A Curious Little Study

A recently published study has been getting some attention, notably on the Incidental Economist blog. I say “recently published” because the study is actually several years old, based on a survey done nearly four years ago and asking questions about people’s experience in the 12 months prior to that.

The blog write-up calls the study “the downside of high deductible health plans,” but I’m not at all sure that’s the take-away. In fact, I’m not sure what the take-away is. I would invite you to read it and make your own conclusions, but it costs $35 to access at Springer Link — pretty pricey for a seven-page article.

In any case, the study finds that people who are in a high deductible health plan (HDHP) use fewer health services than people who are not.  That seems unsurprising. In fact, it is kind of the point of these plans.

The study’s authors aren’t sure what this means. They write:

The clinical significance of these findings depends upon whether adults and children are delaying/forgoing care that is essential or non-essential. Our study was not able to assess this issue.

But the study doesn’t actually manage to test the use of services in a high deductible plan, either. The authors say the plans they looked at had deductibles of $1,000 to $6,000, but:

In most plans, office visits were exempt from the deductible and subject to a $20 co-payment; prescription drugs were also subject to co-payments.

And preventive services were covered at no cost to the patient, so only in-patient hospitalizations, diagnostic tests, physical therapy, and ER visits were subject to the deductible.

The authors add:

Health Reimbursement Arrangements (HRAs) (employer-funded tax-exempt accounts used for health care expenses) were available in the majority of HDHPs but infrequently offered by employers.

I don’t know what that means. An HRA can be offered only by an employer, so how can it be “available” if it isn’t “offered?” Perhaps they mean the employer could have offered an HRA but did not. But that is true for every employer, everywhere, with any kind of health plan. It has nothing to do with having a high deductible.

The “traditional” plans the authors compared had copays that averaged $16 for office visits, prescriptions, and emergency visits. This seems rather peculiar — not many plans cover emergency room visits with only a $16 copay in my experience.

Oddly, the authors found that 33% of the families in traditional plans had an “account for health care expenses” while only 22% of the HDHP families did. What does that mean? Presumably these are Flexible Spending Accounts (FSAs) with the “use-it-or-lose-it” requirement. FSAs certainly encourage excessive spending on health care, but it is hard to imagine this as a good thing.

The authors note that only 11% of the families studied were in HSA-qualified plans, though they provide no information about how many actually had HSAs. There were probably not many since the data is so old and predates the explosion in HSA enrollment, and Massachusetts has always lagged behind the rest of the market.

The authors go on to compare the traditional plans to the HDHP plans in the use of acute care visits, emergency visits, chronic care visits, checkups, and (presumably diagnostic) tests.  But since the HDHPs apply the deductible to only two of the five types of services (emergency visits and tests), I am not sure what is being measured.

Yet, they find substantial utilization differences in all five categories, even though there are (apparently) no significant coverage differences for three of the five types of services.

The authors further find that although these families were chosen based on the presence of a chronically ill member, the delay in seeking care applied to the healthy members of the family, but not to the sicker ones. They write:

Our findings suggest an increased risk for (delaying care) in HDHPs for healthy children and adults in families with a chronically ill member, but not for the members with chronic conditions….

So the people most in need of care continued to get it, but those who were less likely to need it delayed getting it. This is hardly a major problem.

As I say, it is a very curious little study and I am left, once again, amazed that people at Harvard actually get paid for this stuff.

Comments (6)

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  1. Ken says:

    Good analysis.

  2. Devon Herrick says:

    I read the summary on the Incidental Economist Blog. I’m always a little leery of public health advocates who attempt to second guess the decisions of others when it comes to their health care spending. We could (in theory) spend our entire GPD on medical care. At the margin, some of this spending would be beneficial. However, that would leave nothing for other needs of daily life (in the future maybe developers can build condo-hospitals where we all live and work at the hospital since health care will consume our entire GPD).

    Consider preventive care, the type of care people with high-deductible plans are accused of cutting back on. Most preventive care has a positive cost per life year saved (i.e. it doesn’t save money). In other words, you have to treat and screen a lot of healthy people before you find (or treat) that one sick person who benefits. For the average person, prevention does not improve health. For instance, a negative mammogram does nothing other than provide peace of mind. Does a person forgoing preventive medical screenings (that usually find nothing to treat) actually harm their health? Arguably no – but it’s good for society (actually a selected few people in society) when people have screenings performed according to medically accepted guidelines. Another thing: what about people who abuse their health with poor lifestyle habits and then spend large amounts of health care dollars trying to mitigate the damage? Isn’t this worse than someone who has good lifestyle habits but is stingy with medical spending?

    Hopefully my examples illustrate how problematic it is for public health advocates to condemn the incentive to reduce medical spending under high-deductible plans as being a “down-side.” That’s a difficult case to make.

  3. Bruce says:

    Curious study? It sounds like a lousy study.

  4. Tom H. says:

    I’m not sure what to make of all this.

  5. frank timmins says:

    “So the people most in need of care continued to get it, but those who were less likely to need it delayed getting it.”

    Nuff said. If one worships the concept of “preventative care”, this is the only consideration that matters in this report. It is the presumption that people will not do what is best for themselves unless someone else is paying for it (or most of it). Once again the consistent thread that runs through this and other liberal thought is the notion that the GU is incapable of taking care of itself, and benevolent elites must manage the affairs of of the proletariat.

  6. Karl Stecher says:

    Let’s forget for a minute that this study refers to health care (though the info I quote will refer exactly back to health care). Milton Friedman postulated that the most concern for quality, and the wisest use of resources, and the least spending, occurred when the involved person was responsible for earning the money and distributing/using it. Less care (and looser spending) occurred if someone else made the money, etc.
    Why (ha ha) in an article such as this is the Friedman economic model not quoted, understood, applied? It is essential to this paper.