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June 14, 2007
HDHPs and Pregnancy
In more evidence that high-deductible health care plans are bad for women and poor for routine medical expenses, a new study shows those enrolled in traditional health care plans pay about $1,455 for a normal pregnancy, those in the government's high-deductible plan pay $3,000, and those in the average high-deductible plan offered by small businesses pay a whopping $7,000. And the gap tends to get wider as the pregnancy grows more complex, at least until you slam into the plan's out-of-pocket limit. Moreover, much routine prenatal care that individuals think is covered as preventive is, in fact, not covered at all. "If you are contemplating having a baby or having any kind of big health event, this is not the policy for you," said study co-author Karen Pollitz.
Got that? If you're actually expecting to use any health care, don't get a high-deductible plan. But tell me, what's the theory here? Do we want to discourage pre-natal care? Pregnancies? Is there a reason we believe paying more for the associated treatments will have a positive effect on health outcomes or bank accounts? Or are we just down for the cause of shifting risk and cost from business and society down, down, down to the individual?
Update: Link fixed.
June 14, 2007 in Consumer-Directed Health Care | Permalink
Comments
Do we want to discourage pregnancies? Why not? People are happier with only one child.
Posted by: Amber | Jun 14, 2007 8:55:51 AM
I had my kid nine years ago, and I could not believe the items that were not covered by my health care plan -- well-baby care in the delivery room, for instance. You know, when the doctor checked my infant to be certain she was all right, directly after she was born? Gave her the Vitamin K shot and put those drops in her eyes to be sure she wouldn't go blind in case I had some nasty disease? (Even though my doc had already checked to be sure I didn't?) Not covered. So the hospital charged me for every dime of it, to the tune of $3,400.00, and that was just one item that did not get covered on that little trip through hell.
Posted by: delagar | Jun 14, 2007 9:05:04 AM
Well, duh.
Insurance companies make their money by not covering stuff, the same way that credit-card companies make their money by imposing late-payment penalties.
Pregnancies and deliveries require a fair amount of care (more in a deliberately medicalized culture, but that's another issue) and are something that the majority of female policyholders go through. So of course they're a perfect occasion for shifting cost and risk. In some future world, families will have to save up for pregnancy the same way that they now attempt to save up for college.
Posted by: paul | Jun 14, 2007 10:26:08 AM
"Or are we just down for the cause of shifting risk and cost from business and society down, down, down to the individual?"
The individual pays for it no matter what. In terms of their employer, they pay for it through lower compensation and higher prices; in terms of society, they pay for it in taxes. Just because the costs are hidden doesn't mean you aren't paying for it. There is no free lunch.
Posted by: Jason | Jun 14, 2007 10:40:19 AM
Just curious, but where is the new study? I've been having a bit of a back-and-forth with my coworkers about if HDHPs really are a good thing or not and something showing no, really, it's not cheaper would be handy. Thanks!
Posted by: Tom in AZ | Jun 14, 2007 11:09:31 AM
The individual pays for it no matter what. In terms of their employer, they pay for it through lower compensation and higher prices; in terms of society, they pay for it in taxes. Just because the costs are hidden doesn't mean you aren't paying for it. There is no free lunch.
That misses the point, indeed it brings up the most common falsehood used to attack those who favor some sort of universal insurance. No one wants to have a "free lunch." Instead, what we should do is try to spread the risk among as many individuals as possible in order to reduce each individual's cost. What Ezra is asking is whether we as a society are comfortable with each person bearing all of their own risk, or would rather have, you know, insurance.
The problem is that we have an "insurance for me but not for thee" system right now, when we could have a system that would allow everyone to participate in the risk pool which would therefore reduce participation costs for everyone.
Posted by: Stephen | Jun 14, 2007 11:14:34 AM
The difference between having to save up for college and for having a baby is huge. Mostly because you have 18 years to save up for college; the optimum time health wise to have a baby is early in your career, while in your 20s or early 30s--when you're making the least amount of money. Which means, don't have them or marry rich if you want them, or wait till you're older and risk more birth defects.
