High Deductible Health Plans - 700 words of wisdom

Last month I posted a 4,000 word article on HDHPs.  Since then I have written a different article with the same message of only 700 words.  Here it is.

 

Obamacare – In Danger of Failing The Middle Class

The mantra of the Obama Administration has become, “help the middle class.”  Obamacare has already done that in many ways – kids on parents’ insurance policies, no preexisting conditions exclusion, etc.  But next year could be a problem, when those currently uninsured will become insured. 

The near-poor will be fine – they will receive Medicaid at no cost to themselves, with comprehensive benefits and no deductibles and no copays.  The problem will be with those just above them in income.  Yes, they will be insured, but the insurance many of them receive will likely be High Deductible Health Plans, born in 2003 under the Bush Administration, with terms so onerous that the middle class will continue to suffer.

HDHPs became popular because reforms that would lower costs by increasing efficiency would require cooperation among several elements supplying medical care – insurance companies, hospitals, medical specialists, durable supply makers, etc.  And since one element’s inefficiency is another’s paycheck, not much has gotten done. 

So to keep their health insurance costs down, employers have had to purchase HDHPs for their employees.  Premiums have decreased, yes, but only because much of the costs have been transferred to the least powerful element of the health care system – the patient.  Each year patients with HDHPs have to pay at least the first $1,200 per person or $2,400 per family out of pocket, except for preventive services.  The yearly limits on expenditures max out at $6,050 per person or $12,100 per family, on top of the cost of the insurance premiums. These huge costs could be a disaster for the very citizens the Obama Administration most wants to help survive and prosper.

HDHPs are bad health policy.  Yes, costs recede, but only because patients receive less care as they are dissuaded by price from visiting the doctor.  Early detection of illness is thus defeated, and screening tests and immunizations are neglected (even though the deductible doesn’t apply to prevention – people simply decrease their use of everything under HDHPs.)  

In addition, HDHPs do not attack the most excessively priced and excessively utilized health care areas – hospital care, specialist care, technological tests and procedures.  Instead, HDHPs seek to minimize utilization of the biggest bargain in medicine, primary care.  Research shows that 80% of costs are racked up by 20% of families, mostly in hospitals.  Research also shows that to drive down the costs of these 20% we need more, not less, primary care.  Yet HDHPs cut away primary care muscle and leave the overpriced fat.

Moreover, HDHPs promote what is called “adverse selection” of patients.  The healthier and wealthier “cream” of the population will choose HDHPs, figuring they will probably not need much care.  They thus leave the pool of conventional insurance, which means the costs of conventional insurance rises, and those with chronic diseases – asthma, diabetes, cancer, etc. – wind up paying more.

There is still a chance to change this picture.  Deductibles, copays, and maximum expenditures could be reduced, or made non-applicable to primary care visits.   Price competition could be introduced for hospitals only, or for procedures – some insurance companies are already starting to do this.  Yes, costs need to be reduced, but HDHPs look for savings in all the wrong places, simply because of political expedience. 

If nothing is done, consider this scenario for a family with a sick child.  A financially well-off family will go to the clinician with little impact on their finances.  A family on Medicaid will go to the clinician with no charge.  But a working or middle class family with an HDHP policy will have to think long and hard before making the wrenching decision whether or not the child is “$100 sick,” with possibly hundreds of dollars more to follow in tests ordered by the clinician.

Reducing the cost of health care is difficult because inevitably someone’s ox will be gored.  But strong executive action can achieve lower costs with better quality, without victimizing the working and middle classes yet again.  HDHPs need to be recognized for what they are – the detritus left behind by conservative economists and the Bush Administration.  They need to be either left behind, or revised beyond the point of recognition.

Budd Shenkin, MD, MAPA