Elizabeth Fowler can be called an educated health care consumer: An expert on health care policy, she used to be the chief health and entitlements counsel for the Senate Finance Committee. But she was pushed to the limits of her knowledge and patience keeping track of her so-called consumer-directed health plan -- a type of insurance designed to protect consumers from catastrophic medical costs while prompting them to shop wisely for routine care.

The policy Fowler bought from Definity Health through the Federal Employees Health Benefits Program in 2003 featured a low premium (her share was $1,000 a year) and a relatively high annual deductible of $600. Fowler had no major problems that year, but she had few health care needs outside of some dental work.

Last year, however, her out-of-pocket expenses doubled. Along with her premium, she paid nearly $1,500 for allergy shots and physical therapy for a bum knee. Fowler had been aware that she might pay more under a high-deductible policy if her health or luck turned bad, but she never realized just how much. "You need to read the fine print," she says.

"I appreciate the concept of making consumers more aware about health care costs," says Fowler, a District resident who now works in the private sector. But "I didn't understand the full consequences" of choosing a high-deductible policy. Fowler's health plan left her confused and with a pile of paperwork -- including late-payment notices from doctors -- and big costs, some of which she considered improper. She says her experience was "awful," adding, "I don't consider it consumer-directed and it's certainly not consumer-friendly."

The concept of consumer-directed coverage "involves empowerment, it involves patients taking greater responsibility and being more informed and participating in their health care decision-making," says Devon Herrick, a senior fellow with the National Center for Policy Analysis, a Dallas-based think tank.

These plans also expose patients to more costs. Faced with paying in full for their treatment until their deductible is met, consumers have an incentive to be careful about their health care spending.

Until recently, such policies were largely confined to the fickle individual insurance market, where people with few options trade lower premiums for less coverage, and risk paying out big bucks for medical care should they become ill or injured. Now, as millions of workers enter open-enrollment season to choose next year's health insurance benefits, many will consider high-deductible policies for the first time. According to the Kaiser Family Foundation, only 5 percent of large employers offered such policies in 2003; this year, 20 percent did, and more will do so next year.

For workers who've seen premiums jump sharply for HMOs, PPOs and point-of-service offerings, the lure of lower premiums and fewer restrictions on provider selection can be tantalizing. But those opting for such insurance "should expect to have less health coverage," says Karen Pollitz, project director at Georgetown University's Health Policy Institute.

Today's consumer-driven health plans typically require deductibles of $1,000 to $2,000 for individual coverage and $2,000 to $4,000 for family coverage, after premiums, before the insurance policy kicks in. Many policies also require coinsurance payments after deductibles are met, and patients seeking care out of network face steep charges.

To help policyholders become savvy shoppers, insurers offer rudimentary decision-support tools, from online calculators to comparative information about hospital pricing. Increasingly, employers are pairing coverage with tax-advantaged savings accounts to help workers put aside the money they may need to meet their out-of-pocket expenses.

"It's a friendlier way to help members offset the cost shift that's going on anyway," notes Cindy Otley, CareFirst BlueCross BlueShield's project director for strategic marketing and product development.

Experts say high-deductible plans are not well-suited for chronically ill patients requiring regular care or for those unable to suddenly pay out hundreds or thousands of dollars in hospital, doctor or drug bills.

"In some ways, it is roulette," notes Karen Davis, a health care economist who is president of the Commonwealth Fund, a nonprofit focused on health issues. "If you're healthy and don't get sick, you'll pay less" than for comprehensive coverage, she says, but if you get sick, you could incur far greater costs.

This roulette aspect could be the underlying reason why those who buy high-deductible health insurance "are less likely to get care, including care they should be getting," notes Davis. While research shows these policyholders often opt for generic drugs and are more savvy health care shoppers, they also are more likely to put off needed care -- not filling prescriptions and skipping medical tests and treatments -- than are people in plans with lower deductibles. While avoiding a visit to the doctor for a cold might be wise and thrifty, waiting to see if a disfigured mole worsens is not.

Supporters and critics of high-deductible plans agree that these products will become more common. These policies "will be a good thing, but it will take some time before people see the benefits of it," says Thomas Hampton, the District's acting insurance commissioner. "Too often consumers lack the information to make informed decisions."

Anyone considering a high-deductible policy might want to consider the following advice from experts and other consumers.

Understand Your Costs

High-deductible plans force people to pay more out-of-pocket when they get sick, compared with lower-deductible plans. The three-member Thomas family of Alexandria has paid roughly $10,000 so far this year for medical care and premiums on a new policy that has a family deductible of $7,500. Rebecca Thomas got a virus this summer that affected her vision, and treatment for her eye problem isn't covered. Asthma treatment for her and her son has not been covered this year, as they were preexisting conditions. The asthma drug her son needs costs about $1,900 annually.

