Enrollment in high-deductible health insurance plans has exploded over the past five years. I’m learning the hard way how these plans do — and do not — work.

About one-third of American workers covered by health insurance are now in high-deductible health plans, in which the policy holder pays a substantial portion of the cost of health care services out of pocket before insurance coverage kicks in. Many economists and health policy experts believe that these plans are a promising way to reduce health care spending.

So when a high-deductible plan became available through my employer, Harvard University, a couple years ago, I decided to enroll my family in it. If this is going to be a big national experiment, I thought that I, as a physician and a health policy scholar, ought to know what it’s like to live with this kind of health insurance. Debra, my wife, was not convinced.

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While I am a proponent of experiments and evidence, Deb wasn’t interested in including our kids in this one. The notion of having to think about shopping for health care if any of us got sick wasn’t attractive to her. But if we stay healthy all year, I argued, we would actually come out financially ahead.

She reminded me that we have plenty of other reasons to stay healthy all year, and the potential financial savings didn’t feel like a particularly compelling additional reason. Defeated by her logic, I turned to pleading.

I made the point that we had a lot of advantages in navigating the health care system effectively and that she and I should go about making the same health care decisions that we would have otherwise. She relented.

My family is now in its second year under a high-deductible plan. That means we are responsible for paying the first $6,000 of our health expenses for the year, for everything from a doctor visit for a flu shot to surgery.

It has been an educational enterprise.

Our experiment is showing me again and again that it’s extremely hard to be a health care consumer in Massachusetts — just as I’m sure it is in other states. Want to know how much a particular type of health care costs, like a visit to a specialist or getting a minor surgery? Good luck figuring it out. My insurance company’s online tool was hard to use and, even as a physician, I could almost never guess what sets of services a visit to the doctor might generate. What’s more, there was no useful information about the quality of care. Price information without quality information is not particularly helpful when shopping for medical care.

The second lesson was that being a health care consumer is stressful, at least the way the system is currently set up. Here’s an example. Our son had surgery last year. We got a call saying it was time for his one-year follow-up. Deb stressed for nearly two months over whether or not to make the appointment. Of course she wants our son to get the care he needs, but did he truly need this follow-up? That’s both the promise and the peril of high-deductible plans — they are supposed to make you think twice about consuming health care.

She eventually went with our son for his one-year follow-up — they spent two minutes with the surgeon — and paid $465 for the visit. I’m not sure my son, or my spouse, felt any better afterward. There were many examples like this sprinkled throughout the year, but the most profound one was the one I experienced for myself.

I have supraventricular tachycardia, a common heart rhythm problem. When it hits, my heart races at about 180 beats per minute. It comes on a couple of times a year, lasts a few minutes, and usually isn’t a big deal. But one morning I woke up with my heart racing. After 30 minutes, I wondered if I should go to the emergency department, knowing that I’d probably get stuck with a multi-thousand-dollar bill. So I kept waiting. After an hour, during which my heart kept beating furiously, my chest started to hurt. I knew what that meant — I was at risk of having a heart attack.

Deb asked me what I would tell a patient in this situation. That was easy: I’d tell him or her to call 911. But I kept waiting. Finally, about 15 minutes later, the abnormal rhythm finally broke and I felt my heart calm down. I was lucky — I had rolled the dice and things had worked out.

That brings me to the third lesson of high-deductible health plans, the lesson of what didn’t happen — I didn’t really have a choice of where to go for treatment.

Imagine that for dinner on any given night, your two choices were eating at a very expensive gourmet restaurant or not eating at all. I bet that more of us would forgo dinner a lot. (Thank goodness we have a range of options.)

The US health system is something like that. During my heart rhythm problem, I realistically had only one choice — going to the emergency department. Knowing that they are usually the only option, hospital administrators make emergency departments super expensive.

One promise of high-deductible plans is that if we have a real market for health care, we will see lots of innovation, including different types and levels of urgent care centers. But that hasn’t happened.

During my heart episode, all I really needed was a place that had a heart monitor and that stocked common, inexpensive rhythm-restoring heart medicines. The real cost should have been $200 to $300. If I had known that such a place existed, I would have gone there. But this mid-price range of options is rarely available in health care. So I skipped it. And that’s what people are doing under high-deductible plans — skipping needed care.

