WASHINGTON (AP) — It’s the hottest trend in job-based health insurance: plans that give you a personal savings account for medical bills but also require you to pay a hefty share of costs before coverage kicks in.
Such “consumer-directed” plans could save billions for employers, providing relief from high health care costs, a study published Monday concludes.
But there’s a warning flag, a risk that workers will forgo needed care, even preventive services covered at no extra cost to them. Some consumers were apparently unsure that prevention was covered.
Compared with traditional insurance, consumer-directed plans charge significantly lower premiums. But deductibles, the annual amount you pay before insurance starts covering, can be twice as high or more. To overcome consumers’ unease about greater financial exposure, the plans are packaged with tax-advantaged medical accounts to which employers can contribute.
“There is reason to be concerned that this potential solution to our rising health care cost problem comes with risks,” said Amelia Haviland, a statistician at Carnegie Mellon University in Pittsburgh, who led the study. “The immediate risks are carried by employees and their families. If they get less healthy, the cost implications could affect the whole system.”
Consumer-directed plans are not new. Former President George W. Bush called them health savings accounts and promoted them as a way to get Americans personally invested in cutting costs, as proponents say, by having more “skin in the game.” What’s new is that the plans are gaining traction in the workplace — enrolling nearly 1 in 6 workers.
Although President Barack Obama took a very different approach from Bush to the nation’s health care problems, the study concludes that the Patient Protection and Affordable Care Act will encourage more employers to adopt consumer-directed plans, accelerating a trend Bush helped to start.
PPACA, if it survives Supreme Court scrutiny, would create economic incentives that boost low-cost plans in two ways. First, the plans provide an option for medium and large employers who don’t currently provide coverage to avoid federal penalties that loom in a couple of years. And they could also help some employers escape a new tax on high-cost “Cadillac” health insurance.
For consumers, there are other considerations: Premiums for traditional insurance could rise if the new plans lure away people in good health. Also, workers with chronic conditions may find that high-deductible plans put more strain on family budgets.
Published in the journal Health Affairs, the study analyzed medical claims data from 59 large U.S. employers, most of which offered the choice of a consumer-directed plan. Crunching that information, researchers estimated that employers overall could reduce their health care costs by 7 percent if half of American workers were to enroll in the plans.
National savings would total $57 billion annually, potentially allowing employers to pay higher wages or hire more workers.
Two-thirds of the savings in the study came from people using less medical care. The remaining one-third came from frugal behavior such as opting for generic drugs or seeing specialists less often.