The Effectiveness of High Deductible Health Insurance

Emily P. Walker in MedPage Today in November 2010 reported on high deductible health insurance plans (HDHP). According to IRS publication 969 (2009), at the time of this article, to qualify as a high deductible health insurance plan (HDHP), the minimum annual deductible for an individual is $1,200, and for a family is $2,400. Because of this higher deductible, the premiums are lower. Furthermore, lower-income families are defined as those living up to 300% of the federal poverty level. For example, for the 48 contiguous states including the District of Columbia, an individual at 300% of the federal poverty level earns $32,490 gross annually. A family of 4 at 300% of the federal poverty level earns $66,150 gross annually.

• 50% of all families, regardless of income level, who were enrolled in high deductible health plans did not receive a recommended medical service in the past 6 months due to cost.
• The percentage was 20% in a previous study that delayed or missed a medical service in the past year.
• 51% of lower-income families delayed care in the past six months for an adult because of cost compared to 35% for higher-income families.
• 24% of lower-income families delayed care in the past six months for a child because of cost compared to 14% of higher-income families.
• 20% of lower-income families were more likely to delay or skip a medical operation or procedure because of cost compared to 6% of higher-income families.
• A previous study found that raising co-payments from $10 to $20 for a cholesterol drug may cause 20% of patients to stop taking the drug.

2 possible solutions:

• Reducing “deductibles for lower-income families, limiting deductibles to a proportion of a family’s income, or providing income-based cost-sharing subsidies”.
• “Consumers cannot easily distinguish appropriate care from inappropriate care when deciding what to spend their money on, said Grann, who added that a “value-based insurance design” — in which co-payments are low for medical interventions determined to be of high value, and higher for those determined to be a low value — could be a better payment model than the current system, which places no judgments on the value of the services offered.”

To read the entire article, click on High-Deductible Health Insurance Results in Less Care. To read all of Publication 969, click on IRS Publication 969. To review the poverty guidelines, click on Extension of the 2009 Poverty Guidelines Until at Least May 31, 2010 or 2010 Federal Poverty Level.