High-deductible insurance plans become more common

Angela Wenger calls herself a self-reliant “German Midwesterner” who hates to complain. But the Wisconsin mom was dismayed when husband Dan’s employer switched to an insurance plan that increased the family’s medical expenses tenfold.

Two years ago, the company put white-collar workers on a “high-deductible” plan similar to those typically bought by small businesses and individuals. The Wengers’ out-of-pocket medical costs, mainly for treating daughter Emma’s juvenile arthritis, soared from a few hundred dollars a year to $7,000, she says.

The employer: General Electric, one of the largest companies in the world. High-deductible health plans, once deemed a last-resort, “catastrophic” alternative for those with few resources, have gone Fortune 500.

“A number of employers have looked at this over the last couple of years, and they’ve said, ‘No, this isn’t the year, no this isn’t the year,’ ” said Mark Olson, a senior actuary at benefits consultant Towers Watson. For many, he says, this is the year.

“I don’t really see it stopping at this point,” he said.

Seventy percent of large companies recently surveyed by Olson’s firm said they’ll offer high-deductible insurance by 2013 combined with accounts that let patients buy medical services with pretax dollars, often funded by the employer. Nearly a fifth of the firms responding to the survey, conducted by Towers and the National Business Group on Health, a nonprofit alliance of large companies, said high-deductible coverage would be the only option in 2013.

Half of all workers at employer-sponsored health plans — including those working for the government — could be on high-deductible insurance within a decade, according to a new paper from Rand Corp.

Supporters say the plans can contain health costs. Patients who have to pay for care up front will take better care of themselves and shop more carefully, the thinking goes, seeking lower-cost providers or asking whether tests are necessary. High-deductible plans, known as “consumer-driven” insurance, may partly account for a recent slowing in the upward spiral of medical spending, analysts say, although reluctance to buy health services in a poor economy is also a factor.

Critics say high-deductible insurance is just a way for corporations to shift costs onto workers, especially those dealing with chronic illness such as diabetes and arthritis. Further, consumers aren’t prepared to shop for treatment because reliable information on price and quality is difficult, if not impossible, to find. High deductibles, they say, boost chances that patients will delay seeking care until ailments become acute. Still, high-deductible plans, long promoted by Republicans as a way to bring market forces to medicine, are here to stay no matter how the Supreme Court rules on the 2010 health-care law, experts say.

“There’s no question that high deductibles are spreading,” said Jonathan Oberlander, a health policy professor at the University of North Carolina. “That’s a pretty significant trend, and I don’t expect it’s going to slow up anytime soon. Employers like it because they’re providing less coverage. If they can relabel it as consumer-driven then it even sounds good.”