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Health Plans: Avoiding the $10K Deductible

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Two avenues for benefit design are value and individualization.

This second in a three-part series profiling the health plan of 2020 examines how health insurers will design benefits.

Health insurance deductibles increase every year as employers and health plans look to pass costs to members and create better healthcare consumers. The average health plan deductible is about $5,000, as employers and health plans have expanded the deductible concept to PPOs and HMOs. If we follow this path, deductibles could balloon to $10,000 within the decade.

That's one path. Another is happening in Oregon. Jack Friedman, CEO of Providence Health Plans in Beaverton, which provides health insurance to more than 380,000 people in Oregon and southwest Washington, suggests a three-tiered system that takes into account value, prevention, chronic illness care, and overutilization of services that don't provide the most value.

The three tiers would include:

  • Tier 1: No copay or low copay for ambulatory care for those with chronic conditions, as well as for preventive services to help people from moving to chronic illness.
  • Tier 2: This would resemble the current healthcare system and would ask consumers to chip in 20% coinsurance for normal healthcare.
  • Tier 3: This tier would require consumers to pay more out of pocket for services that do not provide a high clinical value.

Friedman says most people, including employers, health insurers, and consumers, are fine with the top two tiers, but the third one raises alarm. Research, most notably from the Dartmouth Atlas, shows that limited-value care "is driven by the number of providers in a given community and/or the preference of the provider—not necessarily driven by rich medical evidence," says Friedman.

Friedman says the Oregon Health Plan, which is the state's Medicaid program, has had a similar tiering design in place for 20 years and has done well in controlling costs, and officials have found the three-tiered program costs about 10% less than the traditional PPO benefit design.

Though he supports the tiering concept and thinks it will likely become more prevalent, Friedman also understands that many Americans have a hard time with the notion.

"I do think our challenge in the future is to do the most good for the most people for the least amount of cost. I think this design achieves that, but unfortunately we tend to sometimes be concerned about that one individual who might fall through the cracks," says Friedman.

Friedman describes a three-tier plan that would take into account value, condition, and cost, but another movement suggests that design should instead look at the individual.

One example is UnitedHealthcare, which created plans for diabetics and prediabetics last year. The idea behind the plans is to lower or eliminate copays for diabetes-related services for diabetic and prediabetic members. The belief is that if a health plan removes cost barriers for care, prevention, and medication, the member is more likely to follow treatment regimens.

Jan Berger, chief medical officer at Silverlink Communications, Inc., which is a healthcare communications company in Burlington, MA, says health plans are moving to more personalized offerings, which can lead to "improved engagement, improved personal responsibility, and improved outcomes."

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