The High Price of High Deductible Plans and the Potential Role of Population Health Management

Should patients be forced to reach a spending threshold before their insurance kicks in? At first glance, it makes sense, because health consumers’ “skin in the game” forces them to think twice before going to the emergency room for a sore throat, or an orthopedic surgeon for simple back pain.

Wharam and colleagues examine the science behind high deductible insurance in this just-written article in the New England Journal.

And the science says there is a lot we do not know.

Once insurance risk is monetized into premiums, policymakers as well as insurers are operating in the dark about calculating the right deduction for a given income level. One example is Cover Oregon’s $5000 deductible for persons who are at 200% to 400% of the federal poverty level. That means a family with a yearly income as low as $47,000 would have to spend more than 10% of their income on health care before seeing a dime of insurance coverage.

“Egads,” says the DMCB.

Given that stark reality, the challenge is to figure out how an up-front deductible influences “buying behavior” once persons get sick. Unfortunately, most of the research out there is on the impact of relatively “small” amounts of out-of-pocket expenses on health care utilization, especially in low-income populations. The bad news is that lay-persons – who are unable to discern the difference between a simple headache vs. a brain tumor – tend to “indiscriminately” lower all utilization as their cost sharing goes up.

There has also been no research on the impact of high deductible plans on mortality or chronic condition control.

Concluding that the U.S. is “poorly prepared” for what will happen under Obamacare’s bronze high deductible plans, Wharam et al recommend there be more research on the topic.  Pending that, they suggest consumers be educated about their insurance purchases and be encouraged to chose low-deductible plans. They note that the star-crossed insurance exchanges (once they’re fixed) can be configured to help do that. When there is employer-based insurance, employers could be encouraged to make the deductibles more proportional to income. In addition, health savings accounts could also help.

While the authors don’t use the words “population health management,” they tap this discipline as one solution to this Obamacare problem. They point out that predictive modeling/risk stratification can be used to create “personalized” insurance designs that optimize high-risk patients’ access to care. Patients in these plans could have access to decision-aids and coaching that help them figure out when it’s a simple headache and then they should seek medical care.