High-Deductible Plans Are A Growing Trend

Sept. 28--Cheryl Lopez studies employee health benefits as part of her job at Fort Worth human resources consultant Whitney Smith Co., but she does it part-time.

That means she doesn't receive her own health insurance through the company. And while her husband has health benefits at his job, his employer doesn't pick up a share of the high cost of coverage for Cheryl or the couple's children.

So years ago, Lopez decided a high-deductible health plan was the way to go for her and the kids.

Then, it was a fairly uncommon choice. Today, high-deductible health plans are a fast-growing part of the employee health benefits world with more companies steering employees towards them each year.

"It's what was affordable at the time," said Lopez, who's had her current plan, with a $10,000 deductible, about five years and who had a plan with a $5,000 deductible several years before that. "We didn't go to the doctor all that much. So I kept it, and now it's where the trend is."

In 2006, employers reported that just 4 percent of their workers were covered by some type of high-deductible plan, according to a recent study by the Kaiser Family Foundation, a non-partisan healthcare trends researcher. Today, that has climbed to 20 percent.

Big employers are especially likely to offer them. Kaiser found that 43 percent of firms with 1,000 or more workers had a high-deductible plan as an option.

How they work

High-deductible health plans trade lower premiums for higher out-of-pocket spending by patients. Kaiser found that the average deductible was $2,086 for a single person and just over $4,000 for a family. Deductibles of $5,000 to $10,000 for a family are not unusual.

Preventive care is typically not subject to the deductible. But other care, including prescription drugs and emergency care, may be.

To lessen the shock of a sudden medical expense, the plans are frequently paired with a health savings account, or HSA, that can be funded tax-free. Money put into an HSA is limited, but both workers and employers can contribute and the money is tax-free as long as it's used for medical expenses, and it belongs to the worker even if he leaves his job.

About two-thirds of employers offering a health plan tied to a health account put money into those accounts for their workers, according to Kaiser.

An annual employer survey by benefits consultant Towers Watson and the National Business Group on Health, found that 59 percent of employers offered some type of HSA-based health plan this year, up from 53 percent in 2011. Eleven percent said they will begin offering them by next year.

Is that a good idea?

It's been good for employers.

In the first year of moving to a high-deductible health plan with a healh savings account, employers' total spending on health benefits declined by $527 per employee, the Employee Benefit Research Institute reported in July. "Cost savings continued over the succeeding three years, albeit at a slower pace," the study said.

It can be good for consumers, unless someone has surgery or an accident or a major illness. Then the costs can pile up.

Lopez said she can testify to that. A round of surgery for a family member was pricey, she said, although she still hasn't withdrawn money from her HSA. Her family instead puts money each year in a healthcare reimbursement account at her husband's job and uses that to pay out-of-pocket costs.

Families that enrolled in a high-deductible health plan spent 14 percent less on care, on average, than families in traditional plans, according to a Rand study of claims data for 53 large employers.

Another study found that people with high-deductible plans went to the emergency room 16 percent less than people insured by the same company but with lower deductibles. It said the biggest difference was trips for low-severity problems.

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Proponents of high-deductible health plans say that requiring consumers to pay a larger share of their own health-care costs helps reduce spending on unnecessary care.

But the Rand study and others have found that when people have to pay more out of pocket for their care, they also skimp on care they need, such as preventive cancer screenings.

"When people are considering a high-deductible plan, I always say, 'Could you come up with the whole deductible all at one time?'" Amelia Haviland, an associate professor of statistics and health policy at Carnegie Mellon University, told Kaiser Health News. "If it's going to keep you from going to the emergency department when you really need to go, don't choose that plan," she said.

The Affordable Care Act throws a wrinkle into high-deductible plans that are being sold in the individual and small group market.

A "catastrophic" plan will be available through the Health Insurance Marketplace, but only to people under age 30. Those plans can carry deductibles of $6,350 for individuals and $12,700 for families, but must still pay for preventive care and three doctor visits a year.

Private plans already in effect can be "grandfathered" in, although that's not a given. For example, Lopez says she still doesn't know how her long-time policy will be affected.

And there's less impact still on high-deductible plans offered through employers.

Large employers -- and growing numbers of smaller employers -- generally self-insure their employees' medical benefits. That exempts them from most of the provisions of the ACA.

Jim Fuquay, 817-390-7552 Twitter: @jimfuquay

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