The Department of Justice is essentially arguing that if four big insurance carriers become two huge carriers, they will be not 'too-big-to-fail,' but 'too-big to-regulate-and-control,'" says a legal observer.
The two court proceedings attempting to block Anthem's attempt to buy Cigna for $48 million and Aetna's planned $37 billion purchase of Humana could come down to whether the judges are convinced that oversight by CMS is strong enough to keep two behemoth insurers in check.
The federal government is arguing that CMS isn't strong enough to protect Medicare Advantage, while the insurers say they would still have to toe the line.
A Washington, DC, judge began hearing arguments in the Aetna/Humana case Monday, and the proceedings are scheduled to last through Dec. 30. The Anthem/Cigna trial is underway in the same federal building, and the CEOs of both companies have testified about friction and lack of cooperation in merger activities.
The Department of Justice filed the lawsuits claiming that the mergers would hurt consumers by reducing competition, driving prices up and creating insurance giants that could do pretty much what they want.
But William D. Wilmoth, a healthcare attorney with Steptoe & Johnson in Wheeling, WV, says the insurers are arguing that antitrust is not a valid concern when the cases focus on consumer access to Medicare Advantage plans and not to general health insurance plans.
"In the same courthouse in Washington, two teams of DOJ lawyers are singing the same tune: Mergers of big health insurers are bad for competition," Wilmoth says.
"According to the DOJ lawyers challenging the Anthem/Cigna and Humana/Aetna mergers, if these four big carriers become two huge carriers, they will be not 'too-big-to-fail,' but 'too-big to-regulate-and-control.'"
The insurance companies are responding that the DOJ position might have worked pre-Affordable Care Act, but not now.
The Payers' Argument
"The insurers' lawyers say that the DOJ is living in a dream, contemplating an insurance world that no longer exists in these ACA days. They're saying they can combine and there still will be plenty of competition with CMS looking over their shoulders," he says.
"They are telling the judges hearing the two cases that CMS is enough of a regulator of rates and coverages that the courts need not worry about reduced competition."
Wilmoth says he sees some substance to the insurers' argument that CMS oversight makes the mergers less problematic than if the mergers involved private health insurance plans
"The thrust of the two cases seems to be the Medicare Advantage impact, so I think the cases might be seen differently if they were just the two business mergers themselves," Wilmoth says.
"This is a brave new world in insurance and these cases are going to be influenced by how much CMS can exert its influence over the Medicare Advantage plans, creating the same checks and balances that the free market does when you have more competitors. And how the new Trump administration might turn this whole antitrust policy thing on its head is anyone's guess."
The possibility of a more business-friendly federal government could lead Aetna to demand a full DOJ trial if the judge rules in favor of the DOJ's current motion for a preliminary injunction.
The New York Post reported this week that a source said Aetna is keeping its options open, since a DOJ trial would not happen until after the Trump administration is in place.
As the first part of the antitrust trial involving the proposed merger of Anthem and Cigna comes to a close, information about how an implementation plan for the payers was executed has come to light.
Early information from the Department of Justice lawsuit aimed at blocking Anthem's attempt to buy Cigna for $48 billion makes clear that even as the two insurance giants try to become one, they are not the best of friends.
DOJ prosecutors and the judge have questioned whether that rift will threaten the merger and ultimately harm consumers.
Unsealed transcripts obtained by The Wall Street Journal last month revealed details about the continuing antagonism between Anthem and Cigna's top executives. The trial continues in front of Judge Amy Berman Jackson in the U.S. District Court in Washington, DC.
Cigna CEO David Cordani confirmed to the court that Cigna had stopped participating in some merger activities, saying he worried that Anthem's integration strategy could damage Cigna's network and value, the Journal reported.
Anthem CEO Joseph Swedish testified that when Cigna stopped cooperating with the merger plan, Anthem created a confidential team to complete the task without Cigna's knowledge, according to the documents.
When questioning Swedish, DOJ attorneys cited a December 2015 note from Swedish to Cordani, in which he said the execution of their integration plans had been "unacceptable."
A Question of Integration
DOJ attorneys expressed concern that the rift could cause the merger to fall apart even if the court allowed the plans to proceed, and that such a failure could harm both companies' customers. That prompted the judge to question the insurers' promises of a smooth consolidation. "How do you work on integration without talking to the person you're integrating with?" Jackson asked.
Swedish also testified that pressure from Cigna's board resulted in Anthem expanding Cordani's planned role in the combined company, but he added that there was some question as to whether Cordani would remain after the merger.
