More consumers choosing high-deductible plans

They're taking on health insurance that requires them to pay more out of pocket -- but not necessarily put money aside to cover the cost.

By Emily Berry — Posted Jan. 2, 2012

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Millions of patients are enrolled in health insurance plans that don't kick in until they've spent $1,000 or more out of pocket, and many don't have tax-free accounts to help them meet their deductibles.

Enrollment in high-deductible plans rose from 14% of insured adults in 2010 to 16% in 2011, according to the Employee Benefits Research Institute, which surveyed 4,703 adults from age 21 to 64 who had employer-based insurance.

The EBRI defines as being high-deductible a plan with an individual deductible of $1,000 or more but no paired health savings account. They have grown increasingly common during the last several years. In 2005, just 5% of insured adults were enrolled in one.

Not everyone enrolled in a high-deductible health plan is eligible for a paired health savings account, but even those who are often skip it. As of 2011, 38% of those with a high-deductible plan, or an estimated 7.3 million people, were eligible but did not open an account, according to the EBRI.

The organization defines high-deductible plans that are paired with an HSA as "consumer-directed health plans." Those have seen growing enrollment, but still make up a smaller percentage of the insured population. About 7% of insured adults, or 8.4 million, were enrolled in a CDHP in 2011, up from 5% in 2010, according to the EBRI. Outside of high-deductible and consumer health plans, 78% of those surveyed were in what it called "traditional" plans.

According to the EBRI's most recent survey on HSA balances, released in January 2011, the average balance in an HSA dropped slightly in 2010 from 2009, to an average of $1,355 from $1,419 -- a number experts attributed in part to a high number of new accounts, which are less likely to carry high balances.

But many never open them at all. Because HSAs are controlled by the employee, employers can't open the accounts on workers' behalf, and many employees don't get around to doing the paperwork, said Paul Fronstin, PhD, director of the health research program at EBRI. Others are confused by tax rules and think they can wait to open the account and still reap the tax benefits the following year.

"The other group is in the individual market and is lower-income. They get less of a tax break from opening an account and have less money to fund it," he said.

He said patients can become so sensitive to deductibles that they avoid care, even though preventive services are covered without out-of-pocket cost under many plans (and a provision in the Patient Protection and Affordable Care Act).

Research published in March 2011 conducted by the RAND Corp. showed that people with high-deductible coverage reduce health care spending significantly, but mostly because they cut back on preventive care. That effect held up regardless of their family income.

"I do think people [in high-deductible plans] think twice before they run to the doctor for minor things," said Teresa Gutierrez, president-elect of the Health Underwriters Assn. of North Carolina and president of Integrated Benefits Solutions, an employee benefits brokerage in Raleigh, N.C.

She said that because employers don't want their workers to avoid preventive care, more are turning to health reimbursement arrangements, because those are opened and funded by the employer, but otherwise work like an HSA.

The EBRI report did not ask whether those in high-deductible or consumer health plans put off care because of cost. However, it said employees in those plans, by a range of 5 to 10 percentage points, were more likely than those in traditional plans to exhibit "cost-conscious" behavior such as checking prices, choosing a generic drug over a brand name, and drafting a budget to manage health costs. However, the EBRI said the percentage of people exhibiting those behaviors has not changed in the seven years it has conducted its survey.

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External links

"Findings From the 2011 EBRI/MGA Consumer Engagement in Health Care Survey," Paul Fronstin, Employee Benefit Research Institute, December 2011 (link)

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