updated September 14, 2017
The High Deductible Health Plan (HDHP) is a catastrophic health insurance product that transfers more of the cost of getting sick onto the consumer than other managed care insurance plans. It is the go-to health insurance product today as employers try to shift health care costs away from the company and onto workers. Our government has had to make it more appealing to individual Americans by attaching the tax-advantaged Health Savings Account (HSA) to it. In the HSA-qualified HDHP, the consumer uses the money he (and possibly his employer) deposited into his HSA account to pay for routine health care expenses with pre-tax dollars before the high deductible is satisfied.
The HSA-qualified HDHP is being marketed by employers and our federal government with the more appealing label of consumer-driven or consumer-directed health plan. To further distance the better sounding consumer-driven further away from high deductible label, it has been given its own acronym (CDHP). Replacing high deductible with consumer-driven is supposed to fool us into thinking the product is somehow different, right? While consumer-driven health plans also can refer to HDHPs that have other medical payment products like the Health Reimbursement Arrangement (HRA), I will limit my discussion to just the HSA-qualified HDHP for simplicity in my current discussion.
On the Health Insurance Marketplace (non-group), any plan that has a minimum deductible of $1300 in 2016 is a high deductible health insurance plan. Most (if not all) of the plans on Marketplace are high deductible plans even though this fact is not identified. In addition, most of these plans do not give the consumer the option of opening a tax-advantaged Health Savings Account (HSA) with it.
Consumers Driving the Flow of Treatment?
What exactly are the consumers driving? The theory holds that by allowing patients to control and manage their own health care dollars, the consumer-driven health plans help individuals become better consumers of health care. If the money comes directly from our own pockets, this theory contends that we will shop for the best prices, use only the medical providers that are best for our needs, and stop taking advantage of frivolous medical services. When doctors see that we are price conscious, they will rush to decrease their prices and improve quality to keep patients. Health experts believe this is the most effective way to reduce healthcare costs–make the sick pay more!
This theory makes a lot of false assumptions and sounds great, as long as you are not the sick person being made to shoulder more of the cost of health care. It assumes that when the sick individual American walks into the doctor’s office, he is in charge of treatment. This concept may be true in theory, but not in practice. The medical professional gets paid only for services he performs and when a sick patient walks into his office, he DRIVES the treatment flow, not the patient. Patients who try to drive treatment flow are often met with stiff resistance even when they are somewhat knowledgeable and up to speed on their health. The medical community works hard to keep health data, pricing, and reimbursement information from patients making control of treatment by patients impossible.
One of the first questions asked of a patient is “what is your health insurance plan?”. Because he is paid by the number of services he provides, the patient with the “richer” plan will get more health care services than the patient with the “poorer” plan. Patients with a “richer” plan rarely question the doctor’s medical practice and assume he is not doing unnecessary testing and treatment simply to pad his bank account. Patients with “poorer” plans know they cannot afford to pay for the extras out-of-pocket so they meekly accept the possibility of poorer quality of care.
What about the concept of shopping for the best health care value (price and quality) and therefore driving the cost of health care down? Am I expected to ask for prices of services and products I may need some time in the future for illnesses I may develop? Where are these prices and quality measures published? I can’t find them online and no longer care to frustratingly ask my medical providers for price information they only grudgingly give out usually AFTER healthcare services are complete.
Getting price information from insurance companies is not much better. In the example below (for colonoscopy with biopsy), you can see the full extent of price sharing that the insurance company is willing to give to the patient. No specific hospital or doctor quality information! No specific doctor/hospital cost information! Using this information to choose the highest quality, best value medical care when I don’t mind traveling far and wide to get it, is not very useful. I did learn that I do not like coinsurance for services that are overpriced and out of control.
Consumers Are Really Being “Driven” and Not Doing the “Driving”
Individual Americans ARE being “driven” into these high cost share health insurance products. Because of the lower premium costs (10-15% lower than other managed care plans), employers are “encouraging” employees to select the consumer-driven plan (HDHP) by reducing employee premium share on just this plan or by taking away all options except the HDHP. With household income declining over the past 15 years, and health costs rising faster than inflation, individual Americans simply must opt for the cheapest (premium) health insurance plan available and hope they do not get sick. People with HDHPs are significantly more likely than those with lower cost share, managed care plans to say they feel vulnerable to high medical bills (55% vs. 22%). Get sick and require expensive treatments and the cheap plan becomes very expensive.
Members of HICUP (federal government and insurance companies) are quick to report how “consumer-driven” HDHPs are working to decrease health care spending. What they do not tell you is how much of this short term health care spending reduction is due to people delaying or foregoing needed health care because they do not have the money to pay for it now.
The “consumer driven” HDHP requires the consumer to become a medical expert who can assess when they should and when they shouldn’t seek medical care. In the past, we have been told repeatedly by those in the medical profession that we are not medical professionals and should not diagnose ourselves. With the consumer-driven HDHP, we are now told the opposite, but this time it is the insurance company representatives and our federal government doing the talking.
These consumer-driven HDHP plans are particularly detrimental for people with mental health problems. Many mental health problems can escalate into major life-changing events if left untreated. Is the average consumer capable of evaluating the need for psychological or behavioral help or is it easier to delay mental health treatment when money is not available to pay out-of-pocket? To the non-medical consumer, the $200/hr cost for mental health treatment is very expensive on a limited budget. He will rationalize foregoing the medical intervention and hope for the best. For many American families making the median household income in the United States, the choice is about spending their limited resources on $1000 (five sessions) of psychology treatment versus feeding, clothing, and providing shelter for their families. Americans should not be forced to make these choices.
HSAs, the carrots used to get people to signup for HDHPs, are marketed as an added tax-free vehicle for retirement savings. This is true for a small subset of relatively healthy, higher income Americans. People with chronic diseases, who need regular care, may exhaust their HSA money nearly as fast as they deposit it, never building a surplus. For these people, the HSA-qualified HDHP simply becomes a catastrophic health insurance plan that transfers more of the cost of health care from the insurance company (or employer) onto the patient (and the taxpayer).
The Bottom Line
The High Deductible Health Plan (HDHP) is a catastrophic health insurance product that transfers more of the cost of getting sick onto the consumer. Calling it “consumer driven” health care is a misleading marketed label. What is the consumer “driving”? Not the flow of treatment–it is the medical provider who DRIVES it. Not the cost of specific services and products—these are negotiated between insurance companies and groups of medical providers. The consumer is being “driven” rather than doing the “driving”.
Because of high health care costs, the consumer is being “driven” to delay or even forego needed medical care. The long-term implications of “consumer-driven” health care could very likely be higher, not lower costs. Consumers are not capable of evaluating medical need and should not be placed in this predicament because payers wish to unload more of the high cost of health care onto sick patients.