Good News for Patients With High-Deductible Health Plans

On New Year's Day 2018, Carla Jordan, a Virginia public school teacher, wrote a 20-page letter to President Barack Obama, President-Elect Donald Trump, and 220 members of Congress, explaining how her employer’s high-deductible health plan (HDHP) had driven her and her husband into bankruptcy. The Jordans’ story, told in a feature¹ on Bloomberg News, is all too common. With 2020 already on the horizon, it’s important to remember that for many Americans, a new year brings a rude awakening. For individuals with HDHPs, resetting to zero is no cause for celebration. For people with chronic conditions, January can mean sticker shock at the pharmacy counter, as meeting the annual deductible begins anew. Fortunately, there is good news for patients with chronic conditions and who are in a high-deductible health plan.

The United States Treasury Department in July announced a change in guidance that expands the list of preventive care benefits, including medical care services and prescription drugs for certain chronic conditions, that can be covered pre-deduct- ible in HDHPs that are linked to health savings accounts (HSAs). The new guidance expands the list of chronic conditions and drug classes beyond the IRS’s previously narrow definition of a “safe harbor,” which directed that coverage did not include “any service or benefit intended to treat an exist- ing illness, injury, or condition.” Under the new guidance, specific preventive care for such conditions as congestive heart failure, asthma, diabetes, hypertension, and heart disease is included.

This is an important step in helping Americans achieve greater value for their health care dollars, especially as HDHPs become more prevalent. A recent federal survey found that enrollment in HDHPs (defined as deductibles of at least $2700 for family coverage) surged in 2018 to include nearly half of the privately insured.² The National Business Group on Health reported that 30% of employers expected to offer only HDHPs in 2019,³ while America’s Health Insurance Plans estimated that enrollment in HSA-HDHPs reached 21.8 million in 2018.⁴ HDHP enrollment among private-sector employees increased from 11.4% in 2006 to 46.5% in 2016.⁵

Despite their popularity, HDHPs can present significant cost barriers for the insured. The Kaiser Family Foundation reports that the average annual deductible among all covered workers has increased 53% over the past 5 years.⁶ The Pharmacy Benefit Management Institute reports that the average family deductible is $3571.⁷ Contrast this with the fact that 40% of Americans say they would be unable to pay for a $400 emergency medical expense, according to the Federal Reserve, and 25% skipped a medical treatment in the past year due to an inability to pay (11% skipped prescription medications).⁸ Although HDHPs were intended to encourage price shopping by consumers, a perverse, unintended result is that individuals delay or forego medical care and vital medications,⁹ often resulting in much more costly conditions down the road.¹⁰

There is a strong research basis for the value of the kind of HSA/HDHP reform demonstrated in the new Treasury guidance. Two NPC-funded research studies by VBID Health demonstrate the positive financial impact of pre-deductible coverage of medications for chronic conditions. Using a baseline hypothetical HDHP with a $2000 deductible and 10% coinsurance until reaching the $6500 out-of-pocket maximum, one study examined how providing pre-deductible coverage for 57 drug classes covering 11 chronic conditions would impact out-of-pocket costs, plan expenditures and premiums. Although it would increase utilization (a good thing for patients with chronic conditions) and shift some costs to health care plans, this study found that the overall impact would be modest, requiring a premium increase of less than 2%.¹¹

The new guidance can be good news for payers as well. It permits health plan innovation and can play a part in an overall portfolio of approaches aimed at reducing health care expenditures. It also has the potential to increase the clinical effectiveness of HSA-HDHPs and improve patient health outcomes. And finally, as stated in the conclusions of the second study:¹²

As we anticipate 2020, better health for all Americans is our goal. Let’s hope that the millions with HDHPs and chronic conditions can resolve to get all of their necessary care and medications in the new year.

References

• Tozzi J, Tracer Z. Sky-high deductibles broke the U.S. health insurance system. Bloomberg News website.bloomberg.com/news/features/2018-06-26/sky-high-deductibles-broke-the-u-s-health-insurance-system. Published June 26, 2018. Accessed August 15, 2019.
• Cohen RA, Martinez ME, Zammitti EP. Health insurance coverage: early release of estimates from the National Health Interview Survey, January-March 2018. National Center for Health Statistics website. cdc.gov/nchs/data/nhis/earlyrelease/Insur201808.pdf. Published August 2018. Accessed August 15, 2019.
• Large US employers eye changes to health care delivery system as cost to provide health benefits nears $15,000 per employee. Washington, DC: National National Business Group on Health. August 8, 2018. businessgrouphealth.org/news/nbgh-news/press-releases/press-release-details/?ID=348. Accessed August 15, 2019.
• Health savings accounts and consumer-directed health plans grow as valuable financial planning tools. America’s Health Insurance Plans website. ahip.org/2017-survey-of-health-savings-accounts/. Published April 12, 2018. Accessed August 15, 2019.
• Miller E, Vistnes J, Rohde F, Keenan P. High-deductible health plan enrollment increased from 2006 to 2016, employer-funded accounts grew in largest firms. Health Aff (Millwood). 2018;37(8):1231-1237. doi: 10.1377/hlthaff.2018.0188.
• 2018 Employer Health Benefits Survey - summary of findings. Henry J. Kaiser Family Foundation website. kff.org/report-section/2018-employer-health-benefits-survey-summary-of-findings/. Published October 3, 2018. Accessed August 15, 2019.
• 2018 trends in drug benefit design. Pharmacy Benefit Management Institute website. pbmi.com/ItemDetail?iProductCode=BDR_2018&Category=BDR. Accessed August 15, 2019.
• Board of Governors of the Federal Reserve System. Report on the economic well-being of U.Ss. households in 2017 - May 2018. The Federal Reserve website. federalreserve.gov/publications/2018-economic-well-being-of-us-households-in-2017-dealing-with-unexpected-expenses.htm. Updated June 19, 2018. Accessed August 15, 2019.
• Brot-Goldberg ZC, Chandra A, Handel BR, Kolstad JT. What does a deductible do? the impact of cost-sharing on health care prices, quantities, and spending dynamics. Econometrics Laboratory, University of California, Berkeley website. eml.berkeley.edu/~bhandel/wp/Utilization_BCHK_Web.pdf. Published February 22, 2017. Accessed August 15, 2019.
• Agarwal R, Mazurenko O, Menachemi N. High-deductible health plans reduce health care cost and utilization, including use of needed preventive services. Health Aff (Millwood). 2017;36(10):1762-1768. doi: 10.1377/hlthaff.2017.0610.
• Financial impact of HSA-HDHP reform to improve access to chronic disease management medications. VBID Health website.vbidhealth.com/insights2018.php. Published March 2018. Accessed August 15, 2019
• Expanding pre-deductible coverage in HSA-HDHPs could improve lives and save dollars. VBID Health website.vbidhealth.com/docs/HDHP+%201-pager.pdf. Published June 2019. Accessed August 15, 2019.