People in High-Deductible Plans Short-change Prevention

December 15, 2011
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Sen. Ron Wyden (D-Oregon) and Rep. Paul Ryan yesterday unveiled an updated proposal to turn Medicare into a voucher program. Their plan, unlike Ryan’s original plan, would be optional and wouldn’t cap federal contributions at inflationary growth (which, in Ryan’s original non-voluntary plan, would have left seniors picking up two-thirds of the tab). It would cap the growth in federal spending at GDP+1%, according to published reports.

Given that more than one in five Americans are now in 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), it’s worth taking a look at what services lose out when people move into high-deductible plans, which many Medicare beneficiaries, especially healthier ones, will do with their limited vouchers. The answer: prevention.

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.”

Portions of this story appeared first in The Fiscal Times.

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One Response to People in High-Deductible Plans Short-change Prevention

  1. Anthony on December 20, 2011 at 8:13 am

    Yeah, with Affordable Care a lot of preventive services are covered. I find the stat about vaccinations really surprising. I can’t imagine cutting back on children’s shots. I suspect the reality is that for many people, a HDHP is really a type of inbetween insurance, where you can’t really afford full coverage so this covers you partially. If you were purchasing an HDHP, and socking away money for the deductible, you would get your kids shots. If you aren’t getting the shots, you just don’t have the money.

    I agree that its going to take a lot of education for people to realize all the benefits they are now entitled to.

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