines whether the plans have a different impact on low-salary and high-salary employees.   People with higher incomes clearly can afford to pay deductibles more easily than those with low incomes.  The paper finds that employees making $75,000 or under had both lower use of preventive and primary care services and more use of ER visits and inpatient stays than did higher income workers.  Total spending in this group, however, was lower.  Since most preventive services aren’t subject to the deductible, the results suggest that these low-income workers may often have difficulty understanding the plan benefits.   I also strongly suspect that there are some confounding effects, such as lower health status and poorer health behaviors among the lower-paid employees.   (High Deductible Paper)

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  • Scott says:

    “That is a dubious proposition because the average person doesn’t know how to evalutate whether they need certain services. ”

    A contributing issue is that it seems few health care providers know the answer to this question either. Few MDs practice problem solving to any degree. They appear to run basic decision tables and seem to be incapable of interpreting new information. This issue is most apparent in the ‘specialty’ focused practices.

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