Rethinking high deductible health insurance--patients cut care as well as costs

[eridani]

http://www.nber.org/papers/w21632

We found that almost all spending reductions during the year occurred while consumers were still under the deductible, despite the fact that the majority of incremental spending occurs for consumers that have already passed the deductible. Moreover, about 30% of all spending reductions come from consumers in months when they (i) began that month under the deductible but (ii) were predictably sick, in the sense that they had very low shadow prices for health care.

http://www.vox.com/2015/10/14/9528441/high-deductible-insurance-kolstad

Economists Zarek Brot-Goldberg, Amitabh Chandra, Benjamin Handel, and Jonathan Kolstad studied a firm that, in 2013, shifted tens of thousands of workers into high-deductible insurance plans. This was a perfect moment to look at how their patterns of care changed — whether they did, in fact, use the new shopping tools their employer gave them to compare prices.

Turns out they didn't. The new paper shows that when faced with a higher deductible, patients did not price shop for a better deal. Instead, both healthy and sick patients simply used way less health care.

This raises a scary possibility: Perhaps higher deductibles don't lead to smarter shoppers but rather, in the long run, sicker patients.

Comment by Don McCanne of PNHP: This is an important study. It shows that sick patients will not shop prices but rather they will forgo beneficial health care services while they are still under the deductible for their plan.

This confirms that deductibles are an inappropriate tool for reducing health care spending, since health policies should be designed to improve care rather than impair it. This puts the entire concept of consumer-directed health care under question as a means of slowing health care spending. In contrast, single payer policies control spending while benefiting patients.

This study may seem familiar to regular readers. That is because it was covered in our June 15, 2015 Quote of the Day. It was based on an article in “The Conversation” by Ben Handel, one of the co-authors of this study.

What is new is that NBER has now released the full study, and reports of it are appearing in the media. It is a concept well worth repeating. Excerpts of the Vox article by Sarah Kliff are included above in that her description is quite clear, avoiding the technical language of economists and policy wonks.

Quote of the Day, June 15, 2015:
http://www.pnhp.org/news/2015/june/deductibles-do-not-foster-price-shopping

[Human101948]

1. The real purpose of high deductibles

The new paper shows that when faced with a higher deductible, patients did not price shop for a better deal. Instead, both healthy and sick patients simply used way less health care

Which was the real purpose of higher deductibles.

Don't get sick and if you do, die quick!

[Igel]

2. There's the counter to this, though.

While some sick patients avoid the care they need, it also motivates people to not go after care they don't need.

I don't know how many people have said that I should see a doctor because it's covered by insurance. "It's viral." "So? What if it isn't?" "Then I'll see the doctor in a couple of days."

In other words, they'd rather see a doctor for the numerous viral illnesses they get that go away quickly enough on their own (colds, flu, retrovirus) just in case it's something more serious when waiting a few days probably wouldn't make much of a difference. And if a few days would, it's usually obvious a day or two later.