Path to a Smarter High-Deductible Plan Includes Flexibility, Disruptive Innovation

Panelists brought diverse viewpoints to a discussion on creating a smarter high-deductible health plan (HDHP) at a session during the University of Michigan Center for Value-Based Insurance Design (V-BID)’s annual V-BID Summit on March 14, 2018, at the Big House in Ann Arbor, Michigan.

Moderator Cliff Goodman, PhD, senior vice president at The Lewin Group, kicked off the session by addressing the audience. “I don’t have to tell you how or why economic stressors on patients and clinicians are making this notion of high-deductible health plans a real issue,” he began. Acknowledging that HDHPs have both positive qualities and unresolved issues, he asked the panelists to each provide their viewpoint on the current status and future of these plans.

Paul Fronstin, PhD, director of the Health Research and Education Program at the Employee Benefit Research Institute, explained that he has been studying benefits and plan design for almost 20 years. Deductibles have risen by 300% since 2006, as employers have looked to them as a single lever to keep their costs down, as opposed to redesigning entire formularies or other broad plan changes.

Michelle Drozd, MS, deputy vice president in the Policy and Research department at Pharmaceutical Research and Manufacturers of American (PhrMA), said that patient affordability is a huge priority for the pharmaceutical industry and cited the “concerning trend” of cost shifting to beneficiaries, including HDHPs, as a barrier to long-term management of chronic disease.

Adam Beck, JD, vice president for employer health policy and initiatives at America’s Health Insurance Plans, agreed that the rise in deductibles was due to increasing health costs, but argued that the concept of deductibles has shifted in a world with guaranteed issue and pre-existing condition protections. Now, “the product that our plans are selling is fundamentally no longer insurance,” he said, “it’s health.” Still, he anticipated that HDHPs would continue to grow in popularity as employers look to continue offering benefits.

When Goodman asked for solutions for a smarter HDHP, the panelists offered up an array of ideas. Beck argued for increased tax credits to help reduce premiums and for changes in the Internal Revenue Code to allow flexibility in deductibles for first-dollar coverage of medications and services to manage certain chronic diseases. Fronstin also alluded to the need for more flexibility, but he said that it could come in the form of a Health Reimbursement Arrangement that can carve anything out of the deductible—or a plan that has no deductible at all.

“Maybe the smarter deductible is no deductible,” he suggested.

Drozd mentioned first-dollar coverage in her proposed solutions and said that employers could look into narrow network plans or reducing overuse of low-value care instead of pushing HDHPs. Considering that the current high-deductible trend won’t disappear soon, however, she praised the idea of deductible smoothing, which would allow beneficiaries to spread their deductible costs over the entire year.

In response to an audience question about one plan’s experiment with reference pricing, Fronstin said that he would like to see more examples of plans “strategically using cost sharing as a way to engage patients,” which could involve coinsurance instead of deductibles. Patients “don’t need a high deductible to do the right thing,” he argued.

Returning to the idea of payers focusing on wellness, Beck advised that more plans should invest in addressing the social determinants of health that impact well-being. He cited several models that have provided a road map for such initiatives and said that although scaling them up to larger populations is a challenge, he has seen growing buy-in from insurers who realize that they will only succeed financially if their enrollees improve their overall health.

Another audience member asked the panel for some immediate ideas to “stop the bleeding” experienced by patients with high deductibles. Drozd advocated for the Pharmaceutical Information Exchange Act under consideration by Congress, based on the “broad consensus that there should be more communication between manufacturers and payers” about new medicines and indications coming to market, thus giving payers the predictability needed to cover these new drugs and, ideally, improving patient access.

As the session drew to a close, Goodman asked the panelists what they would tell a patient in 2020 about what we will have accomplished by then to diminish the barrier of HDHPs and problems with plan design.

Fronstin acknowledged that, despite the “immense amounts of innovation going on, we’re still living with 20th century plan design.” Employees will have a role in determining the plan of the future because employers want to remain competitive, he predicted, and the greatest disruption will come “from people who we haven’t met yet, because they’re not your usual suspects.”

It would be naïve to say that in 2 years we will have moved away from the trend toward HDHPs, Drozd said, but “looking for more flexibility for plans to cover things earlier would be a big win.”

In Beck’s opinion, we can realistically expect to see improvements in plan flexibility and other tangible results from new legislation, but “whether it’s an outside disruptor or simply existing players that are more focused on this shift towards value over volume, that trend is going to continue to reach a point where I, as the patient consumer, will see something different in the way I interact with my plan.”