In testimony last week, an Anthem executive said the insurer "could face a penalty of about $3 billion from the national Blue Cross Blue Shield Association if it fails to derive the bulk of its nationwide revenue from Blue-branded products after acquiring Cigna," reported Bloomberg News.
The Other Big Deal in Question
As DOJ's other big antitrust lawsuit gets underway, attempting to block Aetna's $37 billion purchase of Humana, court documents suggest that Aetna's decision to pull much of its business out of Obamacare could be an issue.
DOJ filed suit in July to block the huge merger on antitrust grounds, saying that it would drastically reduce competition and create Medicare Advantage monopolies in some areas. Consumer prices for healthcare insurance also would increase in many communities, DOJ lawyers argued.
Prosecutors filed a pretrial memo filed with U.S. District Judge John D. Bates in Washington, DC, noting Aetna announced in August that it would stop selling policies on Obamacare exchanges in Florida, Georgia, and Missouri. The prosecution implied that the insurer did so in relation to the antitrust case.
"A firm should not be able to avoid judicial review by withdrawing from a market in an effort to undermine the government's case—particularly where it can reverse that decision," the memo said.
Aetna responded by saying that the decision was made solely for business reasons—specifically a projected $300 million in 2016 in Obamacare plans. "The government's effort to create a sideshow about Aetna's intent does not change the fact that Aetna's exit from the challenged counties forecloses the possibility of any anticompetitive effects in those counties," the insurer's attorneys wrote.
"It is beyond dispute that ACA exchanges are threatening to collapse under their own weight. The government appears intent on punishing Aetna for refusing to continue in a deeply flawed program."
Health plans are concerned that their investments in technology to comply with ACA demands will be wasted in the wake of the massive changes promised by the incoming administration.
The healthcare industry is trying to determine how the presidential election will affect the status of the Affordable Care Act and the way health plans do business, but the only solid conclusion so far is that things won't be the same under a Trump administration.
Promises to repeal and replace have been constant, but exactly how the ACA may change remains to be seen. Some analysts believe, however, that whatever changes are coming will come quickly.
President-elect Donald Trump campaigned on a platform that included overhauling Obamacare, and the majority Republican Congress will make it possible to implement any changes quickly. Tom Price, MD, Trump's choice to lead HHS, is a vocal opponent of the ACA.
David Squibb, chief sales and marketing officer at Xpertdoc, a software company that provides document and communication management for health plans. Squibb says his company's clients are nervous about how a revamp of the ACA could affect them, and whether they will have enough time to prepare.
"If it were a mixed Democrat and Republican government, with Trump in office and a Democrat-controlled house or senate, the thinking is that any alterations to the current law would come more gradually," Squibb says.
"With a Republican majority we expect it to be more rapid. Our health plan clients are telling us they just hope it will be a reasonable, incremental change and not a radical change that leaves them unprepared to respond and serve their customers."
Health plans are particularly concerned that their investment in automation and technology to comply with ACA demands will be wasted, adds Eric Allen, the health insurance sales lead for Xpertdoc. Even if that technology is still useful, health plans still worry that any revisions to the law will require more resources to adapt, he says.
"A few years ago as the ACA came into play, health plans started looking into more automation options to eliminate manual processes," Allen says.
"With changes coming, the ability to be nimble and pivot will be critical for them. Some of our clients are starting to look more at how automation can be designed not only to make processes more efficient but also to allow them that flexibility to respond to changes."
The summary of benefits and coverage (SBC) is a good example of how health plans may find themselves revisiting compliance challenges that they thought had been dealt with already, Allen says.
"The SBC is a very data driven tool and template," Allen says.
"Our clients have done a number of things to automate production of that so that they can deliver in a timely fashion information that is pertinent to their members, and their particular plan. Our clients have already developed a digital form warehouse that allows them to provide that information as required, but will that be obsolete with any new changes? It's likely the SBC will continue in some form, but the impact on technology investments is still a question for health plans."
The country's second largest Medicare Advantage health plan provider reports that it has achieved better outcomes and lower costs through value-based reimbursement model agreements.
Humana's value-based Medicare Advantage (MA) program continues to produce better outcomes and lower costs with its reimbursement model when compared with standard fee-for-service healthcare, the company reports.
The proof is in the data: Physicians in the value-based MA program have racked up Healthcare Effectiveness Data and Information Set (HEDIS) scores 19% higher than average.
