qotd: Paying the deductible year after year

Medical Care Research and Review
June 2015
New Evidence on the Persistence of Health Spending
By Richard A. Hirth, Teresa B. Gibson, Helen G. Levy, Jeffrey A. Smith,
Sebastian Calónico, Anup Das

Abstract

Surprisingly little is known about long-term spending patterns in the
under-65 population. Such information could inform efforts to improve
coverage and control costs. Using the MarketScan claims database, we
characterize the persistence of health care spending in the privately
insured, under-65 population. Over a 6-year period, 69.8% of enrollees
never had annual spending in the top 10% of the distribution and the
bottom 50% of spenders accounted for less than 10% of spending. Those in
the top 10% in 2003 were almost as likely (34.4%) to be in the top 10%
five years later as one year later (43.4%). Many comorbid conditions
retained much of their predictive power even 5 years later. The
persistence at both ends of the spending distribution indicates the
potential for adverse selection and cream skimming and supports the use
of disease management, particularly for those with the conditions that
remained strong predictors of high spending throughout the follow-up period.

http://mcr.sagepub.com/content/72/3/277.abstract?etoc

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AcademyHealth Blog
July 9, 2015
High health spending is more persistent than you might think
By Austin B. Frakt, PhD

You get hit with a major health condition and your health care needs and
spending spikes. A lot. Welcome to the 10% club, whose members spend at
least $30,000 on health care in a year. Yeah, most of it is covered by
insurance, but selecting the plan with the $2,500 deductible you blew
through (not to mention the thousands more in copayments) looks like a
bad idea in hindsight.

It could be worse. It could happen to you next year, and the year after,
and the year after that, and so on. Will it?

This is a question of health spending persistence. And, as surprising as
it may sound, we don't know a lot about it, at least for the working age
population.

Richard Hirth and colleagues recently were able to take an analysis of
persistence for workers and their dependents a lot further, and using
recent data. They looked at six years of health spending data
(2003-2008) for a sample of millions of individuals with coverage from
over 100 medium and large employers. One of their findings is that at
least one in every three high spenders in a given year will be a high
spender in any of the next five years. (Here, high spender is defined as
in the top 10% of the annual spending distribution.) I don't know what
your prior is, but this is a much higher level of persistence than I
expected.

If you're unlucky enough to get hit with a very costly health condition,
consider yourself relatively lucky if it's not highly persistent. The
new work by Hirth and colleagues shows that such persistence is
surprisingly common and remarkably long. This is how sickness saps
savings, for those with coverage that comes with high enough deductibles
and copayments. Today, we call that "insurance." Is it?

http://blog.academyhealth.org/high-health-spending-is-more-persistent-than-you-might-think/

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Comment by Don McCanne

We already know that high deductibles and other cost sharing can result
in financial hardships for individuals who develop major medical
problems. But how many face the additional burden of having to pay the
high deductibles in the years following? This study provides an answer.

Of health plan members or their family members who were in the top 10
percent of spending in a given year, 43 percent were still in the top 10
percent the following year, and an astonishing 34 percent were still in
the top 10 percent five years later.

These are workers and their family members - largely middle-income
Americans - who had employer-sponsored health plans. These are the plans
that the Affordable Care Act was designed to protect. Now that employers
are are switching to "consumer-directed" high-deductible health plans,
these plans are devastating to the personal finances of these families
that must meet the high-deductibles and other cost sharing year after
year. Forget retirement funds, college funds, vacations, and the like
and plan to spend time with bill collectors and bankruptcy referees.

When you think about the financial protection that you should be
receiving from your health plan, it is deplorable that one-third of
those who have the greatest needs for health care are exposed to years
of recurrent, persisting financial burdens simply because of the
fundamentally flawed design of our private health plans. Austin Frakt is
right to question if this is even "insurance."

The authors of the study suggest that the solution is found in disease
management. What? Disease management only tweaks spending on major
medical problems and would have no impact on the high-deductibles that
patients would have to pay before their coverage kicks in. Let's get real.

A single payer system with first dollar coverage would eliminate the
burden of high medical bills that these unfortunate individuals face
under our current, dysfunctional health care financing system. Yes, they
need qualified health professionals to help them manage their diseases,
but that's a function of the health care delivery system. Intrusive,
private, third-party money managers need to get out of the way.