High-deductible health plans: hidden costs
Most payers and employers now offer high-deductible health plans (HDHPs), but questions remain regarding whether these options will actually help plans save on healthcare costs.
Most payers and employers now offer high-deductible health plans (HDHPs), but questions remain regarding whether these options will actually help plans and employers save on healthcare costs in the long run.
HDHPs are health insurance plans with fairly low monthly premiums, but relatively large out-of-pocket expenses for incurred medical care. Typically, deductibles range from $500 to $6,000, depending on benefit design and household size. Members are responsible for the cost of care incurred up to the deductible limits within a given year.
These plans are exceptionally efficient vehicles for constraining health costs to all purchasers: insurers, employers, and patients alike, says Christopher Kerns, MBA, managing director, Research and Insights, The Advisory Board Company. And, for patients who can’t afford traditional health insurance premiums, HDHPs are a low-cost option.
“This explains their overwhelming popularity on the [Affordable Care Act] ACA health insurance exchanges; they’re also favored by a plurality of employees on private health insurance exchanges,” says Kerns. “Although high deductibles make the premiums affordable, out-of-pocket expenses can still be burdensome for lower-income households, although typically far less than they would have been as uninsured patients.”
But while saving money across the board is all well and good, multiple sources report that people with HDHPs forgo getting care or cut back on care due to having high deductible plans. Over time, that could lead to more healthcare costs if untreated chronic conditions snowball into more serious health issues, or if undiagnosed illnesses escalate into long-term, complex health problems. Health plans and employers considering high-deductible health plans must consider the short and long-term implications.