Financial hardship among members of high deductible insurance plans

Alison Galbraith and colleagues have produced a nice Health Affairs paper whose title kindof speaks for itself: “Nearly half of families in high-deductible health plans whose members have chronic conditions face substantial financial burden.”

I don’t have time to offer detailed commentary today. Fortunately Aaron Carroll has already written much of what I would have said–had I thought of it, anyway. The basic story is illustrated in one key figure, which Aaron constructed from their paper:

Aaron’s bottom line is similar to mine:

I think that shifting more and more people to high-deductible plans as a blanket solution to our health care system’s ails is a bad idea. It will result in much cheaper rates for healthy people and may seem like a great idea initially. But it will likely cause harm to sick people and people with chronic conditions, the very people I’d argue the health care system is for. There’s likely a place in the health care system for the use of cost-sharing as an economic incentive, but I don’t think it should be the overall philosophy.

Author: Harold Pollack

Harold Pollack is Helen Ross Professor of Social Service Administration at the University of Chicago. He has served on three expert committees of the National Academies of Science. His recent research appears in such journals as Addiction, Journal of the American Medical Association, and American Journal of Public Health. He writes regularly on HIV prevention, crime and drug policy, health reform, and disability policy for American Prospect,, and other news outlets. His essay, "Lessons from an Emergency Room Nightmare" was selected for the collection The Best American Medical Writing, 2009. He recently participated, with zero critical acclaim, in the University of Chicago's annual Latke-Hamentaschen debate.

6 thoughts on “Financial hardship among members of high deductible insurance plans”

  1. Seems to me there’s a couple of bars missing from that chart: Representing the people without health insurance. It’s not like the only choice an employer has is offering low or high deductible policies; They can always offer no policy at all. Which they might be more inclined to do if you foreclosed the option of high deductible policies.

    Rather like comparing people with high wage and low wage jobs, and coming to the conclusion the minimum wage should be raised… without considering the “no wage job” an increase in the minimum wage might increase the number of.

    For my part, my employer offers a high deductible policy coupled with substantial donations to a HSA; In most years I’m not going to have any out of pocket health care expenses AT ALL; Not even cold medicine if I have a head cold. Why exactly do you want to increase my out of pocket expenses? So that some insurance company can get it’s cut?

  2. Brett, thats a great point. The real fix is increasing the worker’s bargaining power vis-a-vis the employer.

  3. And it is unfair that a person enjoying good health would have to suffer by helping with a sick person’s health care bills.

  4. Although I haven’t read the articles either, I think that the real problem of high deductible health plans for those who believe in the value of financial incentives in health care (and I count myself as one of them) is their limited impact due to the very high proportion of health care expenditures attributable to individuals with high expenses. That is, the vast bulk of health expenditures are for individuals who will have have exceeded and conceivable reasonable deductible that won’t bankrupt them and are thus not expenditures for which financial incentives can work. Almost by definition, the expenditures below the deductible for high deductible plans will be for minor concerns, crises and ailments, routine, ongoing and/or preventative in nature. This is also why those with chronic illness will of course face high expenditures. This is a group on whom the over-all limited impact of the financial incentives of a high deductible plan will certainly face high expenditures (up to whatever the deductible is) but lower than if they had no coverage at all.

  5. My wife and I ran the numbers when she was pregnant with our child — and if we had high medical expenses (viz., a caesarian delivery), the HSA plan and the standard insurance ended up being wash, altogether. The higher monthly premiums of the standard plan and the higher out-of-pocket costs precisely offset each other. (I think the actuaries must have done that on purpose.)

    It turned out that if we had no medical expenses or if we had a lot of medical expenses, the high-deductible plan worked. But it did seem like it wouldn’t work as well for people with chronic but not catastrophically expensive medical needs (which could, yes, lead to skimping on care that makes conditions worse). At the same time, preventive care is generally covered 100 percent, and some folks with chronic conditions might be able to get more visits/meds covered as preventive. Happily, I’ve not had to cross that bridge myself.

    One other wrinkle: High-deductible plans offer cheap premiums, but it is absolutely essential to keep the Health Savings Account — or some savings account — stocked with enough cash to cover out-of-pocket costs. I’ve been fortunate enough to be able to do that, but I have a cheap mortgage and a frugal wife and a paid-for old pick’em-up truck. That said, if you didn’t have the cash and set up a payment plan for health care costs … well, that’s not necessarily catastrophic, and funneling the payments through an HSA would lower your taxable income. And the payments plus the lower insurance premiums might still cost less than a traditional plan’s premiums — these days especially.

  6. People who drill down on health care costs (like insurers) are very aware that relatively few people represent a relatively very high proportion of health care expenditures. This is the precise subject of Atul Gawande’s recent article in the New Yorker. High deductible plans can get at certain practices that lead to unnecessary expenditures — like the use of high cost imaging tests in favor of lower cost substitutes (CAT scan versus x-ray or brand name versus generic medicines). It is also a simple way to transfer costs of coverage to insureds overall, because per the first sentence, it actually works out reasonably well for MOST insureds, who like lower premiums.

    The flipside, is that, it’s only a band-aid on the cost phenomenon, because it barely puts a dent in the costs associated with the “astronomical users,” and it really does penalize what you would call “chronic users” who know year in and year out they are going to use enough resources that they will always meet the deductible. The added difficulty is that some in this latter group of people can become the truly high cost users if they don’t address their chronic health issues at the front end: high blood pressure, diabetes, asthma, etc.

    So if you try to save money on blood pressure medication and blood sticks, you could end up on dialysis with your costs blowing through the roof. It’s the main problem associated with trying to make individuals better consumers of medical care — they don’t what to give up for their own (and society’s) long-term gain. They tend to give up on both necessary and unnecessary measures. The information gap is too vast to use HDHP’s as a true cost containment tool. Their real use is as a stop gap to prevent the loss of insurance altogether.

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