But I call this the "having children is like buying an expensive pet" model. When in fact having and raising children (provided you raise them well) is an act that directly benefits the society at large by providing new productive members of said society. To act as though having kids is a luxury pursuit that only the rich should be able to access is short-sighted and elitist.
Posted by: emjaybee | Jun 14, 2007 12:09:01 PM
I think pregnancy is a bad example to rail against HDHPs. HDHPs work in the way that insurance works for everything else. They are there to protect from unexpected health care issues. Pregnancy is probably one of the more predictable health care costs so isn't something you would normally insure against. So HDHPs might only kick in when there is something abnormal about the pregnancy that would drive the cost above the out of pocket limit.
Posted by: CJB | Jun 14, 2007 12:28:19 PM
Based on the report Ezra linked to, the findings of the study are considerably more complicated and mixed than he describes. It suggests that for some more complicated pregnancies a federal high-deductible plan may have lower out-of-pocket costs than a traditional one. And of course out-of-pocket costs are not the only costs that need to be considered. The premium cost also needs to be factored into the calculation. It may be that high-deductible plans are the best choice only for certain groups, like young, healthy workers.
Posted by: JasonR | Jun 14, 2007 1:25:32 PM
Instead, what we should do is try to spread the risk among as many individuals as possible in order to reduce each individual's cost. What Ezra is asking is whether we as a society are comfortable with each person bearing all of their own risk, or would rather have, you know, insurance. The problem is that we have an "insurance for me but not for thee" system right now, when we could have a system that would allow everyone to participate in the risk pool which would therefore reduce participation costs for everyone.
Forcing people to buy health insurance they don't want or forcing young or healthy people to more heavily subsidze health care for older or sicker people obviously does not reduce the participation costs for everyone. Under any system of mandatory universal coverage, some people will pay more than they do now and others less.
Posted by: JasonR | Jun 14, 2007 1:33:01 PM
I wonder if the patients knew the price of the service before selecting the hospital to use. As mentioned yesterday on another post, I think you need price transparency for this to work and it doesn’t exist today. Wisewon mentioned the need for gov't regulation to achieve this and I tend to agree.
Posted by: DM | Jun 14, 2007 2:10:18 PM
I thought Republicans were the ones that wanted us to have large families???
Posted by: beckya57 | Jun 14, 2007 2:12:24 PM
Instead, what we should do is try to spread the risk among as many individuals as possible in order to reduce each individual's cost. What Ezra is asking is whether we as a society are comfortable with each person bearing all of their own risk, or would rather have, you know, insurance.
The problem is that we have an "insurance for me but not for thee" system right now, when we could have a system that would allow everyone to participate in the risk pool which would therefore reduce participation costs for everyone.
I agree with JasonR that expanding risk pools will not significantly lower costs. Here is an example of the way pooling works: You have X # people, and an unknown 10% will require money to pay for health care costs, and those costs will get divided up as premiums. Whether that X is 20,000 at an employer or 300 million across the country doesn't really change the percent of people who get sick; in fact, people at your job might be significantly healthier than the average American.
Posted by: Jason | Jun 14, 2007 2:26:59 PM
I'm down for the down down down.
Posted by: Senescent | Jun 14, 2007 3:26:22 PM
The people who are healthy and "don't need" insurance, and don't want to pay for something they don't need (now) are deceiving themselves. No one wants to pay for something they don't use. However, something as simple as a car crash could cause lingering problems. Diabetes could strike out of the blue (it's not JUST a fat thing), a brain tumor, an aneuyrism, a broken leg. As with the pregnancy example, it would take very little to get into debt very quickly.
Also, the young should think hard about what getting rid of Social Security and Medicare (or paring them back significantly) might do to their own financial prospects as their parents age and become sick or indigent. Are you willing to let your kin starve or die of a treatable disease?
Posted by: Steph | Jun 14, 2007 3:36:03 PM
I wonder if the patients knew the price of the service before selecting the hospital to use.
