The past year’s health care discussion has been remarkable for the narrow range of ideas and opinions that have floated down to the man on the street. Journalists have sought out the same organizations and sources for their stories, offering up what has become the conventional wisdom for reform. To bring more voices into the conversation, our series, Excluded Voices, will intermittently feature health care experts who aren’t on the media’s A-list of sources. (The entire series is archived here.) We want to offer journalists more options for their stories and encourage a deeper discussion. To that end, we’ve asked the experts featured in each post to respond to questions from Campaign Desk readers.
The Washington Post recently ran an utterly predictable and formulaic story about consumer driven health plans—those newfangled options that come with tax-advantaged savings accounts, and are, some would say, the future of American health insurance. Basically, policyholders shoulder more of their health care costs, relieving insurance companies from as much of the claims burden as possible. After getting beyond the requisite anecdotal lead, about a woman who is facing “steep increases in out-of-pocket expenses for health coverage this year,” we learn that employers are planning to shove more costs onto their workers. The consulting firm, Mercer, surveyed almost 2,000 large employers and found that 44 percent planned to make workers pay a higher portion of their health insurance premiums this year, up from 40 percent in 2008. Higher premiums often lead workers to clamor for lower deductibles. So there’s a need to understand just how these high deductible offerings work. To that end, Campaign Desk talked to comsumer-driven health plan expert Timothy Jost, law professor at Washington and Lee University and author of Health Care at Risk: A Critique of the Consumer-Driven Movement, published in 2007.
Trudy Lieberman: What do we mean by consumer-driven health plans?
Timothy Jost: It’s an imprecise term that means different things to different people. But at its core, it means an arrangement that transfers to consumers much of the responsibility for buying their own health care, just as they would buy cars or computers.
TL: How do the kinds of consumer-driven policies differ?
TJ: Health savings accounts, or HSAs, are savings accounts to which consumers or their employers can make tax-advantaged contributions. HSAs must be coupled with a high deductible insurance policy; in other words, a plan that covers catastrophic expenses. Consumers can use the money in the account to pay for medical bills they incur before they meet their deductible. Health reimbursement accounts, or HRAs, also come with a savings account, but only employers can make contributions. HRAs are usually linked to a high deductible policy, but they don’t have to be.
Balances in the HSA and HRA savings accounts can be rolled over from year to year. If you have an HSA and leave the job, you can take your money with you. If you have an HRA, the money usually stays with the employer.
TL: Are employers putting money into HSAs?
TJ: A lot of employers are providing high deductible policies. Some are contributing to the HSAs, and some are not. A study by the Blue Cross Blue Shield Association found that only 38 percent of consumers with HSAs received contributions from their employers in 2008, down from 45 percent in 2007. Other research shows that millions of Americans have high deductible plans, but no health savings accounts to help them pay for care while they are meeting the deductible.
TL: How high do these deductibles go?
TJ: The latest report from the Kaiser Family Foundation and the Health Research and Education Trust found that the average family deductible for HSAs offered by employers was almost $4000. Deductibles for policies with an HRA can be much higher, and sometimes are. But under the law, deductibles for tax-subsidized HSAs can not exceed the maximum amount a person has to pay out-of-pocket, which is $5,800 for individuals and $11,600 for families.
TL: What’s the rationale behind these high deductibles?
TJ: Supporters believe that when consumers have to spend their own money, they will think twice before running off to the doctor. And when they do, they will shop for the doctor who will offer the best price and quality, much the way they shop for a TV set. They also argue that the high deductibles will cause the price of care to come down because these policies will offer skimpier coverage and consumers will use fewer services which, of course, keeps premiums down.
TL: Has that happened?
TJ: Insurers say yes, but we really don’t know. There is evidence that people with HSAs from their employers are more likely to participate in exercise, stress management, and nutrition programs. They are also more likely to seek out health information and keep track of their health care expenses. They are healthier and use fewer medical services. Advocates of these plans believe that people in consumer-driven plans spend less money, and their employers save money. But an employer’s insurance premium may just be lower because employers are simply shifting costs to their workers. One study showed that, on the surface, these plans saved employers a lot of money. But when you look harder at the data, you see that the savings were largely attributable to healthier workers signing up for the consumer-driven plans, leaving the less healthy workers in more traditional plans.
