Insurers to Employers: Hands Off Those High Deductibles

(MoneyWatch)  Free-market medicine in the form of "consumer-directed healthcare" -- typically involving health plans with high deductibles -- has been tough for many people to swallow. But insurers aren't happy with employers that have tried to limit the financial risks for their employers.

The basic idea of high-deductible plans, which usually force people to pay several thousand dollars before coverage kicks in, is that people will pay more attention to cost and quality of healthcare when they're paying the bills. These plans, however, haven't exactly proven popular with workers, despite the lower monthly premiums, for exactly the reason you'd think -- they saddle individuals with more of their own healthcare costs, and encourage many people to avoid doctors even when they shouldn't.

So some businesses have tried to take the edge off by offering employees help with high deductible costs, sometimes via "wrap-around" self-insurance policies. Insurance brokers, who understand how much people dislike high-deductible plans, have played a big role in pushing these hybrid policies.

As far as insurers are concerned, however, the financial risk to the insured is the whole point, since it discourages "overuse" of medical services. In California over the past several month, health plans such as Blue Shield, Health Net, Kaiser Permanente and Anthem Blue Cross (a unit of WellPoint) have all threatened brokers who combine high-deductible plans with other policies with termination of sales contracts and commissions, the Sacramento Business Journal reports.

Insurers who sell high-deductible plans directly to employers have also begun asking those companies to sign statements in which they promise not to combine them with deductible assistance or similar policies. The catch: Failing to sign -- or violating that pledge -- could cost a business its health coverage.

As with so many things in healthcare, the business logic is sound: Insurers stand to lose money if high deductibles aren't scaring their customers away from the doctor. (Actually, their interest lies in making sure as few people as possible exceed their deductible, which is more likely if they're not paying for every appointment out of their own pocket.)

But it's also out of whack with what insurers are technically supposed to be doing -- that is, helping keep their members healthy -- since the evidence is pretty strong that high deductibles mostly cause people to "self-ration" care that might help keep them healthy in the long run.

Update: Vijay Goel of Consumer-focused Health Care recently noted a related oddity, in which Blue Cross Blue Shield of Minnesota appears to be hiking premiums for high-deductible plans every bit as quickly as for its other policies, despite the fact that costs are rising much more slowly in the high-deductible plans.

(Hat tip: Fierce Healthcare)

Image via Flickr user Otto Pyykkö, CC 2.0