Report High-Deductible Plans Remain Stagnant

The much-ballyhooed high-deductible health plans haven’t caught on yet in the American workforce in part because many benefits of those plans have yet to materialize, a new report asserts.

Despite the initial excitement when the plans were introduced in 2004, enrollment has stayed flat, according to a report released Thursday, December 7, by the Employee Benefits Research Institute and the Commonwealth Fund, both of which conduct health care research.

In its second annual look at so-called consumer-driven health plans, EBRI surveyed more than 3,000 adults who were privately insured and found that 1 percent were enrolled in high-deductible health plans with health savings accounts. Using their data, the institute concluded that about 1.3 million people were enrolled in high-deductible plans with health savings accounts, the same number as in 2005.

High-deductible health plans feature deductibles of about $1,500 for individuals paired with a tax-free health savings account, and were introduced fully in 2004. The plans have received a fair amount of media attention and have been embraced by a number of large employers, including Wendy’s, Textron and American Express.

The percentage of employees with a deductible of more than $1,000 but whose employer did not offer a health savings account actually dropped to 7 percent from 9 percent in 2005.

But advocates of consumer driven health care say the report’s numbers are flawed because the sampling is small. Greg Scandlen, a consumer advocate, points to numbers published by the industry newsletter Consumer Driven Market Report, which counted the number of high-deductible enrollees—as reported by health plans—to be 13.4 million, about twice as many as 2005.

Barbara Gniewek, a consultant with Deloitte’s human capital practice, says the numbers do not represent the growth of high-deductible plans among large employers. In an upcoming survey, Deloitte says 30 percent of employers offer a high-deductible plan with a health savings account. By 2008, that number will be 46 percent. Gniewek says employers will begin to consolidate their plan offerings, reducing the number of HMO plans and resulting in more employees migrating to consumer directed plans.

“I think that consumerism is a critical component of bringing health care costs down,” Gniewek says.

High-deductible plans have been championed as a way to make health care consumers more sensitive to price. Employers buckling under the burden of high health care costs have looked at these plans as a way to change the purchasing behavior of employees.

In response to critics who have said high deductibles would keep sick people from getting necessary treatment, the legislation that created health savings accounts allowed health plans to cover preventive treatment. The EBRI study, however, suggests that many of the criticisms may be valid.

Half of the individuals enrolled in high-deductible health plans did not have their preventive care covered. And those enrolled in the high-deductible plans were more likely to delay or avoid necessary care than were those in low-deductible plans, the study notes.

Though the plans make individuals sensitive to price, those surveyed said their health plans did not provide adequate information on the cost and quality of doctors and hospitals.

Health insurance companies were quick to respond to the report. How a plan is designed will determine its use by enrollees, says Karen Atwood, a senior vice president for Blue Cross and Blue Shield of Illinois.

Scandlen says a third of the care people receive is wasteful, and therefore sees a drop in treatment as a sign that consumers are making decisions not to seek help they don’t wish to pay for. He agreed that information on cost and quality lagged.

“Patient support information services is a real problem,” Scandlen says. “We’re hearing that a lot in the market.

“That is where a lot of innovation and energy is happening right now. Information technology systems are growing as fast as the Internet did 10 years ago.”

Cost was another issue, especially the high deductible. Federal law determines that a high deductible must be at least $1,000 for an individual or $2,000 for a family to qualify for a health savings account. The survey reports that many people have much higher deductibles. Less than half of individuals had a deductible under $2,000; 42 percent had deductibles of between $2,000 and $5,000. For family plans, 29 percent had a deductible of $5,000 or more.

James Bentley, a senior vice president with the American Hospital Association, says high deductibles are causing people to go into debt, either because they don’t have a health savings account or they don’t have enough money in the account at the moment when they need medical services.

“Many of the people lacking a savings account to accompany it people are not prepared to pay the deductible to whomever they owe it in a timely way, leading to bad debt,” he says.

As a result of the high costs and other issues presented in the report, the survey’s authors write: “As in 2005, individuals in CDHPs and HDHPs continue to be less satisfied than individuals with comprehensive health insurance with various aspects of their health plan, are less satisfied overall with their health plan, and are less likely to recommend the plan to a friend or work colleague.”

—Jeremy Smerd