High-deductible health insurance leads to reduced care, not frugality

The standard line of thought has been that if consumers see their health insurance plans involve higher deductibles, they would be more likely to shop around for the most affordable coverage and care possible resulting in reduced health-care costs. However, a new study seems to confirm what a lot of anecdotal evidence has shown as high-deductible plans became more common: Rather than selecting health care services by shopping for the lowest price, consumers are determining the health care they receive based on other factors.

A recent study found that when workers take on significantly more health care costs that used to be covered by their employers, they reduce the health care services they receive, subverting long-held industry beliefs about how consumers find the most affordable care, according to a report from Vox. Jonathan Kolstad, a co-author of the study, told the site that this result was surprising to economists who study health care, and that their study suggests consumers are not shopping around for the most affordable treatments. Instead, consumers are more likely to avoid receiving treatment or delaying receiving medical care. This can lead to more expensive problems down the road as they become increasingly sick and don't seek care.

What are the details?
The company studied provided approximately 75,000 workers health insurance with no deductible, but in 2013 migrated them to plans with deductibles of $3,750, accompanied by a subsidy for that same amount in a health savings account, the report said. Additionally, it also provided price comparison tools to find the best possible costs for the treatments they needed within their networks.

However, the average amount those employees ended up spending on coverage fell 15 percent from one year to the next, for all the kinds of care they were seeking before, the report said. Indeed, in the two-year window from 2012 to 2014, there was a 25 percent decline in spending for emergency room visits, 18 percent for trips to doctor's offices, and 6 percent for mental health treatment. But this was due to decreased medical services received, not  from selection of less expensive providers.

This study suggests that a higher deductible results in less medical care being received, even when the deductibles are subsidized by employers.

Employees stop seeking even affordable, preventative care when deductibles get too high.

Worrisome developments
Because the workers were less likely to visit doctors, they also received less preventative care, which health experts widely acknowledge as being crucial to spotting potential issues before they become major problems, the report said. In addition, this decline in the use of care seems to have disproportionately affected consumers who were already ill; that is, they were the most likely to exceed the deductible in the first place but still didn't want to do so.

This is something that health insurers might want to discuss with their corporate clients on an ongoing basis, because if these employee behaviors end up leading to more serious and higher-cost treatments, employers could end up with sicker workers and insurers could be exposed to expensive medical costs. Striking a balance between coverage that's affordable for employers and workers alike could go a long way toward keeping everyone in better shape.