Why High Deductible Plans May Cost More in the Long Run
Like it or not, the Affordable Care Act has lofty goals: expand health care coverage to the uninsured, and contain the ever-escalating cost of care. But, as a new report shows, the latter is a particular problem--and that means small businesses looking to shave costs in the near term may see expenses increase in the long term.
As I reported on Monday, one of the ways consultants, small-business owners, and other experts are thinking of meeting the new health care mandate is by increasing cost sharing, primarily by offering higher deductible plans that force employees to pay more for care.
The New York Times reported Wednesday that such plans actually cause people to put off care, and that the problem becomes particularly acute for the poor and those with chronic illness.
Moreover, the study upon which the story was based, conducted by RAND Research, found that as cost-sharing increases, the more likely it is that plan holders will put off seeking care. And as endless studies show, when people put off going to the doctor, the severity of an illness and medical costs ultimately surge.
So if you're looking to trim your health coverage expenses, increasing your cost-sharing policies could actually end up costing you more. Instead, if you want to reduce costs over time, a better strategy might involve lowering employees' insurance costs.
Here's why: providing health coverage with minimal cost sharing, or care that's free, motivates people to seek medical attention before health complications arise. And more frequent visits to doctors have led to substantive improvements in certain chronic conditions like hypertension, dental issues, and vision, as well as some more serious problems. That brings costs down.
On the plus side, cost-sharing plans did not appear to adversely affect the quality of care, and it appeared to contain costs indiscriminately for both effective and ineffective procedures.
The big takeaway from the study: It recommends cost-sharing for low-wage workers and the poor should be minimal or eliminated.
And, after more than 40 years, it seems like it's about time for a new comprehensive study of current health care plans.
The Times article relied on a RAND Research study on Health Maintenance Organizations, conducted in the 1970s, and considered the most comprehensive one to look at the effects of cost sharing in health care. It polled 2,770 families and 7,700 people.