A 2017 study by Reid, Rabideau, and Sood published in The American Journal of Managed Care found that, despite their promises to save on medical costs, high-deductible health plans (HDHPs; also known as consumer-directed health plans or CDHPs) have failed to curb spending on unnecessary or low-value health services.
“CDHPs in their current form may represent too blunt an instrument to specifically curtail low-value healthcare spending,” the researchers concluded.
This doesn’t surprise me all that much. Patients often lack reliable information to decide which health care services provide the most value and are at the mercy of their physicians to inform them. So, even if you give patients more skin in the game, without adequate information they can rely on, they will use health care in about the same way they always have.
Even though the researchers found that CDHPs did reduce overall health spending, we can only conclude that the reduction came in the form of foregoing high-value health services.
CDHPs were touted as empowering consumers, but they were really just excuses for employers to cut back on benefits and for wealthy people to get tax breaks by sheltering money in their health savings accounts.
When people are uninsured or underinsured, they often end up with medical bills they cannot pay. Bad medical debt is a serious problem, not just for the patients (who are often driven into bankruptcy) but also for the health care providers.
Just how serious?
Hospitals and providers, historically, received 90% of the reimbursement from insurers, according to The Advisory Board. The patient portion was more of an afterthought.
That dynamic is shifting as more people come under high deductible health plans. The ratio could settle around 70-30 — with patients paying nearly a third of their bills, said Ken Kubisty, senior vice president at Advisory Board Consulting and Management.
For every patient dollar being billed, hospitals have historically failed to collect 65 cents.
Report from The Tennesseean
So, medical providers have to make up the income from this uncompensated care somehow. But how? By demanding higher and higher fees from private health insurers in order to remain in network. This increases claim costs to insurers, which they try to offset by increasing patient cost sharing (higher and higher deductibles, etc.), which leads to even more uncompensated care.
It’s a vicious cycle that no one seems particularly willing or able to break because it requires long-range thinking. Employers and individual insurance purchasers want to minimize premiums this year. Health insurers want to minimize claim costs this year and minimize premiums in order to satisfy employers this year. Hospitals and medical practitioners need to make up for last year’s uncompensated care this year. Even politicians want to get elected this year.
Is it surprising that health care in this country costs so much?