TL: Can consumers really bargain with doctors for cheaper services?
TJ: It’s silly to believe that consumers bargaining with doctors and hospitals can bring down costs. It makes no sense. Even the insurers don’t believe that. It’s not going to happen. Consumers aren’t going to the hospital to drive a hard bargain. Medicare and insurance companies will always get a better deal.
TL: Is it reasonable to expect that consumers can bring down health care costs?
TJ: Relying on consumers to put the brakes on costs is problematic. The information is not there to allow them to do that, and if it were, consumers often would not be in a position to rationally process information. Successful cost control is much more likely to come from the government, or private payers saying that they are not going to pay for medical products and services that don’t work.
TL: Have consumer-driven policies hurt people’s health?
TJ: People in high deductible plans have a harder time getting care. They are more likely not to fill prescriptions or go to the doctor, and less likely to get the health care they need. A study by the RAND Corp. showed that consumers could not discriminate between non-essential care and necessary care, and they basically saved money by not going to the doctor.
TL: Do HSAs further health care equity?
TJ: No. HSAs definitely favor wealthier people. There’s pretty good evidence that where people have an option of an HSA plan, HSA plans are chosen more by wealthier employees. A significant number of these people are using them as a tax shelter for retirement. These plans protect neither the health nor financial security of people who are poor.
TL: Do they further a two-tier health care system?
TJ: More wealthy people use these plans; they get tax benefits and generous contributions to their HSAs. Lower income workers get high deductibles. That means health insurance may be affordable, but when you get sick, health care is not. Just because insurance is affordable doesn’t mean that someone can get affordable care. Consumer-driven plans just postpone the question of affordability. The wealthy can always afford their care. Poor people can’t.
TL: How do these plans affect the doctor-patient relationship?
TJ: The relationship between the patient and physician has traditionally been viewed as one of trust. Patients entrust themselves to their doctors, who have an obligation to put the patients’ interests first. At least, that’s the ideal. The vision for consumer-driven health plans assumes that the physician and other care providers are merchants and patients are consumers. So let the buyer beware. This change threatens the welfare of patients who now cannot trust their doctors to look after their medical needs. Trust is an important aspect of healing. If you approach your doctor as you would a used car dealer, he or she probably won’t be able to help you as much.
TL: What legal issues do these plans raise?
TJ: They raise a host of legal issues that we have not even begun to sort out. Does the duty of a doctor to secure informed consent to treatment now include an obligation to provide information about cost as well as risks and benefits? Might a doctor who withholds medically necessary care because a patient cannot afford to cover deductibles, coinsurance, and copayments be liable for malpractice, or for breaching a fiduciary obligation? Do state managed care bills of rights apply to insurers when they are deciding whether or not the cost of a service counts against a deductible? Are there any limits on how much a provider can charge a patient who is paying for a service out-of-pocket if both have not agreed on a price beforehand? (They almost never do.) Are insurers liable to patients or providers if they provide incorrect information in their quality rankings?
TL: How important are these plans in the so-called individual market, where people have to assume the entire cost of the policy?
TJ: They will take over an even larger part of the individual and small group market if nothing is done to reform health care. They won’t be very important if Obama is successful in creating a public plan, like Medicare, that people can join. If that happens, nobody in his or her right mind would choose a high deductible plan if they can buy a comprehensive and cheaper policy through a public plan.
TL: How will this dynamic threaten sellers of these plans in the context of health reform?
TJ: If Congress can pass legislation offering Americans affordable care with reasonable cost-sharing, I would not expect Americans to choose consumer-driven plans instead of a public option.
TL: How robust is this market in general?
TJ: Both the employer and the individual have grown significantly since 2003, when these plans were first authorized on a large scale. But there are signs that growth has leveled off. Whether the market will continue to grow depends a lot on whether health reform is adopted and whether there will be a public plan. That will be a major sticking point in reform.