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Commentary By Yevgeniy Feyman

High Deductibles: We're Forgetting About the Doc

Health, Health, Economics Affordable Care Act, Employment

An evergreen story recently made its way to the pages of the New York Times. A November 14th piece by Robert Pear titled “Many Say High Deductibles Make Their Health Law Insurance All but Useless,” features people that purchased ACA coverage with deductibles of over $3,000, and the budgeting difficulties that come along with that. Wendy Kaplan of Evanston, IL for instance, pays $1,200 a month for her family of four’s premiums – all with an annual deductible of $12,700.

“In principle, high-deductible plans shouldn’t be problematic. Practically speaking, however, there are some real barriers to making the most of them.”

Without knowing the family’s income it’s hard to say how affordable this is, but it certainly isn’t cheap. (Though this is quite a bit less expensive than the typical family premium for employer-sponsored coverage (over $17,000 a year), only 19 percent of workers have a family deductible of over $6,000.)

Stories about high deductible plans on the ACA’s exchanges are nothing new. And ironically, the uptake of high-deductible plans serves to advance conservative health care principles through the ACA’s exchanges. In principle, high-deductible plans shouldn’t be problematic. Practically speaking, however, there are some real barriers to making the most of them.

For starters, consumers aren’t great at shopping around for health care and health insurance. Austin Frakt’s recent review of the literature on Medicare drug plan and Medicare Advantage plan selections indicates that in the Medicare market, enrollees have had trouble picking the most optimal plans for themselves. Equally concerning is a recent study indicating that after two years of enrollment in a high-deductible plan, all of the reduction in health care spending came from a reduction in utilization – not from patients seeking out lower-cost providers as one might hope.

Some of these concerns could be temporary and are addressable. Among the studies that Frakt cites, include those finding that with assistance, Medicare beneficiaries tend to pick better plans. Another study in Frakt’s review finds that enrollees reduced overspending over time. The implication is that over time, patients should learn how to shop around for lower-cost insurance, and possibly lower-cost care.

The key here is the importance of decision-making tools that open up price and quality information to patients. And there’s some evidence that this actually works out pretty well. In one study using patients chose safer hospitals 97 percent of the time when presented with Leapfrog Safety Scores. Similarly, when CalPERS implemented reference-pricing for knee and hip replacements, patients flocked to less-expensive hospitals in droves.

To reiterate, high-deductibles (for patients without chronic illnesses) are problematic insofar as markets for health care services are dysfunctional. Fixing those markets should be a priority.

“Much of the focus on price and quality transparency looks to insurers and other tools that patients can use before ever interacting with the health care system.”

An important element here that’s often ignored, however, is the physician or hospital. Much of the focus on price and quality transparency looks to insurers and other tools that patients can use before ever interacting with the health care system. This is very important. A patient looking to schedule a surgery, looking for a new physician, or trying to fill a prescription should have access to cost and quality information that allows for informed decisions.

But this is just one touch point of the health care system. All sorts of unexpected surprises can crop up. Let’s say a patient comes in for an annual physical. Typically, this exam would be covered without any cost-sharing, as required by the ACA. But if, during the exam, the physician discovers something potentially worrisome that calls for tests not covered as a “physical,” the patient could be on the hook for added spending. In the age of co-insurance, this may not be as simple as a physician visit copay.

This is just one example. Not all patients will always use transparency tools to find the most cost-efficient physician (just like not everyone does their very best job comparison shopping for cars). Some may simply not be aware of them, or might not have any available. Many patients won’t know where in their annual deductible they are at a given time.

A patient going in for outpatient surgery – let’s say covered under co-insurance and subject to an annual deductible – should be able to find out how much he’ll have to pay out-of-pocket for the surgery. The problem is that most physicians simply don’t have that information available. Your surgeon is unlikely to know where you are in your deductible, and would be hard-pressed to tell you how much you’ll be on the hook for after insurance.

The point is simple – we need completely interoperable systems. Not just cost estimators, physician finders, and clinical data sharing. A consumer-driven health care system that relies on informed decision-making by patients must also be fully integrated. That means not only do test results have to be available from one physician to the next, but insurers’ systems that track patient deductibles and copays also have to be available from one physician to the next.

This will be decidedly easier for hospitals that have an insurance company (Northwell Health, formerly Northshore LIJ in New York, even has an insurer participating on the exchange), since they necessarily have fully-integrated systems. For others, this will be a challenge.

A number of states are already implementing All Payer Claims Databases, which will collect payments paid by insurers to providers across the state. Other states – like New York – are even setting up portals for sharing clinical information between providers.

But the next step seems to be up to insurers, physicians, and hospitals. As we hurdle further towards a consumer-driven health care system, opening up the systems that track a patient’s out-of-pocket requirements is a necessity that can’t be ignored.

This piece originally appeared in Forbes.com.

This piece originally appeared in Forbes.com