The country's second largest Medicare Advantage health plan provider based on membership reports that patients treated by physicians in value-based agreements had better health outcomes compared to patients in standard MA settings, with
6% fewer emergency room visits
8% higher colorectal cancer screening rates
6% higher breast cancer screening rates
13% higher rates of osteoporosis management
Humana compared quality metrics and outcomes in 2015 for approximately 1.2 million MA members who were affiliated with providers in value-based reimbursement model agreements with metrics and outcomes from 170,000 members who were affiliated with providers under standard MA settings, which don't have additional incentives for providers who meet quality or cost targets. The results are consistent with the findings from the previous two years.
"Our integrated approach to partnering with providers enables us to improve the healthcare experience for consumers in multiple ways," Humana President and CEO Bruce D. Broussard said in a statement announcing the report.
"We're able to offer more affordable health plans, help people improve their health through comprehensive, holistic engagement with them, and also drive higher physician satisfaction."
Humana has 1.8 million individual Medicare Advantage members and 200,000 non-Medicare commercial members that are cared for by approximately 49,600 primary care physicians in more than 900 value-based relationships across 43 states and Puerto Rico.
As of September 30, 2016, approximately 63% of Humana individual MA members are seeing providers who are in value-based payment relationships with Humana. Humana's total MA membership is approximately 3.2 million members, which includes members affiliated with providers in value-based and standard MA settings.
Effect on Costs
Humana also continues to lower costs through value-based reimbursement model agreements, the report notes.
By working differently with providers on quality and health initiatives, Humana experienced 20% lower costs in total in 2015 for members who were affiliated with providers in a value-based reimbursement model setting versus an estimation of original fee-for-service Medicare costs using CMS Limited Data Set Files.
Humana notes that cost reductions such as these can benefit plan members through reduced out-of-pocket costs, lower member premiums, and additional benefits.
Humana also achieved better management for older adults in vulnerable populations. For these members, assessment rates for pain screening and medication review were higher by 5% and 10%, respectively.
The value-based model holds Humana and providers jointly accountable for health outcomes. The report includes an endorsement from Griffin Myers, MD, of Chicago-based Oak Street Health, whose practice has recently transitioned to a value-based reimbursement model with Humana.
He says he has seen the opportunities firsthand about the impact of the model.
"In a value-based environment, Oak Street Health is held accountable on how we can quantifiably improve health outcomes," he says. "A value-based agreement drives our physicians to develop patient relationships where the goal is helping a patient reach his or her full health potential."
Insurers need to engage patients, especially those with high out-of-pocket costs, to avoid poor outcomes for both parties.
When financial constraints force patients to use their insurance coverage less, the health plan and healthcare provider can lose opportunities to engage these patients in preventative health and disease management.
That's because most components of patient engagement—such as explaining a care plan, answering questions, encouraging compliance, or appointment reminders—occur during face-to-face patient encounters, says Connie Phillips-Jones, director of clinical programs at Tata Consultancy Services in Santa Clara, CA.
"Health plans can certainly be doing better towards the goal of patient engagement," says Phillips-Jones, who has a background in nursing, case management and healthcare quality.
"It will require the use of more technology and adopting some practices that are as simple as sending written reminders so a patient doesn't miss a doctor's appointment. Dentists have been doing that for years but it's relatively new to the medical market."
Patient adherence to a specific medical regimen is crucial to maintaining health and reducing costs for health plans, Phillips-Jones notes. The Centers for Medicare & Medicaid Services reported recently that a quarter of readmissions were related to medication non-adherence.
People with chronic diseases tend to take only about half of the medications prescribed, and three-quarters do not keep follow-up appointments, she says.
"That certainly shows that there will be additional healthcare costs with those patients. The more health plans can work with patients and get them to do the right things, to follow the plan that their doctors have laid out, the more everyone benefits."
Health plans should take more advantage of the data available to them and use clinical analytics to identify patients who can benefit the most from better engagement, and those who are least likely to follow their treatment plan on their own, she says.
"It's not a broad-brush approach. You can't try to contact everyone and tell them to take their medications today," Phillips-Jones says. "You do want to be in touch with those people who most need to be engaged, and clinical analytics is the way to identify those customers from a very large patient population."
Pulling out the patients with particular diseases or conditions is only part of the effort: Health plans also need to start considering social, behavioral, economic, and cultural components that can affect the patient's likelihood of complying with a plan of care, she says.
Smartphones and tablets also offer opportunities to encourage patients more in self-care and keeping them healthy.
"When 99% of your customers are carrying smartphones, there's a tremendous opportunity to reach them and stay in touch," Phillips-Jones says.