Here’s my major takeaway so far from this ongoing experiment: Simply asking people to pay out of pocket for their health care doesn’t create a health care marketplace. If we are going to be serious about creating one, we have to generate much more innovation in care delivery models, including much more leeway on the scope of practice regulations, such as letting nurses do a lot of the things that only doctors can do today.

We must be much more aggressive about price transparency and make quality data ubiquitous. The way we’re doing it now, even I as a doctor and a health policy expert can’t figure out when I or my family’s needs are worth the expense.

If we continue with high-deductible health plans the way they exist today, more and more people will experience what my family did — the stress of having to make medical decisions with little information and few choices. At best, we’ll have a health care system that might save a little money — but at the risk of harming the health of our citizens.

Ashish Jha, MD, is an internist at the VA Boston Healthcare System, a professor of health policy at the Harvard T.H. Chan School of Public Health, and director of the Harvard Global Health Institute.

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  • Glad to see that this doc experienced what us common folk go through everyday. I have a chronic medical condition. I could not get a straight answer on many questions when trying to sign up for an individual health insurance plan. . One of my biggest problems was trying to get a price quote on a biologic that I take weekly. All I could get was the ‘retail price’ of $4,000 per month!!!! We need affordable health care. No one should have to play ‘Russian roulette’ with guessing when to seek medical treatment. As a side note. There are now financial companies that will give high rate loans for insurance deductables!!! Nothing like finding a target market to profit from. I also feel that catastrophic health insurance should be mandatory for everyone. This would prevent uninsured people from causing big medical expenses that the rest of us are going to be eventually responsible for. I equate this to mandatory auto insurance that many states now require. Which came about as uninsured motorists being unable to pay for accident costs.

  • I am a health insurance agent. If you had max funded your HSA, the tax savings on your OOP costs for ER would have been substantial, and perhaps less than the OOP you would have paid, even if you’d had a GOLD plan. That said, we still need major reforms, and I’m a huge fan of Direct Pay Healthcare, http://www.freemarkethealthcareblog.com

    • Lynne,

      Spot on with your comments.

      Combining a direct pay care practice with an HSA, a HDHP for catastrophic coverage, pricing transparency showing total charge, ins payment and cash pricing along with product transparency can solve a lot of our current problems with healthcare, both in the public and private sector.

      Thanks for the link to the free market healthcare blog too!

  • I have a family of 5 on an employer HDP ($4000/yr deductible) I just budget for the $4K in my HSA (net $2800 after tax) and try to burn through it the first few months of the year with medicines and doctor visits. After the deductible is paid, HC is essential free, and since its a PPO plan I don’t even need to get referrals for specialists. Yes, HDPs create a disincentive to access HC. But if you can afford the $4000 in medical/Rx expenses a year, and accept the fact that that’s what it’s going to cost you every year, a family can get good HC services at a fixed cost.

  • I have used an HDHP for years, and it has worked well for my family, including some pricey broken bones or other emergencies.

    But the (only?) way it had worked is by my simultaneously putting the maximum allowed into a Healthcare Savings Account, which rolls over from year to year, and my employer contributions to the HSA ($600 solo,$900 plus one, $1200 family). I should also point out that our HDHP covers preventative care at 100% and covers certain meds (Eg, BP or cholesterol meds) at 100% as well. I’ve never hit the maximum, but I’ve now had my HSA long enough that I have more than enough in there to cover a bad year if/when one comes.

    I guess part of it is the luck of the draw not having a bad year early, but HDHP has been a very successful experiment for me.

    • Steve,

      Thanks for the good info on your experience with HDHP and HSA.

      I believe that a good DPC practice, with discounted labs, imaging and prescription meds along with reliable price transparency will go a long way to serving as viable replacements for Obamacare.

      In fact, I’ll go out on limb and suggest that this model could also be used for Medicaid and VA beneficiaries.

    • John and Steve – How will an HSA work for medicaid? You already have to live at the poverty line or in states that expanded it, darn near that. I had 2 cancers in 1 year with treatment running into the second. My (negotiated rate) for chemo, surgery, etc. ran about $178,000. How, exactly, would I have been able to save enough for that? Especially with that low of an income? And for that matter I don’t see it working well for medicare either. When people have a fixed income that is low there is no way you can save that amount of money. And, of course, I have about $19,000 a year more each year with check ups as one of those 2 cancers have no cure (but a 10-15 year life span typically). Then we will be back to huge expenses when I finally relapse again. One drug is like $35,000 an infusion. Savings plans do not work when you have something really, really expensive, or chronic and really expensive. Then they are a default “cure our poverty problem by preventing people access to health care because they can’t pay for it”. Most places will cut you off from care once you are a couple of months behind on the payments.

