The Future of American Healthcare, Ctd

Almost half of health plans in the US have deductibles of at least $1,000 according to a new study.  It’s called “cost shifting” and it’s a big part of the future of American health care.

There are two major reasons why employers are doing this.

First, higher deductible plans are cheaper, since there is less risk to insure.  Think of your car insurance – why would you make a claim for a ding on your door when it’s cheaper for you to just pay to have it fixed (or fix it yourself)?  The higher the deductible, the lower the premium, even if it means more out-of-pocket cost for you for the small stuff.

Along these same lines is the second reason.  If employees spend more of their own money on health care, maybe they’ll be smarter about how they spend it.

It sounds good – but does it work?

Yes.  And No.

Studies show that consumers in high-deductible health plans do spend less than those in traditional plans.  But, they spent less in some worrisome ways:

Childhood vaccination rates dropped. . .Rates of mammography, cervical cancer screening, and colorectal cancer screening also fell among those with high-deductible health plans relative to those in traditional plans. . . . even though high-deductible plans waive the deductible for such preventative care.

As another study put it: “Deductibles can create powerful yet potentially indiscriminate and blunt incentives for consumers to alter their care-seeking behavior.”

Of course, this is a complicated way of saying higher deductibles work, and are smart choices for employees and their employers.  But the research tells us they aren’t enough.

Benefits professionals sometimes call higher deductible plans a kind of “shared responsibility.”  But as benefits professionals, we should recognize that employees don’t always see it this way.  Every time an employee faces a health care problem they too often wonder if their plan will deliver help – or hassles.

For a plan to offer real “shared responsibility” it has to do more than just split the cost of care.  It must offer tools that help the insured and their family when sick, and to help them to stay well.  Each person must know that their plan is not just a way to pay for care, but something they can count on in a time of need.

It’s what we do at Best Doctors.  Last year, two-thirds of the people who called us were facing important medical decisions and weren’t sure what to do.  Sure, they had to pay a deductible, but they wondered – should I have surgery?  Is radiation the right thing for me?  Do I have the right diagnosis?  Their questions transcended the simple question of their deductible.

And so to employers I say this: know that your employees need this help, and offer it to them.

Evan Falchuk is President and Chief Strategy Officer of Best Doctors, Inc. Prior to joining Best Doctors, Inc., in 1999, he was an attorney at the Washington, DC, office of Fried, Frank, Harris, Shriver and Jacobson, where he worked on SEC enforcement cases.

6 replies »

  1. It’s true that employees are a cost to employers, but you guys would be surprised at how much they think of their employees as assets. Go to any benefits conference, or talk to leaders of America’s top companies, and they will all talk about employees in this way.

    And it’s not really about health care costs. I can tell you this because we do business in pretty much every health care system there is, and no mater what, employers know their employees face the kinds of questions I posed, and know that when they don’t get the answer they suffer…and so does their productivity.

    So even if you don’t believe that employers are human beings (they are!) believe it because of what it means to be the kind of place people want to work, and where people are as productive and happy as they can be.

    Thanks for the comments!

    Evan Falchuk

  2. “My logical conclusion is that our current US employer based health benefits delivery system is long overdue to be replaced.

    Quoted For Truth

  3. “My logical conclusion is that our current US employer based health benefits delivery system is long overdue to be replaced.

    Quoted For Truth

  4. We need to stop believing in the fairy tale that employers care much about their employees or the communities in which they operate. (There are a very few notable exceptions)

    Until employers shift its employees to the asset side of their balance sheets away from the cost or liability side why should corporations reduce or stablize health care plan deductibles for its employees?

    My logical conclusion is that our current US employer based health benefits delivery system is long overdue to be replaced.

  5. This entry seems to be an infomercial for best doctors.

    “Sure, they had to pay a deductible, but they wondered – should I have surgery? Is radiation the right thing for me? Do I have the right diagnosis? Their questions transcended the simple question of their deductible.”
    Some of those are complex questions, and it is questionable whether they can be clarified over the phone.

    If you think that in the US, an authority (e.g. board) determining what treatments/tests make sense and what doesn’t, and that US americans are more willing to ration by price and maintain “liberty”, then maybe the Weinstein/Skinner suggestion
    of charging copays based on effectiveness is the way to go (for instance no copay for treatments that are > 80% copay).