Becker's Hospital Review

Sign up for the COMPLIMENTARY Becker's Hospital Review CEO Report & CFO Report E-Weeklies at www.BeckersHospitalReview.com or call (800) 417-2035 Concerning how they plan to respond to the increased expense, 36 percent of respondents viewed high-deductible health plans as the most effective strategy for containing costs. National Business Group on Health President Helen Darling says the desire to control spending on benefits is the main reason behind the rise in employers offering their workers high-deductible plans. "The belief is high-deductible health plans cost employers less," she says. Employers see almost immediate savings from high-deductible health plans because of the lower claims costs or premiums, she says. Research suggests that high-deductible plans can lead to very significant employer savings. A study released in August by the Employee Benefit Research Institute confirmed that high-deductible plans associated with savings account options to cover out-of-pocket costs reduced one large Midwestern employer's healthcare spending by 25 percent, or $527 per person, in the first year following the high-deductible plan's adoption. Another factor driving the shift to consumerdirected plans is the idea that people who have more fiscal responsibility for their healthcare costs make smarter decisions about their care, Ms. Darling says. "We think that people who are in high-deductible health plans tend to be wiser about how they spend money," she says. "They're more likely to call a nurse advice line about whether they should see a doctor. They use more tools and resources when they are available, and they use services less." If employees are careful and take what they save through their lower contribution, Ms. Darling says they can also save money if they don't end up using their coverage. If they do need treatment, they can put the money they saved from the lower premium contributions toward their care. In that scenario, she says they won't save extra money, but they won't be worse off than they would be if they had a plan with a lower deductible. Anthony Fioretti — the chief benefits officer for insurance broker HNI Risk Services —  says he's seen more and more clients offering highdeductible plans as a way to rein in their spending on benefits. HNI itself offers its employees the option of enrolling in high-deductible plans, and its plan costs have been reasonably stable. "Eighty percent of our people are in those qualified high-deductible plans," he says. Mr. Fioretti says he's observed employers having "tremendous success" in keeping their spending on health benefits stable through high-deductible health plans. Employees can benefit too if they become "good consumers and savers," he says. How high-deductible can hurt hospitals and patients However, the reality of high-deductible plan use isn't as simple and rosy as employers saving money while employees make smarter healthcare decisions and potentially add to their own savings. "The obvious question is, 'Are they not getting care they should be getting?'" Ms. Darling says of high-deductible plan enrollees. "The answer is actually very complicated." Patients with high incomes and women will probably differentiate between necessary and unneeded care no matter what their deductible is, Ms. Darling says. Low-income patients and people who aren't well-informed about their benefits are a different story. Patients with low socioeconomic status enrolled in a high-deductible health plan may skip needed emergency care due to high out-of-pocket costs, which may lead to higher rates of hospitalization, according to a  study  published in  Health Affairs in August. Men are also more likely than women are to delay treatment for serious ailments under high-deductible plans, forgoing emergency room visits even for severe conditions such as irregular heartbeat, according to a report from The New York Times. Not seeing a physician or going to the emergency room for unneeded treatment saves money, but going without crucial healthcare services could lead to more serious health problems  —  and more spending — down the road. Furthermore, a study published in the Journal of Economics  in August found most people in the U.S. don't understand health insurance plans. The study drew on two surveys of Americans between the ages of 25 and 64 who had private health insurance and were the primary healthcare decision makers for themselves or their families. Of those surveyed, only 14 percent understood all four of the four traditional insurance concepts of deductible, copay, co-insurance and out-of-pocket maximums, according to research led by George Loewenstein, a professor of economics and psychology at Carnegie Mellon University. These findings suggest that instead of promoting more prudent healthcare decision making, 13 high-deductible plans can lead people to avoid necessary and unneeded treatment alike or to not understand that their plan doesn't cover their care until they come face-to-face with the hospital bill. Hospitals seem to be encountering that scenario more and more in association with highdeductible plans. According to the American Hospital Association, hospital owners such as Dallas-based Tenet Healthcare Corp. have reported more bad debt tied to patients with highdeductible insurance coverage. "We're hearing from our members that the number of patients who are unable to pay their bills resulting in bad debts for hospitals because of these plans is increasing," says Caroline Steinberg, AHA's vice president of health trends analysis. "Hospitals tell us around a quarter of bad debt comes from patients who are actually insured." Patients' misconceptions about their health insurance are often responsible for their ultimate inability to pay for their care, Ms. Steinberg says. "A lot of times, people don't understand their benefit package," she says. "They thought they were insured, but they don't understand what their insurance is covering." Regardless of the reason, more patients are finding it harder to cover the high deductibles and other out-of-pocket medical bills. CarePayment, which offers flexible patient financing programs to help hospitals cope with bad debt and rising patient balances, has seen rapid expansion in recent years. Its market has expanded beyond its initial client base of uninsured patients, says Craig Froude, CEO of the Lake Oswego, Ore.-based company. For CarePayment's programs that let patients pay their out-of-pocket costs over time, "we've seen  a pretty significant shift to more accounts from people who have insurance coverage but with a much higher deductible," he says. Ms. Darling of the National Business Group on Health agrees that high-deductible health plans are indeed a factor driving bad debt, but she doesn't Sign Up Today! 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