Most people select a hospital in one of two ways: either it is the hospital in their insurance plan, or it is the hospital closest to wherever the emergency requiring hospitalization happened to occur. I realize pregnancy is not an emergency in most cases. My point is that "choice" is largely a myth when it comes to hospital services. If I "choose" a hospital my insurance company doesn't like, I know it will cost me more out-of-pocket regardless of what the menu rate for services is. And my insurance company doesn't much care that I happened to fall and break my leg in the wrong part of town to use their chosen hospital.
HDHPs work in the way that insurance works for everything else. They are there to protect from unexpected health care issues.... So HDHPs might only kick in when there is something abnormal....
Except that any time you visit a doctor for almost anything these days -- including predictable situations like an infection requiring a run of antibiotics, and including scheduled situations like preventative care -- the first thing the receptionist wants is your insurance card. By the poster's standard, we should all pay for these kinds of visits out-of-pocket. Modern health insurance policies are not major medical emergency policies; they are specifically written to cover everything, and I believe from a public health standpoint we are better off that way (we all benefit from our neighbors getting a contagious infection cured rather than spreading it around).
The other obvious problem I see with this is that if the fees involved in having pregnancy go up hundreds then thousands of dollars with each problem "at least until you slam into the plan's out-of-pocket limit," then the same is true for the fees involved for having a heart attack or cancer or any of the other serious conditions that everyone agrees insurance should cover. It is worth noting that a true unexpected medical emergency may cause a person to miss some work (and the wages one earns from that work). There are a lot of people who can't write a check for $7000 (or more) and have it clear. If the point of health insurance is to make sure that getting medical care doesn't bankrupt us, these plans fail.
Posted by: ShortWoman | Jun 14, 2007 3:48:08 PM
Forcing people to buy health insurance they don't want or forcing young or healthy people to more heavily subsidze health care for older or sicker people obviously does not reduce the participation costs for everyone. Under any system of mandatory universal coverage, some people will pay more than they do now and others less.
They aren't going to get old or sick eventually?
Posted by: Don | Jun 14, 2007 3:50:19 PM
ShortWomen,
I agree the concept of choice in health care is limited (and in some cases, like a heart attack, improbable), but it’s not non-existent, especially for something like a pregnancy. My wife and I chose our hospital for our infertility and pregnancy and we have fairly normal coverage plans. We chose the infertility partially on price; we went to a research hospital that didn’t charge the insurer full fare for their procedures.
You use the “broken leg problem” as an example of why choice is a myth, but this is one of many examples. One that fits the “there is no choice in healthcare” belief well.
My point is that choosing based on price is difficult at best because there is no price transparency. Without which, high-deductible plans, or HSA, are likely to be ineffective. Have you ever asked a Doctor what something would cost? They have no idea.
In general, I think this is a pour measure of the potential effectiveness of such plans. After spending time on this board, and in thinking through this issue more, I’ve come to agree with many that “sweeping” change is required for any reform to be effective.
Posted by: DM | Jun 14, 2007 4:16:18 PM
ShortWoman,
I agree that most standard health insurance policies aren't major medical emergency policies, but HDHPs are. That is the entire point of an HDHP. And yes I do think that we should pay for more routine care out of pocket. A major reason that there isn't price transparency in medical care is because of all the third party payments, and the fact that the price changes depending on which third party is paying.
Posted by: CJB | Jun 14, 2007 4:59:38 PM
Ooh! I'm plural! =)
No, seriously. My position on these issues has evolved over the years. Which is a good thing because the system too has evolved. I used to think that if all of us were responsible for buying our own policies (instead of our pointy-haired boss or Catbert the evil HR Director), a variety of new insurance products would be demanded and prices would come down as Joe Average decided to spend "this much and no more." I figured this would at least eliminate one middleman between patient and provider. How could that not be a good thing?
Then I came to beleive that the problem would start to fix itself when doctors started putting up signs saying "We no longer take insurance. We will gladly give you all the paperwork to file your own claim." I thought this because it would bring cost transparency, eliminate the need for a billing department or outside billing service (who cost money) and show the consumer exactly how little the insurance companies paid.
So DM is right that the doctor doesn't know how much stuff costs. He might know what his billing service bills to insurance companies, and he might even know how much he gets reimbursed. At least for the most common CPT codes used in his office. There are thousands of them, hundreds of which apply to his office.
