Consumer-Driven My Ass–The High Deductible Health Plan

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 often called a consumer-driven health plan.  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 before the high deductible is satisfied.

targeting individuals with consumer-driven health insuranceThe 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 distance the label of consumer-driven further away from high deductible, 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 message .

On the Health Insurance Marketplace  (non-group), the words high deductible health insurance plan cannot be found. By the definition of the HDHP (minimum deductible of $1300 in 2016), most of the health insurance plans being sold in the non-group marketplace are HDHPs but most do not use this label to identify them. Most of these plans do not give you the option of opening a tax-advantaged Health Savings Account (HSA) with it. When the plan is an HSA-qualified-HDHP, you will have to decipher this fact by the title of the plan (for example in Oregon’s Health Co-OP SiMPLEsilver HSA Select Network is an HSA-qualified HDHP plan that has the option to open an HSA). On some individual state marketplaces (Washington for example) you have the option of selecting plans that have HSAs without having to decipher the plan title. I found it interesting that only insurance plans with no copays (just coinsurance ) came with HSAs on the Washington non-group marketplace site. It seems that the individual must shoulder the high medical inflation along with the insurance company in order to avail himself of the HSA tax-advantaged privilege.  Is it a federal government requirement that plans with copays are not able to use HSAs even if the deductibles are above the minimum requirement?

Consumers Driving the Flow of Treatment?

What exactly are the consumers driving? The theory holds that allowing patients to control and manage their own health care dollars, consumer-driven health plans help individuals become better consumers of health care. If the money comes from our own pocketbooks, 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. This is believed to be the most effective way to reduce healthcare costs.

Sounds great, doesn’t it? “Bull doo-doo”! This theory makes a lot of false assumptions. It assumes that when the sick individual American walks into the doctor’s office, he is in charge of treatment. This concept is 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. He is after all the medical expert, not the patient.  Treatments and procedures in hospitals have some of the highest healthcare costs and it is ludicrous to assume that anything going on in this setting is consumer-driven.

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.

medical providers driving treatment not consumer-drivenConsumers Driving Costs Down?

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. 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.

consumer-driven cost estimator

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 they take 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 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 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.

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.

Not every medical consultation is for an emergency medical problem that requires immediate attention. For example, 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 for oneself (or a loved one)?  To the non-medical  consumer, the $200/hr cost for mental health treatment is very expensive on a limited budget.  He will rationalize forgoing 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. Many lower income Americans are financially incapable of coping with the onerous HDHP cost share requirements.

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. Consumers are not capable of evaluating medical need and should not be placed in this predicament. The long-term implications of “consumer-driven” health care could very likely be higher, not lower costs.

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