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High Deductible Health Insurance Plans Becoming the Norm in Large Companies

Posted Jun 05 2012 12:00am

High deductible health insurance plans are rapidly becoming the "new normal" in coverage for employees of large companies. A recent article on this topic from Kaiser was very well written (see: The New Normal In Health Insurance: High Deductibles ). Below is an excerpt from it. I quote liberally from it because it's so well written.

Seventy percent of large companies recently surveyed...said they’ll offer high-deductible insurance by 2013 combined with accounts that let patients buy medical services with pretax dollars, often funded by the employer....Half of all workers at employer-sponsored health plans — including those working for the government — could be on high-deductible insurance within a decade, according to a new paper from Rand Corp. Supporters say the plans can contain health costs. Patients who have to pay for care up front will take better care of themselves and shop more carefully, the thinking goes, seeking lower-cost providers or asking whether tests are necessary. High-deductible plans, known as “consumer-driven” insurance, may partly account for a recent slowing in the upward spiral of medical spending, analysts say, although reluctance to buy health services in a poor economy is also a factor.

Critics say high-deductible insurance is just a way for corporations to shift costs onto workers, especially those dealing with chronic illness such as diabetes and arthritis. Further, consumers aren’t prepared to shop for treatment because reliable information on price and quality is difficult, if not impossible, to find. High deductibles, they say, boost chances that patients will delay seeking care until ailments become acute. Still, high-deductible plans, long promoted by Republicans as a way to bring market forces to medicine, are here to stay no matter how the Supreme Court rules on the 2010 health-care law, experts say....

Deductibles are expenses paid by employees and families each year before their medical insurance kicks in. In the past, they’ve typically been a few hundred dollars. Definitions vary, but deductibles for consumer-driven plans are usually at least $1,000 for individuals and $2,000 for families. This year, banking company JPMorgan Chase narrowed its choice for most employees to two medical plans, one with a $3,000 deductible and another with a $5,000 deductible, both for family coverage, plan documents show....

This year, General Electric moved hourly workers to high-deductible coverage after imposing it on salaried employees two years ago....GE has aggressively promoted the plan’s free preventive care and health coaching while urging employees to comparison shop using a “treatment cost calculator,” she said. Among high-deductible plans’ advantages: For both companies and workers, premiums are substantially lower than for traditional coverage. Employers often use money saved on premiums to fund tax-free health savings accounts and similar arrangements to help workers pay for deductibles....

Like many companies, GE contributes company money to the tax-free accounts — $500 for individuals, $1,000 for families — for employees to pay some of the deductible. The idea is for people to receive the preventive care they need and seek lower-cost treatment when they get sick, knowing their money is first in line to be spent. Republicans favoring a bigger consumer stake in medical decisions gained congressional approval in 2003 for the health savings account, an expanded way for companies to set up tax-free savings pools for patients to cover out-of-pocket costs. But only in recent years have such accounts, usually paired with high-deductible plans, taken off....

[A] Rand study, this one published last year, 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 high-deductible families also cut back on preventive care — perhaps because members didn’t realize the deductible didn’t apply to such visits, the study found....For severely ill patients or families coping with chronic illness, switching to high-deductible insurance can be the equivalent of a large pay cut. “I’ve always hated the term consumer-driven health plan,” said Oberlander, the health policy professor. “If we want to describe them accurately, they should be called employer-driven health plans for less comprehensive health insurance.”

I have been a very strong advocate of preventive medicine in various previous notes. As noted above, it's very telling that many families with high-deductible plans don't study the details and thus don't understand that the deductible doesn't apply to visits for preventive care. I am sure that such details vary from plan to plan. However, I am also certain that weight reduction, smoking cessation, and exercise plans fall into this category for most of the insured.

Clearly, the major driving force behind the adoption of these high-deductible plans are the cost savings for the companies themselves. However, I think it would be in the best interests of all individuals covered by such plans to pursue a more healthy lifestyle. In other words, they should allocate more time and effort moving in a healthy direction than complaining about the negative aspects of the plans. The losers in all of this, as stated above, are those with chronic diseases that can't be ameliorated with lifestyle changes. For them, the high deductible plans amount to a pay cut.

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