      A friend was in hospice. The cost was $100,000+. She lived in a state with no medicaid expansion (she had stage 4 cancer). The only way she could even die without being in agony (as she also did not make enough for a subsidy) was because her partner sold their joint business to pay the $100,000 demanded up front to even admit her to the facility. Had he not done that she would have died at home with no pain meds, no visiting nurses, no nothing. Do we really want to do that to people? A HSP also presumes you have enough money to begin with to save this kind of cash.

    • Annon1234,

      Sorry, didn’t really clarify the issue with Medicaid. I was really referring to the use of Direct Primary Care in Medicaid, not HSAs.

      DPC is a membership model that for around $40 per month would provide all primary care on a 24/7 basis and also allow for discounted meds, labs and imaging. Important aspect of this model is easy, timely and convenient access.

      Concept here is that catching diseases earlier can reduce downstream cost.

      For those with existing diseases, the catastrophic portion of Medicaid coverage would then kick in.

      Apologize for the lack of clarity.

  • Bravo, Ashish. Unfortunately, think tankers and journalists, like the NYT’s David Brooks, blithely write that information is available for shopping for care — and it is not. NY State has some of the best information available on individual cardiac surgeons. It’s at least 3 years old and difficult, if not impossible, for the lay public to find.

    BTW, I hope you were typing notes as you went along, Ashish, so had you died of a heart attack your wife could have published the final results of the experiment. 🙂

  • It is too bad more people, including Dr Jha do not know about Direct Primary Care as an option to help combat these issues. Imagine having your own primary care physician that knows you, that is accessible by all forms of visits (i.e. e-visits) with no visit fees, provides almost 80% savings on labs and imaging, and can help navigate and counsel on insurance and our screwed up system. Its called DPC and we are doing it here in MA all for an affordable monthly fee instead of filing transactions/insurance claims and staring at a computer screen for 8 minutes. We practice medicine for all. Its not going to change until doctors and patients demand better

    • I was in a similar situation – 6k deductible, out of pocket for everything else. It was $150 just to walk through the door of my former family doctor and antibiotics/cough meds/anti-inflammatory meds were $30-$40 at CVS.

      So I signed up with a Direct Primary Care practice near my house. $600/year for unlimited, same day office visits. If I go 4 times in a year (very likely), I’m breaking even compared to my last doctor. My medications are bought through that same office for $2-4 dollars per prescription now. Where I was paying $150 for labs monitoring my cholesterol, now I’m paying $10. Where I was paying $20 each time I needed my allergy shots (twice per month), now I pay $0. It really is the answer to high deductible plans since I don’t pay anything extra no matter how often I call my doctor or have an appointment.

  • The typical response from people with plenty of money and Cadillac insurance is: the free market will provide. As if medical emergencies are like buying smartphones or toothbrushes. Of course, with medical insurance worth 80k per year, they don’t have to worry about such things.

  • We have company compelled HSA plan ($24k/yr premiums and $8k/yr out of pocket before a penny of coverage. Daughter with epilepsy, husband with chronic health problems. Your article mirrors all my experience. Your view as a physician needs to be read by every legislator as they draft away at the next iteration of the ACA (which in general I supported as at least one step closer to something eventually good). The system itself is sick. My daughters anticonvulsants are over $60k/year–perhaps more than average income in USA today. The system is simply unsustainable. Thanks for super article.

  • I think your commentary confirms the old RAND study from the 1980’s on high deductibles – they will decrease utilization, but they decrease ‘good/effective’ utilization just as much as ‘bad/ineffective’utilization. And your story confirms it is true for the highly educated and motivated.

    • And those that won’t purchase insurance just go to the emergency room anytime they feel really sick and never pay any money towards that extremely high bill. This situation makes me furious and something needs to be implemented to stop this. I know people who work all week and get a good check, but have never paid taxes because they’re subcontractors and go to check cashing places to cash their checks. Then they go to the emergency room /hospital at least twice a year and never pay a penny. And receive foodstamps.

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