Health-insurance plans with higher deductibles, increasingly popular among consumers, could save the medical system billions in costs if they were widely enacted, a study released Monday shows.
The report from Rand Corp., the Santa Monica, Calif.-based think tank, says if half of all consumers were on plans with $1,000 annual deductibles, it could save the system as much as $57 billion a year, or 4% of current health-care costs.
In recent years, medical inflation has been more than triple that of consumer-price increases in other parts of the economy, as consumers have been shielded from some costs due to third-party payouts from insurers. But by giving consumers more “skin in the game,” according to Rand Corp., higher deductibles could help push for greater transparency in medical costs, as well as force caregivers to keep charges more in line with normal inflation.
It’s not a silver bullet that would bring that in line, but it’s a piece that would help,” said Amelia M. Haviland, a Rand statistician and one of the authors of the study. Haviland also is an associate professor of statistics and public policy at Carnegie Mellon University.
Plans with higher health deductibles are growing in adoption, she added, from roughly 4% of all plans in 2006 to 13% in 2010. More than half of all employers were offering what is known as a consumer-directed plan as of 2011, and another 13% are expected to add those plans to their repertoire next year.
Consumer-directed plans are expected to become more popular, provided the Affordable Care Act is upheld by the Supreme Court, according to Haviland. The act would levy taxes on so-called “Cadillac” health plans with low out-of-pocket costs to consumers. Those policyholders probably would flock to higher-deductible plans to avoid taxation.
Also, employers under the gun to offer insurance or pay subsidies would be attracted to the plans, where premiums would be as much as 20% lower than current PPOs.
Robert Zirkelbach, spokesman for the industry trade group America’s Health Insurance Plans, couldn’t comment on whether the study’s calculations are correct, but noted there has been “solid growth” in plans with health-savings accounts that encourage policyholders to sock away tax-free money to pay for medical-office visits.
Zirkelbach noted, though, that there is a large variety of health plans available to consumers and that higher-deductible coverage isn’t always the best policy. “There isn’t any one-size-fits-all plan that’s good for everybody,” he said.
One drawback to higher-deductible plans, Rand’s Haviland said, is that consumers might be discouraged from seeking preventive care via routine exams or physicals. But both she and Zirkelbach pointed out that under the Affordable Care Act, insurers are required to provide full coverage for preventive exams that wouldn’t be part of a deductible.