"It can all nickel-and-dime you to death," Thomas says, adding that both she and her son have halved their asthma prescription regimen to make the drugs last longer. The family has paid out much more than they expected, but the policy will cover their preexisting conditions next year, so they are sticking with it, hoping they won't spend as much in 2006. Still, the policy's drug coverage is limited, with a $2,000 maximum benefit after a $500 per-person deductible for drugs. They'll still have to pay a $25 co-payment per drug and half the drug's costs.

"You have to weigh which is worse, better -- lower premiums, higher out-of-pocket payments or higher premiums, lower out-of-pocket," says Thomas.

Unlike managed care plans, high-deductible plans also require policyholders to pay coinsurance, often 10 percent to 20 percent of the cost of services, after the deductible is met.

Beware Cut-Rate Plans

Pollitz cautions against low-premium policies that feature $1,000 deductibles and little or no drug coverage. They are riddled with out-of-pocket cost obligations. "Leaving the back door open is what will bankrupt you" if you get sick, she warns. Instead, consider a policy with a very high deductible, say $5,000, but one that clearly picks up 100 percent of all costs after the deductible is met. Just make sure you can afford the $5,000, she advises.

"This is a gift that keeps on giving, as you'll pay that deductible every year," Pollitz says of high-deductible plans. "You need to pay attention. Read through what counts and what doesn't count toward the deductible."

Some plans combine you're-on-your-own responsibilities with we're-here-for-you support. For example, CareFirst BlueCross BlueShield, the region's largest insurer, has designed high-deductible plans with preventive benefits -- from well-child and annual adult exams to cancer screenings -- that require no out-of-pocket payments. "Preventive services are very important," Otley says.

And CareFirst has built its high-deductible plans in conjunction with its PPO offerings. In addition to giving members access to the widest provider network around, this allows policyholders paying out-of-pocket for an exam or a procedure to take advantage of the discounted rates the insurer negotiates with providers. The broad network also narrows the chances of having to see unaffiliated providers, whose rates are typically much higher.

"Understand the consequence of going out of network, not only on the cost of service, but on the deductible, too," says Fowler, who paid 40 percent of her physical therapist's bill, much more than if she had chosen an in-network therapist. Even when she stayed in the Definity network for her allergy shots, she was charged an out-of-network rate initially. Fowler straightened that out with the insurer and provider. What's more, because her dental costs in 2003 exceeded the $400 dental benefit, Fowler's deductible in 2004 went up nearly $100. "I was surprised it was a factor."

Ken Perlberg, health plan marketing manager for the American Postal Workers Union, which offers the plan that Fowler used, says it generates few complaints from federal workers. The plan, which is not raising premiums next year, has eliminated the "confusing" provision that increases certain members' deductibles, he says.

Don't Beg for Mercy

Not only do high-deductible plans present challenges for workers more familiar with managed care, but "providers aren't used to this, either," says Otley. "It becomes much more complicated from the patient's and the doctor's perspective," Pollitz says, so it may be wise to consult your doctors if you're considering a high-deductible plan. Traditionally, doctors get all or most of their fees from insurers, with nominal co-payments upfront from patients. But under high-deductible plans, it's often not clear at the time of an office visit how much the patient will pay for that encounter.

And that can wreak havoc on doctors' accounts receivable. Typical insurance contracts prevent or discourage providers from billing patients first. Instead, they must submit a claim to the insurer, which determines how much reimbursement the doctor should receive and whether that total is the patient's out-of-pocket obligation. A minor headache in low-deductible situations becomes a major concern when deductibles are in the thousands of dollars: Providers see increases in their administrative expenses, the time it takes to get paid and frustration levels. In turn, patients may get collection notices for unpaid bills from their doctors. Fowler, for example, received several late-payment notices.

"It's the Wizard of Oz behind the curtain," says Jennifer Miller of the Medical Group Management Association, which represents large physician practices. "This is the first time the patient is exposed to what's going on in the billing process." And by many accounts, it's not pretty.

What's more, doctors are limited in their ability to give discounts to people who are paying their own way. Patients with consumer-driven policies sometimes expect they can negotiate prices, Miller says, but they can't, because this would breach the contracts doctors sign to join insurer networks.

Expect Paperwork Hassles

With a high-deductible policy, expect to get provider's bills, explanation-of-benefit forms and a blizzard of other paperwork, all of which you'll be responsible for directly.

And if you open a tax-advantaged savings account -- these are often offered with high-deductible policies -- be sure to save your receipts and cultivate your record-keeping skills. Depending on the account, you may have employer contributions mingling with your own contributions. "The bookkeeping can be pretty complicated throughout the claims payment process," Pollitz says.

By comparison, managed care plan enrollees usually don't see provider bills, and only pay co-payments and premiums, typically deducted straight from their paychecks. "You are on your own [with] high-deductible health plans," notes Pollitz.


E-mail: grahamt@washpost.com