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High-deductible plans lead to costly care procrastination


As a semi-reformed procrastinator, I know a thing or two about the seductive allure of trading long-term goals for short-term satisfaction. 

But I've learned that philosophy almost always has an unhappy ending. After all, coasting one's way into a last-minute frenzy is no way to live a happy or productive life.

Yet I can't help but think as more and more experts sound the alarm about consumers forgoing medical care because of their high-deductible insurance that this is precisely what is going on in healthcare these days.

A report from the Kaiser Family Foundation in March indicated that nearly a quarter of all non-elderly Americans with private health coverage lack the financial means to pay their deductibles. And when people can't pay, it's not rocket science to deduce that they'll skip getting necessary care--which is exactly what nearly 30 percent of adults with deductibles of at least $1,500 per person did in 2014, according to another study.

Skipping care obviously isn't a good idea in the short term for acute illnesses, but arguably the bigger threat is the accumulation of missed preventive care--the kind that catches costly chronic conditions before they spiral out of control.

It hurts consumers' health--and insurers' bottom lines. After all, the evidence is overwhelming about how costly it is to treat the sickest individuals. It stands to reason that it would benefit the whole system to steer consumers away from plans that discourage them from seeking care and ultimately drive up costs.

But how can insurers achieve this without forcing higher-cost plans on consumers who already have little tolerance for premium increases?

One promising solution comes from a paper released this week by the Brookings Institute. It advocates for health insurance exchange regulators to design better "smart default" options that leverage consumer inertia, or the tendency to avoid re-examining coverage options.

While some exchanges simply place these consumers into their current plans as a default, authors Ben Handel and Jonathan Kolstad argue that it would be wiser to default them into the lowest-cost, highest-quality plan based on individual preferences and characteristics.

Of course, there would have to be stopgaps to prevent consumers from being switched to plans that don't include their regular providers, the paper notes, and exchange regulator will have to come up with a model to determine the maximum allowable financial loss associated with switching consumers' plans.

If it all sounds too "big brother knows what's best for you," consider the fact that nearly half of uninsured Americans lack confidence when it comes to selecting the right health plan. And it's not as though consumers wouldn't be able to change their plan on their own; this would simply be a default if they don't bother to do so.

The paper also advocates for exchange tools that put more power in consumers' hands, including an individualized plan cost calculator that uses algorithms similar to those employed by Amazon or Netflix to assess consumers' preferences and needs, and tools that allow individuals to asses networks based on their provider offerings.

In other words, give the people what they want--the best plan for the best price--but make it much easier for them to get there.

If the fact that people are skipping care because they can't pay their deductibles is any indication, we still have a long way to go to design an ideal individual health insurance market. And employer health plans that hope to trim costs by putting unwieldy cost-sharing requirements on members are just as short-sighted.

Better tools, better plan design and more price transparency hold great promise to combat these worrying trends. And now is no time to put off adopting them. - Leslie @HealthPayer