High-Deductible Health Plans and Better Benefit Design

High-deductible health plans are growing in policy and market prominence. These plans offer lower premiums than conventional insurance products but make enrollees pay high deductibles (the amount that a person must pay out-of-pocket before their health insurance plan pays benefits) for most types of care, including emergency department use, inpatient hospital services, diagnostic testing, and pharmaceuticals. Average deductibles in high-deductible health plans range from $1600 to $1900 for individuals and $3300 to $3900 for families. In 2007, approximately 10% of employers offered high-deductible health plans, and such plans covered about 3.8 million workers (1). By shifting more of the cost of care to individuals, advocates of high-deductible health plans believe that consumers will more carefully assess the balance of benefits versus costs of their health care choices, ultimately improving the efficiency and quality of care.

The RAND HIE (Health Insurance Experiment) was a large-scale, randomized, community-based, controlled trial that examined the effects of varying levels of cost sharing versus free care on the use and quality of care and on health status from 1971 to 1982. The results are often used to justify incorporating more cost-sharing into insurance design, particularly because 1 of the HIE cost-sharing plans had a deductible that would qualify it as a high-deductible health plan today. The HIE showed that more cost-sharing reduced use and did not affect the health status of average Americans younger than 65 years. However, cost-sharing reduced the use of highly clinically effective and less or ineffective services in roughly equal proportions. In addition, free care did not improve the quality of care patients received (2, 3). If the HIE results are relevant to this century, then high-deductible health plans would be expected to equally reduce the use of both clinically effective and ineffective care.

Since the HIE, studies using …