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More opt for low-cost coverage

Consumers with high deductibles cut back on care

By Kay Lazar
Globe Staff / March 25, 2011

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The number of Massachusetts residents enrolled in high-deductible health insurance plans nearly doubled last year as employers and consumers looked for lower-cost options amid soaring medical prices.

A report out today says people in these plans indeed spent significantly less on their medical care, compared with families with more traditional coverage, but they also cut back on preventive health care, such as cancer screenings and childhood vaccinations. Surprisingly, they did so even though most of the plans allowed people to get preventive care without paying an up-front deductible.

“These plans are reducing costs substantially, but it’s not clear that they can maintain quality, and that’s the real concern,’’ said Amelia Haviland, coauthor of the RAND Corporation study.

Haviland said the high deductible may have deterred patients from seeking care for medical problems, and it is typically at this type of visit that a physician would prompt them to get a needed screening or vaccination.

The researchers said their findings are a cautionary tale for the nation’s health care overhaul, which aimed to make preventive health care more accessible by requiring — starting last fall — that deductibles be waived for immunizations, cancer and diabetes screening tests, and similar services.

“Our findings suggest there is a much greater need for communication with individuals about their benefits,’’ Haviland said, noting that eliminating out-of-pocket payments for preventive care “does not seem to be enough.’’

High-deductible plans typically require consumers to pay $1,000 or more per person out of pocket for health care before their coverage kicks in, in exchange for lower monthly premiums. The intent is to make consumers more cost-conscious, but critics say such plans may also deter people from getting needed care.

Researchers studied 36,000 families enrolled in high-deductible plans, and among those with a deductible of at least $1,000 per person, health spending was 14 percent less in the first year than for families with lower deductibles.

But the percentage of young children receiving vaccinations dropped as much as 8.5 percent in the first year their families were covered by the high-deductible plans, while vaccination rates for children in standard plans rose slightly. And use of cancer screenings was two to three percentage points lower among families with high deductibles.

Haviland said some patients simply may not have understood the material insurance companies sent them describing their coverage benefits.

A 2009 study by Kaiser Permanente researchers who interviewed consumers with high-deductible plans found that they had limited knowledge about their deductibles.

Eric Linzer, a spokesman for the Massachusetts Association of Health Plans, a trade group, said insurers typically provide a straightforward explanation to consumers about their benefits and charges, including deductibles, before they purchase a plan and also after enrollment.

He said high deductible plans have not been popular in Massachusetts in the past because employers typically offered more generous benefits. But the cost pressures, he said, are changing that equation.

“The interest in these products has grown in large part because employers and consumers are trying to find more affordable options and one of the ways to do it is to have higher cost-sharing on the part of the individual,’’ Linzer said.

Massachusetts still has one of the lowest percentages of residents enrolled in these plans in the nation, with only about 2 percent of those with health insurance selecting a high-deductible one in 2010, according to America’s Health Insurance Plans, a national trade association. But the total enrollment in these plans increased from about 50,000 in 2009 to about 93,000 individuals last year.

Nationwide, roughly 10 million Americans were enrolled in high deductible health plans in 2010, a 25 percent increase over the previous year and a 10-fold jump since 2005.

The RAND researchers found that monthly costs for most types of health care, including prescription medications, grew for families in high deductible plans as well as for those in more traditional ones, but the increases were substantially lower for the families with the high deductibles.

The study, published in the American Journal of Managed Care, tracked claims data for employees of 53 large US companies during 2004 and 2005. Haviland said researchers have continued to track the trends since then, and observed similar findings. RAND is a nonprofit public policy research organization based in California.

Consumers who were more likely to select these high-deductible plans were younger and healthier and lived in areas with higher percentages of college graduates, but the researchers statistically adjusted the data to compensate for these differences.

Massachusetts’ 2006 health care law, which was a blueprint for the national legislation, required nearly everyone to have health insurance or pay a tax penalty.

Roughly 98 percent of Massachusetts residents now have coverage, according to state figures.

Lawmakers are now working on the next step, which aims to reduce costs, and Amy Whitcomb Slemmer, executive director of Health Care for All, a large Massachusetts consumer group, said ensuring that consumers have information that is “decipherable and in plain language’’ will be a critical piece of that.

She said confusion about benefits in high-deductible plans may lead to higher future costs if patients wait to see a doctor until their condition worsens.

“We think it’s critically important for people to understand what their benefits are and how to use them,’’ she said. “Simply having everyone have an insurance card doesn’t mean they have better care.’’

Kay Lazar can be reached at klazar@globe.com.