Do high-deductible plans make the health care system better?
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Congressman Tom Price, President-elect Donald Trump’s pick to head up the Department of Health and Human Services, faced his first Senate confirmation hearing today.
While he was light on the specifics of what the incoming Trump administration wants to replace Obamacare with, he did say, “I think health savings accounts and high-deductible catastrophic coverage are things that make a whole lot of sense for many individuals, and we ought not force anybody to do anything. It ought to be a voluntary choice, but they ought to have the choice to be able to select them.”
Those high-deductible or “catastrophic” plans work like this: you pay most of your own medical bills up to a specific amount — usually thousands of dollars — before your insurance kicks in. Price, and congressional Republicans say they’re a big part of what should replace Obamacare. And it’s not just the GOP who likes them; Democrats and employers have also embraced these plans. But here’s a complication: researchers do not know if high-deductible plans actually lead to good health care.
It’s a question that preoccupies Dr. Ashish Jha, a physician and health policy professor at Harvard University. In fact, Jha is so concerned with how high-deductible plans influence health care that he’s conducting a very personal experiment: Jha switched his own family to one of these plans.
Dr. Ashish Jha and his wife Deborah Stump.
“I thought…it would be really useful, as a family, to know what it actually feels like to have to pay for everything out of pocket at least until you hit your deductible,” said Jha.
Now, he and his family are on the hook for everything from prescriptions to caring for the odd cast of strep throat, until they’ve spent $6,000 — that’s the cap on their plan.
“High-deductible health plans are supposed to make the healthcare system work better. And none of us has the exact right answer for what American health care needs to look like,” Jha said.
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What experts like Jha have known for decades is that people on high-deductible plans spend less on their health care. And that’s not necessarily a good thing. It makes a big difference, for example, what a consumer cuts back on. Some expenses can be wasteful, like buying name-brand drugs when a generic alternative is available. Others can be critical, like the expense of a cardiologist appointment.
Families also face the question of whose care they’re willing to spend less on. Dr. Jha’s wife, Deb Stump, says they learned about this first hand when their son needed a follow-up appointment after surgery.
“In the past, I would have just called and made the appointment,” Stump said. “But this time, because it was a specialist, I was pretty sure it was going to be quite expensive.”
When it came to their son, though, spending the money seemed to be worthwhile.
“I sat on it for a while and I called Ashish [Jha]… and Ashish said [our son] should probably just have the follow-up,” Stump said. “So we had a probably two minute visit — and it ended up costing $465.”
For Jha and Stump, and tens of thousands of families like them, this is the new normal. High-deductible plans push people to shop around for health treatments, often without the benefit of information on quality and price. That worries Amitabh Chandra, an economist and health care researcher at Harvard University.
“Simply calling the patient a consumer doesn’t make buying health care anything like buying cars and computers,” said Chandra.
In fact, Chandra’s research shows that even higher-income earners with more economic flexibility do not really shop for health care efficiently, even when they’re given a state-of-the-art computer program to compare prices. People on these plans tend to forgo all sorts of care, regardless of their own need and health status.
“Prevention, imaging, or drugs — consumers were cutting back on all those. And that’s a sign they don’t really know what care is valuable and what care isn’t valuable,” said Chandra.
In health care research, a new consensus is forming, in part because of Chandra’s work: high-deductible plans with cheaper premiums work well for people who are generally healthy. But for those who are chronically ill or live on lower incomes, these plans can be a disaster. At any income level, in fact, they incentivize the consumer to cut back on care they may need. It could have been a disaster for Jha. He has a heart condition that occasionally causes spikes in his heartbeat.
“Imagine running as fast as you can and your heart is racing. Just imagine that continues for minutes and minutes,” said Jha. “It’s not a great feeling.”
These episodes usually pass quickly. But the most recent one, which Jha experienced after a bruising international business trip, was a particularly bad bout. At half-an-hour, his heart was still racing. After an hour, his wife urged Jha to go to the Emergency Room.
“And I was resisting it. She actually asked me, ‘if a patient of yours called you with this, what would you recommend to them?’ And I said, ‘oh, yeah, that’s easy. Go to the [Emergency Department],'” Jha said.
Though he knew he could be experiencing a heart attack, Jha didn’t want to spend $2,000 or more getting checked out in the ER — even though he said he could afford that. In retrospect, Jha said he should have gone to the hospital.
“But, you know, I knew there was a big bill waiting for me if I did, and I rolled the dice,” he said.
Jha got lucky. After an hour his heart rate began to slow.
But his experiment, putting his family on a high-deductible plan, is helping him see the reality of what many health care researchers are finding: these plans can put people in difficult positions. Sometimes, in fact, they can force people to make decisions as if they were their own doctor; and that’s something even a physician struggled to do for himself.