Running head: THE PRICE OF HIGH DEDUCTIBLE HEALTH PLANS – IS IT 1

The Price of High Deductible Health Plans – Is It Worth It?

Paige Gray

Northern Arizona University – Personalized Learning

THE PRICE OF HIGH DEDUCTIBLE HEALTH PLANS – IS IT 2

The Price of High Deductible Health Plans – Is It Worth It?

To pay or not to pay...that is the question asked by millions of families across the United

States with a high deductible health insurance plan (HDHP). The Internal Revenue Service

(IRS) defines an HDHP as a plan with a minimum deductible and maximum out-of-pocket limits.

For 2017, the minimum deductible is $1,300 for individual coverage and $2,600 for family

coverage with a maximum out-of-pocket limit of $6,550 for individual coverage and $13, 100 for

family coverage (Internal Revenue Services). Most HDHPs have associated health savings

account (HSA) or health reimbursement arrangement (HRA) with annual maximum

contributions as established by the IRS. HDHPs were created to reduce unnecessary health care

costs through consumer driven cost-sharing with the idea that if the consumer has some “skin in

the game” they would be more likely to seek high-value, lower cost healthcare. Unfortunately,

HDHPs are being purchased by consumers with low medical understanding who are foregoing

necessary treatment/procedures until too late which is affecting over-all healthcare.

HDHP Consumers

Shopping primarily by price tag, consumers are purchasing low monthly premium and

exorbitant out-of-pocket minimum health plans. With monthly premiums ranging from $545.11

to $1,319.69 depending on state residency (America's Health Insurance Plans, February 2017),

consumers are spending on average 9.6% of their annual income on healthcare (Herman, 2015).

Not understanding the differences between premiums, co-insurance and deductibles, Americans

are increasingly finding themselves in collections, unable to pay for healthcare services. In

addition, many patients are unaware of free preventative services provided through their health

insurance plans (Reed, Graetz, Fung, Newhouse, & Hsu, 2012).

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Preventative Care Avoided Due to Cost Concerns

The lack of consumer understanding of their preventative healthcare options at minimal

to no direct cost has also had a negative effect on overall health by patients putting off or

avoiding these services. Examples of preventative services covered by many health plans

include annual wellness visits, services to help manage diabetes or asthma, medical tests or

screenings, immunizations, and counseling for drug and tobacco usage. According to the Centers

for Disease Control and Prevention (CDC), chronic illnesses such as diabetes, heart disease and

cancer account for 75% of America’s health spending and are typically identified during

preventative screenings (Centers for Disease Control and Prevention, 2017). A study by Reed et

al. (2012) identified that patients intentionally put off preventative screenings and tests due to

cost concerns. In addition, the study found that patients did not understand how preventative

office visits affected their health insurance deductible. Removing cost-sharing from preventative

services, such as mammograms, has shown an increase in utilization of these screenings.

High-value and Low-value Healthcare

In addition to forgoing preventative screenings, patients with an HDHP are choosing to

not seek diagnostic screenings as well. Lower and middle income HDHP consumers have been

identified as deferring or choosing to not seek these screenings based on out-of-pocket costs

(America's Health Insurance Plans, February 2017). Patient understanding of the differences

between high-value1 and low-value (little to no health benefit) healthcare is another contributing

factor, beyond cost alone, of why these patients do not seeking the medical care they need. As a

1
“healthcare that balances clinical benefit with costs and harms with the goal of improving
patient outcomes” or “’the best care for the patient, with the optimal result for the circumstances,
delivered at the right price.’” (Moriates, n.d.)
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result, patients are seeking treatment once they become extremely sick, whereas early treatment

may have helped to avoid the higher payment costs associated with acute care.

Case Study.

Jane has been having lower stomach pain off and on for the past four months. She has

often considered seeing her primary care physician but puts it off since she had not met her

maximum out-of-pocket deductible for the year, and does not think the pain is so important for a

doctor visit - the pain does not always bother her. One day the pain becomes too much and she

seeks care in the emergency room. The radiology screening identifies ovarian torsion and she is

rushed off to surgery for emergency oophorectomy due to delay in treatment. In this scenario,

Jane’s lack of understanding of high-value healthcare (seeking medical attention early on)

resulted in even higher medical charges (emergency room and professional fee, radiology fee and

professional fee, surgical and professional fee, and hospital inpatient fee) and the loss of her

ovary. Had Jane sought medical care sooner she would have been able to comparison shopped

for the radiology charges which included the professional fees; been seen by the surgeon of her

choice and not just the one on call at the hospital; paid lower out-of-pocket expenses to her

primary care physician instead of the emergency room care; and negotiated her hospital fees.

Jane’s delay in care also resulted in a greater utilization of services which increases over-all

healthcare spending nationwide. Since Jane’s HDHP is through her employer-sponsored self-

insured program, Jane has unwittingly past on her higher costs to her co-workers when her

company re-evaluates their annual premium costs.

Conclusion

As HDHPs continue to see an even larger expansion in the health care market place, even

extending into Medicare and Medicaid plans, patient education will be a key factor in helping
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patients make educated decisions regarding the best health plan for their situation. Continuous

information provided to patients regarding how deductibles and co-insurance are affecting their

plan will ensure patients seek the care they need. Advertising about preventative screenings will

also encourage patients to seek out care before it is too late and even more expensive. Intern,

patients will not only be better informed they will be able to make better health care decisions

thus lowering overall healthcare costs.

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References

America's Health Insurance Plans. (February 2017). 2016 Survey of Health Savings Account -

High Deductible Health Plans. Retrieved October 14, 2017, from

https://www.ahip.org/wp-content/uploads/2017/02/2016_HSASurvey_Draft_2.14.17.pdf

Health Affairs. (2016, February 4). High-Deductible Health Plans. Retrieved October 14, 2017,

from Health Affairs:

https://healthaffairs.org/healthpolicybriefs/brief_pdfs/healthpolicybrief_152.pdf

Herman, B. (2015, January 8). Workers spending 9.6% of income on healthcare. Retrieved

October 14, 2017, from Modern Healthcare:

http://www.modernhealthcare.com/article/20150108/NEWS/301089964

High Deductible, High Risk. (Jan/Feb 2015). HealthLeaders Magazine, 18(1), 56. Retrieved

October 14, 2017

Internal Revenue Services. (n.d.). 26 CFR 601.602: Tax forms and instructions. Retrieved

October 14, 2017, from Internal Revenue Services: https://www.irs.gov/pub/irs-drop/rp-

16-28.pdf

Mitts, L., & Fish-Parcham, C. (2015, May). Non-Group Health Insurance: Many Insured

Americans with High Out-of-Pocket Costs Forgo Needed Health Care. Retrieved October

14, 2017, from FamiliesUSA:

http://familiesusa.org/sites/default/files/product_documents/ACA_HRMSurvey%20Urba

n-Report_final_web.pdf
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Tables

Table 1

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