Report criticizes high deductibles

One of the most hotly contested issues in healthcare is whether patients will make more cost-conscious choices if they have a bigger financial stake in the services they receive.

A study released Thursday stoked the controversy further by casting doubt on the concept, a cornerstone of President Bush’s plans to reform the country’s healthcare system.

Many Republicans and the insurance industry argue that offering health plans with low premiums and high deductibles would go a long way toward reducing costs. Such plans would make insurance more affordable while giving people an incentive to take better care of their health and cut unnecessary expenses.

Opponents say such plans, which insure more than 10 million people by some estimates, exploit those who can’t afford more comprehensive coverage.

The stakes are high as the newly empowered Democrats, who are generally cool to the idea, vow to make healthcare a top issue.

Whether high-deductible plans are a “success or failure will say a lot about the fundamental healthcare reform we will have in this country,” said Robert Laszewski, president of Washington-based Health Policy and Strategy Associates Inc.

But the evidence so far is inconclusive, in large part because high-deductible plans are still very new and generally estimated to account for less than 10% of the market.

Although premium differences between high-deductible and conventional plans vary, the savings can be significant. For example, monthly premiums on a Blue Cross of California plan for nonemployer-sponsored individuals with a $3,500 annual deductible range from $55 to $259. A comparable plan with a $500 deductible costs $225 to $643.

The high-deductible concept took hold after Congress passed the Medicare Modernization Act of 2003, which allowed people with so-called consumer-driven health plans to open tax-sheltered savings accounts earmarked for medical expenses.

According to a report released Thursday by the Commonwealth Fund and the Employee Benefit Research Institute, two of the country’s most prominent voices on healthcare issues, high-deductible plans do little to grow the ranks of the insured and may be keeping people from getting needed care. People in high-deductible plans reported being more likely to postpone care or skip it altogether because of concerns about the expense.

“Is this really helping the health system evolve or are lower-income people simply being forced to choose less care?” asked Sara Collins, a coauthor of the report, which was based on an Internet survey of a nationally representative sample of privately insured adults.

The survey also said those in high-deductible plans were no more likely to have been uninsured before enrolling -- about one in five compared with a quarter of those enrolled in comprehensive plans with lower deductibles.

The report was immediately assailed by the insurance industry, which contested many of the findings.

America’s Health Insurance Plans, an industry group, said its own census of members showed that nearly 40% of those who purchased consumer-driven, also called consumer-directed, plans were previously uninsured. They had bought the insurance on their own and were not covered through an employer-sponsored benefit.

The majority of those surveyed by the Commonwealth Fund and the Employee Benefit Research Institute were insured through their employers’ high-deductible plans.

Consumer-directed plans allow “consumers to choose the product that best meets their healthcare coverage needs,” said Karen Ignagni, chief executive of America’s Health Insurance Plans.

John Marcus, a 40-year-old self-employed recruiter in San Francisco, said he bought a plan with a $5,000 deductible after he saw his health insurance premiums rise 20% to 25% a year. He now pays $167 a month.

“The cost of health insurance is way out of control,” he said, “but you have to have it.”

With premium increases consistently outpacing inflation, these plans are likely to gain popularity, many experts say.

WellPoint Inc., one of the nation’s largest insurers and the parent of Blue Shield of California, said its consumer-driven membership grew 30% from 2005, to nearly 700,000 people.

Even opponents of consumer-driven plans agree that encouraging patients to save, such as by curbing unnecessary expenditures or using cheaper generic prescription drugs, can bring costs down.

Controlling the supply of medical services through a managed-care system has largely failed, with consumers abandoning once-popular health maintenance organizations, said Michael Thompson, a healthcare expert at PricewaterhouseCoopers. “We need to look at this from [the] demand side as well,” he said.

daniel.yi@latimes.com