Do High-Deductible Health Plans Help Consumers Make Better Decisions about Their Health Insurance?

We recently reported our findings on the potential problems posed by health insurance plans with high deductibles. Proponents of high-deductible plans assert that making consumers spend more to cover their medical care will encourage them to seek high-value care. But that isn’t possible for many consumers because they don’t have the tools or the basic understanding of how their health insurance works—both of which are necessary to make informed decisions about what care to get at what price.

In addition, recent studies have found that many households lack the resources to pay for care out of pocket before meeting their plan’s annual deductible. This means that plans with high deductibles can leave consumers vulnerable to medical debt and lingering financial problems.

Many consumers struggle to understand basic health insurance concepts

Health insurance is complex. Not only is it difficult for many consumer to understand the complexities of their insurance and their health care costs, but consumers who struggle with literacy or whose primary language is not English face even greater barriers. About 25 million Americans have limited English proficiency.

Without an understanding of what they will have to pay out of pocket, consumers may buy health plans that have low monthly premiums but that also have high deductibles that are difficult to afford and that don’t meet their needs. And once enrolled, consumers who are uncertain about their out-of-pocket costs can have problems paying medical bills or may need to forgo care.

Consumers may not fully understand the out-of-pocket costs they will pay

The Affordable Care Act provides new tools, such as a short “summary of benefits and coverage,” that are designed to help consumers understand what types of care their plan covers and how much they may need to pay for care. However, it is still a big leap to assume that consumers are able to determine their costs.

In our recent study, Non-Group Health Insurance: Many Insured Americans with High Out-of-Pocket Costs Forgo Needed Health Care, about a quarter of survey respondents lacked the confidence that they could determine whether a service was covered, which drugs were covered or what they would cost, or the maximum they could be charged out of pocket for covered services in their health plan. And about a third of respondents were not confident that they could figure out what costs counted toward their deductible. These findings are consistent with previous research on health insurance literacy.

Many consumers are not able to pay high out-of-pocket costs

We found that one in four adults who bought non-group coverage (private insurance that is not provided by an employer) and who were insured for a full year went without some needed medical care because they could not afford it.

Two other recent studies also shed light on this problem.

• Sara Collins at The Commonwealth Fund reported on the large number of people with job-based coverage or with non-group coverage who are “underinsured,” meaning they pay an unaffordable share of their incomes toward monthly premiums and out-of-pocket medical costs.
• And researchers at the Kaiser Family Foundation found that many Americans lack the resources to meet a deductible without going into debt.

That is why Families USA advocates for thoughtful plan designs with lower deductibles and more services available before consumers meet their deductibles. We also advocate for increased financial assistance to families who struggle with out-of-pocket costs.