So yes, I totally agree that cost transparency is a huge issue. But absolutely none of the plans on the table -- HDHPs, HSAs, the various "reform" efforts of CA, MA, or the various candidates -- is going to give us transparency. Not even a posted "MD Menu" would do that as long as the insurance companies pay a lower rate, but it's a good start.
And I remember my first prenatal visit well. I was told it could not be on my day off during the week because they just don't do initial visits on Wednesdays period but I could have all my subsequent visits on Wednesdays. The doctor came in, looked at the photocopy of my insurance card and said "So you'll be delivering at XYZ Hospital!" (No, that ass did not deliver my baby, and he charged my $15 to fax my records to the guy that did).
Really, in principal I used to agree with the idea that we should pay for our own runny noses and only invoke insurance for The Big Stuff. Then I realized that when people don't have the money for basic healthcare, they have no choice but to let problems go away or get worse. Worse means both "more serious" and "more expensive." This costs society in the form of lost productivity, time/money stresses on emergency rooms, and suffering. And that is assuming that Joe Average even has the ability to correctly determine what is no big deal and what is serious. "That annoying cough" is sometimes tuberculosis or pertussis; "that darn upset stomach" is sometimes an abdominal problem; "my left arm sure hurts" is sometimes a heart attack.
Sorry if that's a little rambling. The issues are complicated, and none of the proposed answers look simple.
Posted by: ShortWoman | Jun 14, 2007 6:51:49 PM
The people who are healthy and "don't need" insurance, and don't want to pay for something they don't need (now) are deceiving themselves. No one wants to pay for something they don't use. However, something as simple as a car crash could cause lingering problems. Diabetes could strike out of the blue (it's not JUST a fat thing), a brain tumor, an aneuyrism, a broken leg.
Well, sure, anyone might get sick or have an accident at any point in their lives, but that doesn't mean that people who forgo health insurance are "deluding themselves" or otherwise acting irrationally. Depending on an individual's particular circumstances and priorities, his best option may be to buy only a "catastrophic" plan with low premiums and a high deductible, or even to go without health insurance entirely. Part of the debate about health care reform is a debate about the degree to which some people should be forced to subsidize health care for others, or forced to buy something for themselves that--rationally or otherwise--they do not want.
Posted by: JasonR | Jun 14, 2007 7:07:31 PM
Your response was so good that I had to attribute it to many people!
My apologies ShortWoman
Posted by: DM | Jun 14, 2007 7:30:57 PM
Shortwoman,
I agree that it is a complicated issue, and I don't think that what we have is ideal. My original comment was just to point out that of course doctor visits with HDHPs cost more that is the way they are designed. I don't understand why it took a study to figure that out. Of course the flip side is that they have cheaper premiums then full insurance and there is an associated HSA that can be used for tax advantaged savings to differ future costs so it may or may not be cheaper over all.
Posted by: CJB | Jun 14, 2007 11:22:46 PM
I think pregnancy is a bad example to rail against HDHPs. HDHPs work in the way that insurance works for everything else. They are there to protect from unexpected health care issues. Pregnancy is probably one of the more predictable health care costs so isn't something you would normally insure against. So HDHPs might only kick in when there is something abnormal about the pregnancy that would drive the cost above the out of pocket limit.
Actually, a coworker of mine who is pro-HDHP likes to recount the year he and his wife had their 1st child he paid the whole yearly deductible (and a bit more, somehow) out of pocket and it was somehow a great savings over a "regular" plan.
Posted by: Tom in AZ | Jun 15, 2007 1:40:10 AM
Hey, I caught this link through Google Alerts. Karen Pollitz, one of the main authors of this study, is a big-time health insurance affordability advocate and, really, a guru when it comes to knowing the ins and outs of what health plans cover.
She's published a great series of guides through her project at Georgetown University (which, full disclosure, I am the webmaster for). You can get them all, for free, at healthinsuranceinfo.net, so please check it out!
Posted by: Sara | Jun 15, 2007 1:53:42 PM
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