How High-Deductible Health Plans Hurt Consumers
Nothing about high-deductible plans makes health care more affordable for families. While the Republicans have yet to agree on how they propose to replace the Affordable Care Act (ACA), one thing is clear—whatever they pursue will push more families into high-deductible plans. Every single replacement plan put forth so far would very likely increase deductibles for millions of people.
New research shines a light on the harm such a move could exact, particularly on lower- and moderate-income people. A new study in Health Affairs examined how the growing shift to higher cost-sharing (such as deductibles) is affecting workers differently based on their wages. The study looks at the experience of employees across four large self-insured employers. It found that deductibles are posing a much greater financial burden for low-wage workers.
Health plan deductibles accounted for 10 percent of the annual wages for the lowest-wage workers in the study (people making less than $24,000). In contrast, deductibles accounted for only 1 percent of the income of the highest-wage workers (people making more than $70,000).
This difference in the financial impact of deductibles translated to stark differences in the care people received. For example:
- Low-wage workers didn’t get as much care. The lowest-wage workers used the least amount of care overall, while the highest-wage workers consumed the greatest amount of care.
- Low-wage workers received less primary and preventive care and much more hospital care. Lowest-wage workers had only half the usage of preventive care compared to the highest-wage workers. They also received less outpatient care and prescription drugs. In contrast, the lowest-wage workers had four times the rate of avoidable hospitalizations (meaning the need for more serious inpatient care could have been prevented if they had received earlier outpatient treatment). They also had three times the rate of emergency department visits. Particularly important, low-wage workers’ higher use of the emergency room was not due to problems or care that could have been treated in a less intensive setting. In fact, their higher usage of the ER was due to true health emergencies.
- Despite receiving the least amount of care, low-wage workers had just as high of health care costs as the highest-wage workers who received the greatest amount of care. In fact, these two groups had the highest health care costs of any wage group. While high-wage workers’ costs were tied to higher use of outpatient medical services and prescription drugs, low-wage workers’ higher costs were tied to emergency and inpatient care.
These findings tell a sober story of the potential consequences of pushing high deductibles on lower-and moderate- income families who simply can’t afford it. Faced with having to pay the full cost of medical care on their own, many lower-income individuals are holding off on getting care until they face an emergency. Often times, if they had received earlier outpatient care, many of these severe health problems could have been adverted. On top of this, shifting a greater share of health care costs onto lower-income consumers isn’t saving anyone money—insurers and patients are actually paying more to treat severe health problems that probably could have been prevented.
Lower- and moderate-income families need solutions that will reduce their deductibles and help make care affordable. The Republicans’ plan is to move this country backward and shift an even greater share of costs onto working families. This will come with devastating consequences for families and our overall health care system.