Healthcare Matters

“There’s no question that high deductibles are spreading,” said Jonathan Oberlander, a health policy professor at the University of North Carolina. “That’s a pretty significant trend, and I don’t expect it’s going to slow up anytime soon. Employers like it because they’re providing less coverage. If they can re-label it as consumer-driven then it even sounds good.”

Supporters say the plans can help contain if not reduce health costs. The thinking is, patients obliged to pay for a higher percentage of their day to day care will take better care of themselves and shop more judiciously for services. High-deductible plans, known as “consumer-driven” insurance, may partly account for a recent slowing in the upward spiral of medical spending, although reluctance to buy health services in a poor economy is also a factor.  A recently published Rand study showed that total medical spending on families who switched to high-deductible plans was 14 percent lower than for families on conventional plans. But the same study showed that high-deductible families were cutting back on preventive care. Not exactly what the doctor ordered.

Critics also say that high-deductible insurance is just a way for corporations to shift costs onto workers, especially for the chronically ill. And how successful can consumers shopping for treatment be, given the U.S. system’s famous lack of pricing transparency?

Regardless of who says what, high deductible plans aren’t going anywhere. In fact, they are gaining in popularity to such an extent among the largest employers in the U.S. that a 50-year trend we’ve known since 1960 where consumers paid less out of pocket for their healthcare is about to reverse itself. In the Kaiser Family Foundation’s 2011 employer survey, 17 percent of the covered workers were enrolled in a high-deductible plan, up from 4 percent in 2006, and many believe we’re just now getting on the steep part of the adoption curve.

“GE put its 85,000 U.S. white-collar workers on a high-deductible health plan in an effort to cut the growth of its U.S. health bills, which are now running $2.5 billion a year. In the first two years after the plan went into effect, use of advanced imaging, including MRIs and CT scans dropped by as much as 25% within its own ranks –a statistic that is consistent wherever high deductible plans have been instituted. In fact, GE’s $18 billion medical imaging business has been adversely impacted by the trend. The company admits that in some ways the “wound” is self-inflicted.

Taking cost out of the system at what cost? Despite the debate, it’s hard to imagine either party shooting this goose, because it lays golden eggs in terms of taking the kinds of costs out to the system the CBO loves to measure (short term and easily verified).

—Tom Finn