"Health plans are behind the curve in comparison to many other companies in the way they use smartphones and similar technology to the patients' benefit and to their benefit also. They need to start building programs to contact, to engage, to remind, and to get patients motivated."
A standard app with the health plan's logo won't be enough, however. There are already thousands of apps that can help people monitor their health, take medications regularly, and prompt them to certain behaviors, but research has shown that interest falls off after a few weeks, according to Phillips-Jones.
One way to keep patients engaged might be apps with practical purposes that are turned into games, she says.
Health plans also have learned that patients sometimes respond better to patient engagement initiated by the healthcare provider rather than the plan, so it may be more effective to funnel engagement resources through the provider, she suggests.
One of the architects of the Obamacare exchanges says the best strategy for saving the beleaguered health law might be to impose a penalty on a certain type of enrollee.
A seldom-discussed problem with the viability of the Affordable Care Act is the number of people who are counted as insured, but who intentionally go without coverage for months.
Those gaps represent significant losses for health plans struggling to remain viable, says Joel S. Ario, former director of the Office of Health Insurance Exchanges at the U.S. Department of Health & Human Services and now a managing director at the consulting firm Manatt Health in Washington, DC.
Ario, one of the architects of the Obamacare exchanges says the best way forward might be to impose a penalty on those who have coverage gaps during the year.
"Current enrollment is well short of what it could be and should be, and as a former insurance regulator, I know that if you get only part of what you intended, you'll be getting the people who need service right now," he says. "The people that will be missing are the ones who don't need services right now and therefore help balance out the risk pool."
Requiring continuous enrollment would address what amounts to a loophole in the ACA, Ario says. The penalty for not having insurance is a family maximum of $2,085 per year, or 2.5% of household income above the tax return filing threshold for your filing status, whichever is greater. If the person had coverage for part of the year, he or she would pay one twelfth of the fee for each month without coverage.
Those numbers don't stop some people from buying insurance long enough to obtain a service like surgery and then dropping it afterward. Increasing the penalty might make coverage gaps less attractive, but that is unlikely in the future because the mandated coverage already is unpopular, Ario says. But creating a new penalty might be an easier sell.
"You could have a proposal in which if someone shows up for open enrollment and doesn't have continuous enrollment, there were gaps in the coverage in the past year, then there would be some penalty to be paid at that time," Ario says.
"One form could be a permanent penalty like Medicare does now. You just pay more for your coverage. That, however, falls across the people you want in the system, the young and healthy, and the people who are manipulating the system by jumping in and out of coverage."
A better type of penalty might be one that exempts a young person who was slow in obtaining coverage after leaving a parent's plan, for instance, but targets those purposefully gaming the system, he says.
"There are different ways to address it, but the goal is to reward continuous enrollment and penalize people who intentionally create gaps in their service," Ario says.
"That's the kind of thing that we might see proposed after the election. The actuaries say that could be a game changer because it goes at the need to have a more balanced risk pool."
A moratorium has been issued in response to reports that the practice can result in large and unexpected medical bills for some senior citizens.
In what could be yet another blow to health plans struggling to remain viable under Obamacare, the Centers for Medicare & Medicaid Services has stopped accepting proposals from health insurance companies that enroll customers in Medicare Advantage plans without their consent.
The announcement came in a memo from Michael Crochunis, acting director of the CMS Medicare Enrollment and Appeals Group, who noted that the moratorium was in response to recent inquiries about the automatic conversion, also known as "seamless enrollment" or "seamless conversion."
Crochunis was most likely referring to criticism spawned by recent news coverage such as a July Kaiser Health News story that details how senior citizens are shocked to find themselves enrolled in a private Medicare Advantage plan even though they had enrolled in Medicare.
In many cases, customers don't find out they have been transitioned to a private plan until they receive medical bills for treatment outside the plan's network.
Health plans must get CMS permission to engage in seamless enrollment, but CMS has been routinely allowing health plans to enroll members of marketplace or other commercial plans into Medicare Advantage once the insured become eligible for Medicare. CMS has even reminded insurers about the opportunity.
Moving customers to Medicare Advantage plans can result in more revenue for payers, but consumer and watchdog groups have criticized seamless conversion as a sneaky move that robs seniors of the ability to choose their own health coverage.
"It flew under the radar for quite a long time, and it's just beginning to gain more attention," Gretchen Jacobson, associate director of the program on Medicare Policy at the Kaiser Family Foundation told Money.
