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Study finds spending is lower; but so is use of preventative care

High-deductible health plans lead to significantly lower spending on health care, but consumers also cut back on preventative services, according to a new study.

The study, co-funded by the California Healthcare Foundation and the Robert Wood Johnson Foundation, was conducted by the RAND Corporation. It tracked families insured through 53 large employers, of which about half offered a high-deductible plan.

Researchers describe the findings of the study as painting a “mixed picture.” More than 800,000 families in the U.S. were studied, and those who used or shifted into insurance plans with deductibles of at least $1,000 per person reduced spending by an average of 14 percent compared to families with lower deductibles, according to the study.

On the other hand, the study found that such high-deductible plans lead families to cut back on preventative services like childhood immunizations, cancer screenings and routine tests for diabetes.

Health care spending was also less for families enrolled in high-deductible plans that had moderate heath savings accounts sponsored by employers. However, when employer contributions to health savings accounts made up more than half of an individual’s deductible, savings decreased among families enrolled in what are often described as “consumer-directed” health plans, according to the study.

“We discovered that costs go down dramatically during the first year people are enrolled in high-deductible plans, as long as the deductible is at least $1,000 per person,” said Amelia Haviland, a co-author of the study and a statistician for RAND. “But we also found concerning reductions in use of preventative care. This suggests people are cutting both necessary and unnecessary care.”

The findings on preventative care come as certain elements of health care reform take shape over the next few years. Last year’s Patient Protection and Affordable Care Act is expected to encourage enrollment into high-deductible health plans as a means of curbing costs. The plans are also seen as a central piece in offering health benefit exchanges that are being set up by states to help the uninsured find coverage.

Victor McKnight, a health underwriter and consultant with Sitzmann Morris Lavis in Santa Rosa, said companies that offer high-deductible plans are seeing an increase of about 15 percent in health care spending. But the model is relatively new.

“They’re still figuring out the pricing on them,” he said.

Other key findings in the study include:

n  Health spending, overall, grew for people enrolled in both high-deductible and traditional plans, but grew at a slower rate in the high-deductible group;

n  Spending was lower on inpatient and outpatient services and prescription drugs for those with high-deductibles;

n  Generous employer contributions to health savings accounts led to less “cost-conscious behavior,” and a lower savings rate.

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Barry Burke has joined the North Bay Wells Fargo Insurance Services staff in Petaluma. He will be working with the personal lines team as a producer.

Previously, Mr. Burke worked at Heffernan Insurance Brokers, also in Petaluma.

 

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Submit items for this column to Dan Verel at dverel@busjrnl.com, 707-521-4257 or fax 707-521-5292.