Benefit designs that emphasize consumer cost-sharing are now the norm in the U.S. As adoption of high-deductible health plans (HDHPs) and other cost-sharing models increase, we need to continue to scrutinize whether they’re having the desired effect on price, quality, and consumer behavior.
Let’s start with the idea of a ‘moral hazard.’ This concept posits that an individual is likely to take on more risk when someone else bears the consequences. Now, let’s translate that concept to health care benefits. Traditional benefit designs offering a flat $20-dollar copay regardless of the services received insulate consumers from the full costs of their care and may encourage them to consume more care.
HDHPs seek to solve this problem by exposing consumers to greater out-of-pocket costs for care upfront, before full insurance coverage kicks in. Consumers bear the financial risk associated with receiving care mitigating the impact of the “moral hazard.” As a result, the assumption is that consumers will make thoughtful decisions about when to seek care, which providers to seek care from, and at what price.
But…is it too good to be true? Studies reveal that while HDHPs do eliminate the moral hazard of insurance, they aren’t necessarily making consumers better shoppers for health care.
A recent study analyzed the health care decisions and spending behavior of consumers who were moved into a HDHP after having full coverage. While spending was reduced by up to 13.8% researchers concluded that reductions were due “almost entirely to consumer quantity reductions across a broad range of services, including some that were likely of high value in terms of health and potential to avoid future costs.” The study also found that consumers did not switch over to less expensive providers either. Furthermore, according to a 2016 JAMA article HDHP enrollees were not more likely to evaluate multiple health care professionals for their care, or to compare out-of-pocket cost differences across options.
Thus, the evidence is mounting that HDHPs can motivate consumers to skip care altogether, including both unnecessary and necessary services. While this reduces costs in the short term, long-term costs and outcomes will suffer if consumers skip necessary care and need greater care later as a result.
When looking to implement HDHPs at your organization, it’s important for employers to distinguish between fact and fiction in light of the evidence.
Want to learn much more? Watch our Virtual Summit: The Future Evolution of High Deductible Health Plans and Consumer Incentives in Benefit Design and hear directly from our panel of experts about how high deductible health plans and other benefit design strategies might evolve and further encourage consumers to seek the “right” health care services. During this event, our panel of experts will review trends, discuss implementation and results of benefit offerings, and have a dialogue about the consumer and payer experience and opportunities for improvement.