High-Deductible Plans a ‘Quiet Revolution in Health Insurance’

As health costs rise, insurance plans characterized by lower premiums and higher out-of-pocket costs are on the rise in American workplaces. Health correspondent Betty Ann Bowser reports on the growing trend toward high-deductible health plans, and concerns that they may encourage delays in receiving needed medical care.

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    Next, a growing change in the way Americans are buying and receiving health insurance.

    NewsHour health correspondent Betty Ann Bowser reports.


    Dennis Adams is what the insurance industry calls a young invincible.

    DENNIS ADAMS, professional dancer: I figured nothing would happen to me. When I was 26 or 25, when I got the plan originally, I had never had surgery, I had never broken a bone, I had never been in an ambulance, I had never been to the hospital.


    So when the non-profit Oberlin Dance Company of San Francisco offered a new type of health insurance three years ago, the 27-year-old professional dancer didn't think twice. He signed up right away.

    It was a high-deductible insurance plan that traded lower monthly premiums for higher out-of-pocket costs to employees. In this case, Adams would have to pay $2,500 up front before his health insurance would kick in, if he needed it.

    Then, the unthinkable.


    I got hurt.


    During a performance like this, Adams tore his ACL. When he need an MRI to determine how bad the damage was, the provider demanded the $1,600 test be paid for up front.

    Adams was stunned, but, even worse, he didn't have the money. Of the growing number of companies that are going to high-deductible plans, about 23 percent of them offer employees some type of rainy-day option, usually called a health savings account, or HSA. And even though the dance company is a non-profit with a tight bottom line, it puts $100 a month in each employee's account.

    The 30 people on the plan can also contribute to it tax-free, and the money rolls over year after year and from job to job. In the end, workers comp paid for Adams' treatment because the injury happened on the job. But for the young dancer, it was a teachable moment. He went back to a traditional plan with higher monthly premiums.

    Dr. Drew Altman, president and CEO of the Kaiser Family Foundation in Palo Alto, calls this a reshaping of the insurance market.

    DR. DREW ALTMAN, President and CEO, Kaiser Family Foundation: Well you know, I think we've been so focused on health reform in Washington, what we have missed is there is a quiet revolution happening in health insurance out in the country.


    According to Kaiser, last year, 31 percent of workers covered by their employers offered this type of insurance, with a deductible of at least $1,000. Enrollment has tripled, up from 10 percent, in five years.


    They don't have a lot of weapons to throw at their rising health care costs any longer, so they have really no choice but to go in this direction, especially the smaller employers, who are getting hit especially hard by rising health care costs.

    So, we're seeing this quiet revolution in what health insurance really is. It's changing in the country and it has big implications for people.

    PHIL LEBHERZ, founder and chairman, LISI: The logic is that, if you have a higher deductible, as a consumer, you're going to pay more attention to the marketplace and how much people are charging you for their services.


    Phil Lebherz is the founder and chairman of LISI, an agency that provides support for health insurance brokers throughout California. About a third of his employees are on these types of plans. And, Lebherz says, their rise in their popularity comes down to economics.


    This move to high-deductibles is really, at the bottom line, an economic market adjustment to lowering the cost of the actual health insurance premium, putting some risk, or some emphasis, from a consumer standpoint, and some interest in people's trying to stay healthy, so that it protects them and protects the company at the same time.

    What we're seeing is a change in the financing of health care, not an erosion of the coverage. The coverage is still there. In fact, there's more coverage than ever.


    That's why, in 2009, the dance company's finance manager, Charlene Folcomer, recommended they start offering a high-deductible plan with lower premiums.

    About a third of the company's 100 full-time employees opted in.

    CHARLENE FOLCOMER, finance manager, Oberlin Dance Company: So, it's made a huge savings for us. The employees that are on it stay with it because they're getting used to it. They have to do what it takes to keep their health care costs down now.


    But a new study found people on these types of plans sometimes put off medical care, more often than those in traditional low-deductible plans.

    The study's lead author is Dr. Alison Galbraith, a pediatrician at Harvard Medical School.

  • DR. ALISON GALBRAITH, Harvard Medical School:

    What we found was that, in families in high-deductible plans, there was a much higher prevalence of delayed or foregone care due to cost, compared to people in the non-deductible plans. And an interesting thing was, it was — there was the suggestion that actually it wasn't necessarily the chronically ill family members who were delaying care.


    But, Galbraith added, these plans can work well for some people.


    Ideally, the best person in a high-deductible plan, well, it's a healthy person who doesn't need a lot of care. And for those types of people, they're great plans. So that's why some families will want to buy them, because it may be the only affordable option for them.


    Lauryn Menard, an administrator for the dance company, is one of those ideal candidates for this type of insurance, and she's happy with it.

  • LAURYN MENARD, Oberlin Dance Company:

    I feel like I'm getting good coverage for me. I'm young, I'm healthy, I'm savvy. I know, you know, what my costs are going to be per month. I know those costs. I know what my expected medical costs are, so — so, I — and I feel like, if something were really worrying me, I could totally go to a doctor.


    But even Menard admits she now sometimes puts off going to the doctor to save money.


    I do get headaches about once a month, and they can get really bad. And I still haven't gone to see a doctor about it. And I don't know. I haven't made plans to yet. It's like, I'm kind of trying to cheat the system a little bit, because it's like, if I don't go and it's not really serious, then I'm saving money.


    With this so-called quiet revolution already well under way for thousands of Americans, Altman is pushing the industry and the country to take stock.


    We really need to have a national discussion about whether this is a good thing or this is a bad thing. Or it may mean — I think what it really means is, this is okay for some people if you are pretty healthy. But we have to worry about what these very high deductibles, $2,000, $3,000, $4,000, $5,000 deductibles, is that really even insurance coverage?


    The number of Americans enrolling in high-deductible plans is expected to rise as long as the cost of health premiums also continue to climb.


    Online, you can find our list of the top 10 things you need to know about high-deductible insurance plans. Plus, you can submit your questions via Facebook or Twitter or on our website, and we'll post answers from experts next week.