Early Experience With High-Deductible and Consumer-Driven Health Plans:
Findings From the EBRI/ Commonwealth Fund Consumerism in Health Care Survey
By Paul Fronstin, EBRI, and Sara R. Collins, The Commonwealth Fund
Employee Benefit Research Institute
December 2005
This report presents findings from the first EBRI/Commonwealth Fund Consumerism in Health Care Survey. The online survey of privately insured adults ages 21-64 was conducted to provide national data regarding the growth of high-deductible health plans with and without savings accounts and their impact on the behavior and attitudes of health care consumers. The sample was randomly drawn from Harris Poll Online, Harris Interactive’s online sample of Internet users who have agreed to participate in research surveys. The final sample of adults participating in the survey is skewed toward higher-income, more highly educated individuals and also under represents minorities.
Despite its limitations, this is the first national survey of individuals with high-deductible health plans who also have savings accounts (HSAs or HRAs), or so-called consumer-driven health plans (CDHPs), and people with high-deductible health plans who are eligible to contribute to a health savings account but who currently do not have an account (HDHP).
Health Care Spending
When combined with premiums, outlays on health care as a share of income rose substantially among those with HDHPs and CDHPs, particularly among those with low incomes or health problems. More than two-fifths (42 percent) of people with HDHPs and 31 percent of those in CDHPs spent 5 percent or more of their income on out-of-pocket costs and premiums, compared with 12 percent of people in comprehensive plans. Nearly everyone (92 percent) with HDHPs with incomes under $50,000 spent 5 percent or more of their income on out-of-pocket costs and premiums, and one-third spent 10 percent or more. This compares with 34 percent of people in that income group in comprehensive plans who spent 5 percent or more of their income and 10 percent who spent 10 percent or more. People with health problems in HDHPs were also vulnerable to spending large shares of their income on out-of-pocket costs and premiums: more than half (53 percent) of those in HDHPs with health problems spent 5 percent or more and 18 percent spent 10 percent or more.
Cost-Related Access Problems
While people reported using health services at similar rates across health plans, adults with CDHPs and HDHPs were significantly more likely to report that they had avoided, skipped, or delayed health care because of costs than were those with comprehensive insurance, with problems particularly pronounced among those with health problems or incomes under $50,000. The survey asked whether in the last year respondents had delayed or avoided getting health care services when they were sick because of costs. About one-third of people in CDHPs (35 percent) and HDHPs (31 percent) reported delaying or avoiding care, twice the rate of those in comprehensive health plans (17 percent). Having a health problem made it more likely that people avoided or delayed care. Among people who reported being in fair or poor health or having at least one chronic health condition, those in CDHPs or HDHPs reported delaying or avoiding care at higher rates than those in comprehensive plans: 40 percent of those in CDHPs and 31 percent of people in HDHPs, compared with 21 percent in comprehensive plans.
Attitudes and Satisfaction
Overall, individuals with comprehensive health insurance were more satisfied with their health plan than individuals with CDHPs and HDHPs. Specifically, 63 percent of individuals with comprehensive health insurance were extremely or very satisfied with their health plan, compared with 42 percent among CDHP enrollees and 33 percent of individuals with HDHPs.
Availability and Use of Cost and Quality Information
The survey asked respondents whether their health plans provided any information regarding the cost and quality of providers. Just 1 in 7 people (12-16 percent) in all plan types said that their plans provided either type of information on doctors and hospitals.
More than 70 percent of people enrolled in CDHPs and 60 percent of those in HDHPs strongly or somewhat agreed that the terms of their health plans made them consider costs when deciding to see a doctor when sick or fill a prescription; less than 40 percent of those in comprehensive plans felt this way.
Conclusion
At its most fundamental level, consumerism in health care is an attempt to wrest control of the galloping increase in health care costs experienced by employers over the first half of this decade by addressing the incentives surrounding the demand for health care. This survey finds that consumer plans do, in fact, significantly raise consumer sensitivity to costs and reduce use.
But the survey also demonstrates that at least one factor crucial to the success of consumer-driven health plans-realistic, useful, accessible health-cost information-does not yet exist on a widespread basis. Further, the survey also demonstrates that cost-related reductions in demand are highest among individuals with the most to lose-those who are sick and those who have low incomes. To the extent that the health care cost problem is a problem owned by all of us, early evidence from the consumerism movement suggests that solving it through blunt, demand-side instruments like high deductibles gives disproportionate responsibility for the problem to the most vulnerable among us.
http://www.ebri.org/pdf/briefspdf/EBRI_IB_12-2005.pdf
Comment: Although the negative impact of CDHPs and HDHPs were fully predicted and then confirmed by this survey, one finding is shocking in the intensity of the negative impact: “Nearly everyone (92 percent) with HDHPs with incomes under $50,000 spent 5 percent or more of their income on out-of-pocket costs and premiums, and one-third spent 10 percent or more.” The introduction of financial disincentives to care resulted in widespread financial hardship.
A fundamental principle of health care research is that when preliminary results demonstrate significant harm that cannot be offset by any potential benefit, it is an ethical imperative that the study be terminated immediately. The experiment with CDHP and HDHP has already crossed that threshold. Further experimentation can only define more precisely the enormity of financial hardships created. Health policy researchers have the same ethical obligation as biomedical researchers; they should call for an immediate end to this disastrous experiment.
What feature of this model is causing the harm? The HSA plays an insignificant role in that it is merely a restricted savings account. The patient must still meet the out-of-pocket expenses whether they come from other income or savings or from this account distinguished primarily by an inequitable, regressive tax benefit.
The real harm is caused by the high-deductible requirement of both the CDHPs and the HDHPs. Extensive data already exist that confirm the harm done by high deductibles in impairing access and health outcomes and in creating a financial burden for those in need. This study indicates that the financial hardship appears to be far more extensive than previously thought.
What can we do? Existing HSAs can be converted into IRAs, and future HSAs should be prohibited as bad tax policy, bad pension policy and bad health policy. HDHPs should be prohibited. Financial hardship created by the need to access the health-care system can be eliminated by covering all beneficial services through a single risk pool. Since insurers will never attempt to corner the market on those who need care, this can be accomplished only by public policies requiring a universal pool. It’s time for single payer.