Health Plans: A Shifting Burden
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High deductibles are spreading beyond the consumer-driven health plan niche—and helping change the way patients relate to providers.
In the world of health plans, the phrase "high deductible" has applied to consumer-driven health plans with either a health savings account or health reimbursement arrangement. Those plans remain a relatively small percentage of the health plan market—but the premise behind CDHPs is spreading.
The median deductible for PPO plans jumped to about $1,000 in 2008 from $500 the previous year, according to Mercer, which recently released its National Survey of Employer-Sponsored Health Plans. About 78% of employers now offer PPOs with deductibles, says Blaine Bos, a worldwide partner at Mercer in Minneapolis. Bos says employers are adding higher deductibles to PPOs rather than charging more for their coverage. As the distinction between CDHPs and PPOs grows smaller, rising deductibles are affecting both the individual member's wallet and healthcare organizations' bottom lines—but it's also changing healthcare in other ways.
The theory behind high-deductible accounts is that they transfer more costs onto members, who will become better healthcare consumers because they will have more incentive to find affordable, quality care and will have the tools available to make wise choices.
Meredith Baratz, vice president of market solutions at UnitedHealthcare in New York City, says account-based plans coupled with decision-support tools are quite different than merely shifting costs by adding a high deductible to a PPO.
"You are in a very different model now and one that is pretty revolutionary … which is the idea of creating financial accountability with the net of support information that people need to get really involved in their health decisions," says Baratz.
Health plans and employers have created Web sites that offer price and quality information to help educate those individuals. Health insurers contend the information has created better-educated consumers and is even helping members not enrolled in CDHPs. "Once that information is made available, it can be used by other employees [in PPOs or HMOs]," says Garry Ramsey, chief marketing officer at Bluegrass Family Health, an integrated health plan based in Lexington, KY. "We are seeing that the employee is much more engaged in the process because he is part of the healthcare equation."
Some contend that higher deductibles are forcing patients to delay care or medications because they must pay for their care before the deductible is reached, but that's not a problem for most CDHPs, which exempt preventive service costs. CIGNA says members of its CDHP, CIGNA Choice Fund, do not put off recommended care any more than members of traditional CIGNA plans.
Will Giaconia, vice president of CIGNA Choice Fund in Bloomfield, CT, says promoting consumerism allows members to compare doctors and hospitals based on quality and costs. "We have fully integrated the tools and made them much more powerful and real for the consumer."
Higher deductibles and the consumer-directed healthcare movement have changed the way doctors are paid. Not long ago, insurers paid 95% of office visits and services. Now, that number has dropped to about 75%, says Ramsey.
The implications for providers are mixed, he says. Individuals paying for more of their care means members and providers are communicating more about cost and quality. But providers also increasingly must track down delinquent payments from patients who aren't paying promptly. With CDHPs, there are legal out-of-pocket maximums that protect consumers, but that is not the case for PPOs, says Ramsey.
"The provider community will embrace the HSAs because at least it's a mechanism that will help pay for those high-deductible plans," he says.
Joe Paduda, principal at Health Strategy Associates in Madison, CT, however, says high-deductible plans show that health plans are no longer managing care. "What's happening is the commercial health insurers, both for-profit and nonprofit, have given up any pretense that they actually manage care. It's managing reimbursements and managing benefits. They don't manage care."
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