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High-Deductible Plans Aren't the Big Draw Proponents Expected, Report Finds

By Laura Blinkhorn, CQ Staff

December 7, 2006 -- Disappointing expectations of many health policy wonks, Americans are not flocking to low-premium/high-deductible plans and those who have are not particularly satisfied, according to a report released Thursday by the Employee Benefit Research Institute (EBRI) and The Commonwealth Fund.

Though touted as a possible solution to the growing number of uninsured Americans, these insurance plans have failed to significantly attract uninsured Americans, the report found.

"It will be interesting to see if continually rising health care costs prompt more workers to conclude that the trade-off of lower premiums for higher deductibles, and potentially higher out-of-pocket costs, is worth it," said Dallas Salisbury, EBRI president and chief executive officer, in a press release.

Approximately 9.8 million adults, accounting for 8 percent of insured Americans, are enrolled in low-premium/high-deductible plans. The report found that 8.5 million of those adults qualified for health savings accounts, but did not have them because they could not afford to contribute to the accounts.

HSAs permit individuals who sign up for high-deductible health plans to contribute and withdraw funds to cover health care costs tax-free.

Created in the 2003 Medicare overhaul law (PL 108-173), proponents of such accounts say they will make consumers more aware of the cost of health care, which will reduce health care expenditures. HSA opponents say the accounts are most attractive to healthier individuals who, if they enroll in HSAs, will leave the group market, driving up costs for less healthy individuals left behind.

The report found that there is still considerable confusion about high-deductible plans, with just 20 percent of Americans familiar with them at all. It also found that while participants in high-deductible plans were more cost-conscious in their health care decisions than people enrolled in more comprehensive plans, they also were more likely to skip doctor's appointments or avoid filling prescriptions.

The report also found that adults in high-deductible plans were no more likely to have been uninsured before enrolling than adults in more comprehensive plans.

According to the Kaiser Family Foundation, over 46 million Americans were uninsured in 2005, up by 1.3 million from 2004. Two-thirds of uninsured Americans were low income.

Karen Davis, president of The Commonwealth Fund, concluded that a solution to the problem of the uninsured "will have to be a mix of public and private." She cited the example of Massachusetts, where the state subsidizes premiums for low-income citizens.

The report's findings are based on a survey of 3,158 Americans from ages 21 to 64 conducted through a 14-minute Internet questionnaire. In the survey, high-deductible plans were defined as having a deductible floor of $1,000 for individuals or $2,000 for families.

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