In 2006, Kliff reports, about one in 10 employees had a health insurance deductible over $1,000, but today about half do. Health economists consider that “good news,” long theorizing that “higher deductibles would force down health-care costs” because if patients had to pay more of the cost, they would shop for the best price, ultimately forcing expensive physicians to lower their price.
But a “massive new study” by economists that “studied a firm that, in 2013, shifted tens of thousands of workers into high-deductible insurance plans” has found this to not be the case, Kliff reports.
“The new paper shows that when faced with a higher deductible, patients did not price-shop for a better deal. Instead, both healthy and sick patients simply used way less health care,” Kliff writes.
“This raises a scary possibility: Perhaps higher deductibles don’t lead to smarter shoppers but rather, in the long run, sicker patients.”
For two years, the study looked at a company that shifted more than 75,000 workers and their dependents from a plan with no deductible to one with a $3,750 deductible. Along with the shift, employees received a $3,750 subsidy to a health savings account, which they could use for their health care cost, and they were also given online tools to look up prices for doctor visits, tests and other services.
Researchers found that while workers health spending dropped by 15 percent in a single year for all types of health services, they also found that the reason for it was not because of smarter shopping, but instead, they just went to the doctor less for both “potentially wasteful” diagnostic test and “potentially valuable care,” like preventive visits.
“I am a little bit surprised at just how poorly patients were able to do when looking at very similar products, like MRI scans, and with a shopping tool,” Jonathan Kolstad, an economist at University of California Berkeley and one of the study’s co-author, told Kliff. “Two years in, and there’s still no evidence they’re price shopping.”
This finding was also found true for the sickest workers, but once this population exceeded their deductible, use of medical services rebounded, Kliff writes.
Kolstad couldn’t definitively answer why sick patients forgo care even though they had $3,750 to spend in their health savings account, “but he thinks it might have a lot to do with the difficulty all of us have, as patients, guessing how much we’ll spend on health care in a certain year.”
“This is a difficult task for consumers to take on, and we now have very detailed data to show that’s the case,” he says. “When we’ve thought about the economics, we’ve generally thought this type of price change wouldn’t be problematic, that sicker people would just spend their deductible and get the care they need. This research suggests that’s not the case.”
“Americans aren’t used to shopping for health care, and maybe we don’t want to start,” Kliff writes.
One challenge is that most people don’t have access to enough information to comparison shop, like you can for a dishwasher on Amazon, she writes.
But still, this reality doesn’t hold true for the workers in this study because they were provided with cost comparison tools as well as financial incentives to choose the less expensive option. But it didn’t seem to matter, “Instead of looking for a lower-cost option, workers simply decided not to go to the doctor at all,” Kliff writes.
Kolstad told Kliff that the findings from this study “makes him skeptical of “demand-side” interventions in health care — those that rely on consumer demands for lower health prices to ultimately lead to less medical spending” and that “interventions that reduce demand could have the unintended consequence of actually raising long-term health-care costs.” But he also said that there needs to be further data and evaluation to determine the long-term effects.