CMS requires that beneficiaries be notified in writing at least 60 days before the conversion, and the health plan must provide information on how to opt out of the conversion. But opting out requires affirmative action; doing nothing results in conversion to Medicare Advantage.
Twenty-nine Medicare Advantage companies have been granted permission from CMS to move beneficiaries into their Medicare Advantage products, and half of them got the go-ahead this year. These include big players such as Aetna, UnitedHealth Group, and Blue Cross Blue Shield.
CMS previously did not disclose which companies used seamless conversion, but in conjunction with the moratorium, CMS published data on how seamless conversion has been used to date.
"CMS is temporarily suspending its acceptance of any new seamless enrollment proposals. Further, for MA organizations currently approved to offer seamless conversion enrollments, CMS will soon issue a memorandum clarifying current policy and requirements," The memo from Crochunis stated.
CMS released a statement saying it continues to look for ways to improve the seamless enrollment process.
It seeks to ensure that automatic enrollment into the Medicare Advantage plan is in line with the beneficiary's wishes and is not the result of "a lack of understanding on the part of the beneficiary of the need to deliberately decline the Medicare Advantage enrollment if it is not desired."
Insurers are facing more pressure than ever to meet customer demands or lose those customers to competitors.
A recent survey of 2,500 health plan members across the U.S. indicated that health plans must quickly tune their offerings and provide service levels that match or exceed members' expectations, says Ray Desrochers, executive vice president of HealthEdge, which conducted the survey.
Consumers expect organizations in their healthcare ecosystem to more effectively communicate with them and supply information and services in a way that is as convenient as their experience in other industries, Desrochers says.
For example, 88% of survey respondents said their health plan could be doing a better job of communicating their total financial responsibility.
Incentives for healthy behaviors including diet and exercise are popular, with 42% of consumers responding they are "very interested" and an additional 45% stating that they are "somewhat interested" in taking advantage of such inducements.
Despite that high level of interest, 48% of those surveyed reported that their health plan offers none of these benefits, Desrochers says.
Only 12% of individuals stated that their health plan provides discounts on gym memberships, although it's possible respondents did not know they have access to that benefit—another result of poor communication.
Health plans also are missing the opportunity to allow members suffering from chronic conditions to participate in groups, according to the survey. Only 8% of respondents reported participating in a condition-specific support group or other resource resulting from a referral provided by their health plan.
The survey also indicates that members care if their health plans lag in tech-savviness. More than half, 57%, said their confidence in the health plan's ability to provide effective coverage and benefits would be adversely affected by the knowledge that outdated technology is being used.
"Health plans are rated so poorly in comparison to other industries because industries such as retail, travel and banking have had decades of experience ahead of health insurance to better understand, segment and communicate with their consumers," Desrochers says.
"It has only been since the Affordable Care Act that insurance companies have had to deal with consumerism. This is due in part to members' individual buying power via the exchanges and the added financial responsibility that consumers are expected to shoulder with regards to their care."
Improving communication would benefit insurers' bottom line, Desrochers says. Insurers spend hundreds of millions of dollars and tens of millions of hours each year handling claims-resolution calls, so there is a lot to be gained by improving factors such as a customer service representative's ability to address consumers' concerns, he says.
With the ability to shop for their insurer, type of coverage and where to receive care as they do in other industries, consumers' expectations for the customer experience are now much higher, he says, and insurers must catch up to meet or exceed these expectations.
"All of these findings should serve as a wake-up call for health plans," Desrochers says. "In today's world of short attention spans and fleeting consumer loyalty, a health insurer's competitive position and ability to retain members rests on its ability to quickly provide complete, accurate and up to date information."
Health plan leaders should ask themselves why everyone is pulling out on one side of the market while there is so much growth and success on the other side, suggests the head of a prescription drug discount firm.
Struggling health plans should learn from the experiences of those who are doing well under the Affordable Care Act, says Keith Jacobs, president of RefillWise, a prescription drug discount company that primarily serves the uninsured.
The financial struggles of health plans under the ACA are surprising, he says, especially since other players in the healthcare industry are prospering.
"How can the government hold a gun to the head of American consumers to force them to buy a product and the makers of that product still not succeed? Any other business would die for that, and yet somehow they can't figure out how to sell and make it work," Jacobs says.
"They're not reaching the consumers and managing to break even with their offerings on the exchanges. All of the non-payer businesses are somehow managing to fill this gap, so it's not like it's impossible to reach consumers and remain profitable."
