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High-deductible plans may lead to cost headaches

Shifts to consumer-driven model could backfire

High-deductible plans may lead to cost headaches

When Drink Eat Well Inc. began offering health insurance to its employees several years ago, it chose a high-deductible health plan because the premiums were the most the small business could afford.

But the Lawrence, Kansas-based health food manufacturer, which does business as Hilary's Eat Well, has since found the health plan to be “not very accessible,” and some of its fewer than 50 workers, many with low incomes, are avoiding the doctor rather than emptying their wallets, said Amy Dorsey, the company's office manager.

Some even have opted out of the employer-sponsored health coverage.

“We are taking a hard look this year at whether or not we would be doing better by our hourly employees ... to not offer health insurance so they could get better care and coverage through the (public exchange) marketplace,” Ms. Dorsey said.

As more employers offer high-deductible health plans to cut costs and avoid the Patient Protection and Affordable Care Act's 40% excise tax on health plan costs that exceed $10,200 for individuals and $27,500 for families that will go into effect in 2018, there's growing concern that HDHPs discourage workers from seeking necessary treatment to avoid the out-of-pocket costs. That could worsen health issues and increase medical costs down the line, health experts say.

For example, employees enrolled in consumer-directed health plans were less likely to receive medical care for chronic conditions than those in other health plans, according to a Truven Health Analytics study in April that analyzed data from 183,000 plan members from 2009-2012.

At the same time, the number of employers offering HDHPs has skyrocketed since 2009, a June PricewaterhouseCoopers L.L.P. study of 1,150 employers showed. Some 83% of employers have an HDHP this year, almost 300% more than in 2009. In the same time period, the average in-network deductible increased to $1,200 from $680, according to the study and analysis of other reports.

Dr. W. Ryan Neuhofel, a primary care family physician in Lawrence who contracts directly with Hilary's Eat Well to fill in the company's insurance coverage gaps, regularly sees patients who delayed tests or X-rays because of high deductibles.

He gave an example of a recent case in which a patient with hand pain decided against a $2,000 MRI recommended by an urgent care physician. After six months of pain, she saw Dr. Neuhofel, who contracts X-rays for $25 from an X-ray provider in the area, but surgery was unable to fully repair the fractured bone. “Had she found the scaphoid fracture in the first few weeks, a surgery would've likely saved the bone and a life of arthritis,” Dr. Neuhofel said in an email.

“It's kind of a catch-22,” said Dave Ratcliffe, Washington-based principal in the health and productivity practice with Buck Consultants at Xerox. “You're reducing utilization, which is a benefit, and you're shifting costs to the employee,” but if employees don't understand their benefits and forgo necessary care, that could “lead to higher expenses later.”

The American Academy of Pediatrics agrees. In a 2014 statement in the journal Pediatrics, it said, “HDHPs discourage use of nonpreventive primary care and thus are at odds with most recommendations for improving the organization of health care.”

Mr. Ratcliffe said employees may not understand that preventive care, which includes a physical or screenings for certain health conditions, is fully covered. And even if they do, preventive services could lead to other, more expensive care, he said.

On the flip side, HDHPs are reducing costs: The PricewaterhouseCoopers study said the percent of consumers forgoing medical care reached 40% this year, up from 29% in 2009.

“Generally, the reduction in the use of health care services in high-deductible health plans is concentrated in services that are somewhat lower value,” said Dr. Jeff Levin-Scherz, Boston-based national co-leader of the health management practice at Towers Watson & Co. and an assistant professor at Harvard Medical School. “People wait an extra day before they go to see a doctor for their sinus infection, and ... they happen to get better and they never get care.” The patient's “health isn't adversely impacted,” he said.

An analysis by Cigna Corp. published Sept. 8 said there is little evidence that consumer-directed health plans adversely affect low-income populations. And in a separate Cigna study, when comparing the insurer's CDHP members with managed care plan members, both showed the same or higher compliance with 500 evidence-based medical practices 96% of the time, a Cigna spokesman said in an email.

If high-deductible health plans are implemented effectively, “we could have less waste in our health care system, and we could have more empowered consumers,” said Ceci Connolly, PricewaterhouseCoopers' Boston-based managing director of its Health Research Institute.

But for the plan to work as intended, employees need information about their choices, how the plan works and procedure prices, she said. Otherwise, it would be like buying a car “and not being able to get information about ... all of those elements you want when you decide which one you're going to buy.”

Transparency tools that help workers shop around for the best prices are one solution, she said.

Employers can also provide incentives for employees to get biometric screenings and health risk assessments so they know what health issues need to be addressed, Buck Consultants' Mr. Ratcliffe said.

Another option is to take the highest-value procedures and exclude them from the deductible so workers don't skimp on necessary care, Dr. Levin-Scherz said. Employers can also contribute to a health savings account upfront so workers have the funds when they need them.

“The important thing is to design the insurance program ... as well as the way of communicating it such that we limit the chances that people will forgo very valuable care,” Dr. Levin-Scherz said.