Health Care Costs Flattening. Why?

The New York Times has an article on the the slowdown and leveling off of health care cost, as a percentage of GDP. The economy is undoubtedly a factor, as people simply delay care. But consumer-directed plans might also be a factor.

Many experts — and the Medicare and Medicaid center itself — point to the explosion of high-deductible plans, in which consumers have lower premiums but pay more out of pocket, as one main factor. The share of employees enrolled in high-deductible plans surged to 13 percent in 2011 from 3 percent in 2006, according to Mercer Consulting.

That means thousands of consumers with an incentive to think twice about heading to the doctor. One study by the RAND Corporation found that health spending among people who shifted into a high-deductible plan dropped 14 percent — though the study also found that enrollees cut back on some care that tended to save money in the long run, like vaccinations.

The article notes that there also haven’t been any big “blockbuster” drugs released in the past few years.

I think that makes the case for high-deductible and/or consumer-directed care. Patients that are insulated from the true cost of care will consume more. Shift costs their way and they consumer less.

Across the silos of care the only constant is the patient. Policymakers are being on “patient-centeredness,” but that typically means some way of monitoring and tracking patients. I think these can be a useful tool to complement, but not replace, what ultimately has to be the patient’s responsibility.

Unfortunately, the ACA makes the high-deductible plans more expensive and subjects them to the same requirements to offer “free” preventive care and the like, thus defeating the purpose.

7 Responses

  1. I’ve been talking about this all year. The cost of insurance keeps going up and up and so employers/employees and individuals are being forced into high deductible plans. It may be lowering health care costs as the consumer is more discerning but it’s not saving the consumer any money if the benefit of a higher deductible isn’t a lower premium. I have ignored all sorts of health care advice this year, even two admissions into the hospital because I knew we couldn’t afford it. It all worked out okay, but I may have just been lucky. Nearly everyone we know is in the same or a worse boat.


  2. Here’s something on why HSA/high-deductible plans have high premiums.


  3. This may be of interest here.

    “A Critical Moment for The American Prospect

    April 30, 2012

    Dear readers and friends of the Prospect,

    Media stories have started to appear saying that The American Prospect is facing a major financial challenge and may be forced to fold. The stories are true. The next four weeks will determine whether the Prospect will be able to build on its 22-year legacy of influence or whether it must retrench or even close. Between now and May 31, the Prospect must raise $500,000 and have $700,000 of additional support pledged for the new fiscal year that starts in July. If we do not find those commitments, the Prospect as we’ve known it will cease.”


  4. “Employers save $422 billion if they dump health coverage. Will they?
    Posted by Sarah Kliff at 09:00 AM ET, 05/02/2012”

    I’m thinking yes.


  5. jnc…………………….I hope they do.


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