Health plan leaders should ask themselves why everyone is pulling out on one side of the market while there is so much growth and success on the other side, Jacobs suggests. RefillWise is one of the success stories under Obamacare and Jacobs says that is largely because his and other prospering companies are focused on price.
"That's instead of trying to build a big brand that is memorable in everyone's mind, like Blue Cross/Blue Shield, or Aetna, or Humana. If you look at their marketing campaigns, it's a big billboard with a family splashing in the pool and suggesting you're going to be healthy and happy with that insurer," Jacobs says.
"For us, the story of consumer healthcare in America in 2016 is lowering the price, trying to bring capitalism to this non-capitalist market."
For Consumers, Cost is King
Health plans have gone far astray from actual consumer concerns, he says. As premiums and deductibles continue rising, American consumers are less interested in esoteric feel-good marketing campaigns from insurers, Jacobs says. Instead, they're interested in cold, hard cash.
RefillWise, for instance, has seen success with a loyalty card program that includes $5 cash back on the first prescription and again after each 10th prescription. Jacobs also cites the price lookup tool offered by a competitor, GoodRx, that he says responds directly to consumer concerns.
"Payers are just now following suit with a lot of me-too products where they are launching price lookups of their own, and it's a lot easier for them than for a company like ours. We have to find everyone's prices and they're just providing their own prices," Jacobs says.
"It would be as if Taco Bell had a lot of trouble telling customers what a taco costs, yet we have health plans struggling to make these things transparent because either it's not in their nature, or they have some benefit from not doing that."
Nevertheless, Jacobs expects more transparency from health plans in the future simply because consumers are embracing what little exists today and will expect more.
"I think if the insurers realize they can't pivot because they're just too big to make that change, they may begin acquiring the companies that do offer that kind of transparency to consumers so they can use them to change from within," Jacobs says. "Or they'll just squash them and eliminate the competition."
More people are turning down services recommended by their physicians because they can't afford the out-of-pocket costs.
The high deductible health insurance plans that are plaguing consumers could end up biting the insurers and employers too, if people are dissuaded from seeking necessary medical care.
That's the prediction of one analyst who says high deductible plans may have been the insurers' best attempt at making Obamacare work, but they could turn out to be one more threat to the viability of the industry.
Consumers who have not met their deductibles for the year, and at any time that's a large proportion of the insured, are looking for ways to save money on healthcare expenses, says Mike Ducote, chief operating officer of CirraGroup, a company that assists consumers with healthcare debt resolution.
More people are turning down services recommended by their physicians because they can't afford the out-of-pocket costs, services that they would have automatically accepted years ago when their plans were more likely to pay all or most of the cost.
Ducote had that experience himself when his son injured his arm playing baseball. The physician ordered an MRI, but Ducote balked because it would cost him $1,000 out-of-pocket. He decided to wait a couple of days in hopes that the injury wasn't serious and would heal without further care. It did.
'Not Everyone Knows to Question' Providers' Orders
"But I'm not the norm. I understood my benefits and knew what questions to ask," he says. "I would have done whatever they said was right for my son, but when I asked if the MRI was really necessary, they said it was fine to wait a couple of days. Not everyone knows to question those orders, and the healthcare providers are focused on taking care of your needs and moving to the next one."
The result is that some consumers end up paying large sums out-of-pocket for healthcare that may not have been entirely necessary, Ducote says.
But at the same time, the pendulum may swing too far the other way and some consumers forgo necessary care and prescriptions because of the cost, he says. Too much of that behavior could hurt already struggling insurance plans and employers, he suggests.
"The problem with high deductible health plans is you are shifting the decision making to the least informed, which is the consumer," he says. "We're having to make these calls purely based on the dollars. I don't think that's a good recipe for success."
Not only can consumers be harmed by avoiding expensive healthcare, but so can the insurers and employers. Health plans try to encourage preventative care by making much of it covered in full regardless of the deductible, but research has shown that consumers typically have a poor understanding of their insurance policies and many are forgoing covered preventative care because they assume they will have to pay.
That could result in higher utilization, already a problem for many insurers, if consumers avoid preventative care and end up in the emergency room or admitted to a hospital for ailments that could have been avoided, Ducote says.
Continued use of high deductibles also could have the effect of making the insurance companies less and less relevant, he says.
"If people are going to pay for healthcare out-of-pocket most of the time, you may see insurers lose their position as providers begin pricing their services at a more realistic rate," Ducote says.
"What if the services were priced closer to what they actually cost to provide, and you had catastrophic insurance on the back end? That's something we had once upon a time, before we got into this mess that we have."