Today’s Managing Health Care Costs Number is 12-14%
Today’s New York Times Sunday Review has an article titled “The Big Problem With High Health Care Deductibles.” The article references a paper published in November – which showed that HDHPs at a single large company led to huge (YUGE) decreases in utilization, but little or no shopping behavior, and no substantial decrease in cost per unit. Those with highest overall medical costs were most likely to reduce their utilization – even if they were highly likely to exceed their out of pocket maximum.
I reviewed this paper back in November – here’s a link to that post.
Summary:
1. Costs plummeted (down 12-14% -even when accounting for "stockpiling" at the end of 2012)
a. ED utilization down 25%
b. Physician OV down 18%
c. Mental health services down 8%
2. ALL of the cost decrease was from volume decrease; none was from "shopping" or purchasing less expensive units of service - and none seemed to be substitution of different (and lower cost) similar services.
3. The largest drop in units of service was amongst the sickest (even those who should have known they would have exceeded OOP max - so the marginal OOP cost for incremental service would have been zero)
4. Quantity reductions were across pretty much all services - so preventive care decreased (even though preventive services were covered without deductible).
The paper focused on claims - and it's just the first two years after a "full replacement HDHP" - so there is no information about whether health was positively or adversely affected by this insurance change.
HDHPs have such compelling cost savings that they’ve increased dramatically in prevalence. They lower utilization, but they don’t induce patients to become very effective shoppers. The article ends by wondering whether a solution to get patients to shop better might be “value based insurance design,” where the out of pocket is high for low value services but high value services are offered no patient out of pocket responsibilities. I’m skeptical of this. Existing HDHPs offer preventive care without cost share – but preventive care diminished anyway. Further, VBID can only save money if we charge highercost share for lower value services, and so far we’ve been quite unwilling to do so.
