Are High-deductible Health Plans Working?

May I whine for a few sentences please?  My staff and I have a high-deductible medical insurance plan.  As the costs of coverage increased each year, we had to find a product that we could afford for our small private practice.  As any small business owner knows, margins are tight, revenue is declining and expenses inexorably rise.  And physicians, unlike other retailers, cannot raise our fees.  Would you want to invest in a company with this business model?  If so, then contact me directly.

High-deductibles health plans are painful for consumers.  The first several thousand dollars are borne by the individual.  While we have an HSA (Health Savings Account), which confers a tax advantage, it is still painful to fork over wads of one's wages to cover medical expenses.  Isn’t that what medical insurance is supposed to do?

Would we expect fire insurance to cover only part of our house if it burned down?

Will fire insurance cover a fire?

But, I recognize that high-deductible health plans are an effective means to combat over-diagnosis and over-treatment, two of the deepest systemic failings in the medical profession.  Indeed, highlighting these two practices has been a leitmotif of this blog.  I have repeated in multiple posts my belief that patients need to have skin in the game if cost-effective medicine is to be achieved.

Just this past week I have seen how this works.

A close acquaintance has been suffering from arm pain and consulted an orthopedist.  A steroid injection was administered and the situation fortunately improved.  The individual contacted the physician’s office for additional advice and an MRI of the arm was advised.  The patient replied that she would research area radiology facilities for pricing as this service would be out-of-pocket as she had a high deductible plan.  Later, on reflection, the individual decided to hold off on the MRI, particularly as she was improving.

There’s a lot we can learn in this vignette.

• It’s easy for physicians to order tests that cost them nothing.
• It’s easy for patients to accept tests that cost them nothing.

I’m sure that if my acquaintance had full coverage with no deductible, that she would have dutifully accepted the advice for an MRI.  Why not?  The doctor wants the test and it’s free.  However, if this patient has to shell out a thousand bucks to view the internal workings of an ailing arm that’s making progress, there may be some push back.  My personal belief is that this MRI was not only expensive, but was not medically necessary, a terrible combination that is responsible for so much rot in our health care system.

 

Of course, I realize the dangers of high-deductible plans.  Indeed, many previously uninsured folks who have been ‘rescued’ by Obamacare are now facing this predicament.  Many of them forfeit medical care that they and their families need because they can’t afford it.  For so many families, a $5,000 deductible is like not having medical insurance at all. This has to be fixed, and it won’t be easy. 

Let me share an arcane law of economics.   It’s easier to spend someone else’s money.  Consider this example.  When you are in a fancy restaurant, and someone else is paying, do you order differently?