When it comes to protecting patients from the crushing weight of healthcare expenses, employer sponsored  and individual high-deductible insurance plans offer all the protection of a dented tin roof in a hailstorm. They present the appearance of security and can potentially deflect the cost burden of some medical bills — but in all likelihood, financially-damaging healthcare expenses will still clatter through into a patient’s life. 

Individuals whose coverage rely on these models can quickly turn jaded when they realize that they need to pay out of pocket for all but the most expensive procedures. As Lianna Patch, a 29-year-old copywriter facing down a $6,500 individual deductible, commented in an article for CBS earlier this year, “I’m firmly in the camp of resignation and bitterness […] I have to pay for this in case something terrible happens. I look at it as catastrophe insurance.” For households like Lianna’s, high-deductible health plans offer a safety net during disasters — and a lack of support nearly on par with uninsurance at all other times. 

With the apparent lack of support that HDHPs provide, it might seem odd that they have such high enrollment rates. According to a recent survey conducted by the CDC, a full 47% of privately-insured persons under the age of 65 were enrolled in an HDHP during the first three months of 2018. These findings demonstrate a year-on-year increase in HDHP enrollment and reflect the continuation of a longstanding trend away from traditional plans. 

Why are High-Deductible Plans So Popular?

The appeal behind an HDHP lies in the best-case scenario. By definition, these plans offer a lower monthly premium than traditional models; however, enrollees must meet a higher cost threshold before they become eligible for insurers coverage. In a perfect world, patients who don’t have costly health conditions and rarely need treatment can save by not paying the extra money that a lower-deductible plan would demand each month. To share the explanation that Health Savings Account preceptor John C. Goodman provided in a 2018 article for Forbes: “If someone chose a $1,000 deductible instead of a $100 deductible, the reduction in premium was more than $900. In other words, if you were willing to take on an extra $900 of risk, you could put more than $900 in the bank.” 

This outcome sounds ideal in theory — in practice, however, it has a few caveats. 

Short-Term Savings, Long-Term Costs

As Lianna Patch exemplified at the top of this piece, those who use HDHP and need to pay most healthcare expenses out of pocket often feel unable to afford or access non-emergent care. Indeed, a recent study published in Health Affairs found that women “who switched from low to high deductible health plans were more likely to delay breast cancer diagnosis and treatment.” In a worst-case scenario, this avoidant behavior could allow a patient’s cancer to become more extensive and require more expensive medical care than it might have if the patient had come in for routine care. Chemotherapy, after all, is one of the most costly specialties in the healthcare field, with the average payment for procedures tallying over $360,000

Yet, even in best-case scenarios — wherein a patient rarely gets sick and only foregoes their recommended primary care treatments — can be costly in the long view. In 2010, researchers for the RAND Corporation found that better utilization of primary care correlates to better health outcomes and lesser health care spending in the long run. 

With this information in mind, it seems clear that the cost-savings advantages that HDHPs appear to offer fall short in the long term. High-deductible plans have few, if any, advantages for low-income families and offer benefits little better than a total lack of insurance. Payers and providers need to engineer a new solution — one that can meet affordability needs without sacrificing care accessibility. 

Medicare Advantage: Inspiration for a New Model? 

I posit that the lower and middle income households would benefit from having the opportunity to trade in their insufficient HDHPs for a model of coverage that is similar to what Medicare Advantage plans currently offer, albeit one adapted to the needs of the broader commercial market. 

Consider United Healthcare’s work with the provider group Optim Care as a case study for how this model might work. With a standard Medicare contract, the Center for Medicare and Medicaid Services (CMS) assesses what the average cost of a beneficiary in a given group of senior patients will be, and provides an insurer with a lump sum that matches that risk assessment. The insurer keeps a relatively small percentage of that amount to cover the costs of plan administration and make a profit; then, it gives the remaining funds to a partnered provider group. The provider group, in turn, takes on full risk and responsibility for delivering cost-efficient and effective care to the group. 

What sets Optim Health and United Healthcare apart, however, is that they focus on providing care to a high-risk pool of Medicare-enrolled seniors. This choice can be a double-edged one. If the providers do an excellent job, they get to retain better profits; but if they aren’t able to keep their high-risk patient pool healthy, they are liable for the costs beyond the CMS-provided sum. 

The Medicare Advantage model aligns providers’ motivations with their financial incentives; they have a concrete reason to be proactive and go above and beyond to keep their patients healthy, rather than stepping in only when patients are hospitalized. It also encourages providers to take on the patients that cost the most and take excellent care of them. Research has proven this model’s efficacy. In a recent study, United Healthcare found that accountable care organizations (ACOs) like Optim Health record 12.2% fewer ER visits and 8.6% fewer hospitalizations for Medicare patients than non-ACO provider groups. 

Instead of offering tin shield insurance plans, we should take a lesson from how United Healthcare and Optim Health have successfully delivered the Medicare Advantage model. The HDHP model is sorely lacking, and thus needs to be replaced with a value-based approach that can align provider incentives with high-risk patients’ needs for low-cost, high-quality care and,  by handing more financial responsibility and ownership to insurers’ provider groups, offer a financial reward for keeping patient pools healthy. Low-income families deserve better care — and with a value-based, incentive-aligned model, they can have it.