Much hyped health plans lead some to cut care: study

By Kim Dixon

CHICAGO (Reuters) - People with high-deductible health plans designed to raise awareness of costs and reduce unnecessary care are causing consumers to scrimp on health care, according to a study released on Thursday.

The plans charge higher deductibles in exchange for lower premiums and cheaper preventive services to cut overall health care costs. They also offer a tax-deferred savings account that can be used for care.

But they have failed to attract the uninsured more than traditional health care plans, the study found, and people who were in the plans were more likely to cut back on basic care like prescriptions or doctor visits.

The survey of 3,158 adults was conducted by the Employee Benefits Research Institute, a private nonprofit group funded by large employers, and the nonprofit research group Commonwealth Fund.

"Employers are interested in the long-term prospects of (the plans for) cost control, but they await evidence of actual effects on costs," said Karen Davis, president of Commonwealth Fund. "They are not attracting large numbers of adults without insurance."

Critics say the plans attract the healthiest individuals and leave sicker people in the wider insurance pool, which will raise overall health care costs. They also say the plans, which typically have a deductible of about $1000, are too expensive for the poor and uninsured.

The study showed that people in the plans were less likely to suffer from chronic illnesses like diabetes that generate higher health care expenses.

Major U.S. health insurers including UnitedHealth Group Inc. and Aetna Inc. are promoting the plans as a strategy for employers to control double-digit increases in the cost of health care.

About 8 percent of the privately insured population was covered by a high-deductible plan in 2006, the same as in 2005. One percent of those enrolled in the plans chose a tax-deferred savings account meant to be spent on prevention and health maintenance such as mammograms and diabetes testing.

The national study was conducted in September and has a margin of error of plus or minus 3 percentage points.

Karen Atwood, senior vice president at Blue Cross Blue Shield of Illinois, said it took time for the public to warm to health maintenance organizations and preferred provider plans, the most popular types of insurance today.

"We are in the early stages of determining how consumerism can be part of the solution," she said. "Nobody likes change."

But skeptics say the plans are too expensive for the uninsured and the poor. Nearly half of those with did not sign up for the tax-deferred savings account for preventive care said they could not afford it.

The plans have been promoted as a way of tackling the rising number of uninsured in the United States, now at 46.6 million people, or about 16 percent of the population.

But the study found that the uninsured were more likely to sign up for HMOs (health maintenance organizations) or PPOs (preferred provider organizations).

Hospitals say the plans are increasing the number of unpaid medical bills they have, or "bad debt."

"People are not prepared to pay their deductible," said Jim Bentley, director of strategy at the American Hospital Association. "This is weakening hospital finances."

The study found that because of steeper out-of-pocket costs, consumers are less satisfied with the plans compared to those on a standard health care plan.