By Max Friedman
Recent trends in health policy have led to more and more costs being shifted onto individuals by traditional payers, like insurance companies and employers. This is largely done by moving more and more people into high deductible health plans (HDHPs), where they are on the hook for thousands of dollars of out of pocket spending, before their insurance really kicks in to provide the care they pay for in their rising insurance premiums.
In 2006, around 10% of employees had a deductible of over $1,000, now nearly half do, according to the Kaiser Family Foundation 2015 Employer Health Benefits Study.
These HDHP plans are being promoted by policymakers, with the backing of health economists who believe that patients who have to pay more out of pocket will be better “shoppers” for health care services. The thinking is that consumers would seek out lower-cost health care providers, forcing high-cost ones to lower prices in order to compete. Based on normal economic theory, this would make sense, consumers are likely to want to purchase a service at the lowest possible price.
But health care is not a normal consumer good – it’s not like buying a TV or a car. The reality is that it is very difficult for a regular person to determine the cost of a health care service or procedure from different providers, as a recent study has shown.
A group of economists studied a company that shifted its tens of thousands of employees and dependents from a no-deductible plan to one with high deductibles. They found that instead of shopping around for low cost care, both sick and healthy people simply used less. One of the economists said, “I am a little bit surprised at just how poorly patients were able to do when looking at very similar products, like MRI scans, and with a shopping tool…Two years in, and there’s still no evidence they’re price shopping.”
Health care spending for the company in the study did decrease, but simply due to a drop in the amount of care accessed by employees. The decrease in care cut both potentially wasteful care, like imaging services, but also potentially valuable care, like preventative care visits. Sicker people, who were more likely to hit their annual deductible, triggering the health plan to start covering more costs, were the most likely to reduce their spending.
The author of the Vox piece on this study has written about her own experiences in shopping around for lower-cost health services, and found that some quality measures were lower when she went to a lower cost facility.
As more and more Americans are shifted into these high deductible plans, policy makers should look at this study and others and consider whether the goals of health care reform, allowing more Americans to access both coverage and quality care, are being undermined by the cost-shift trend.