We’ve heard it for years: HSA-qualified high deductible health plans help reduce unnecessary utilization. Ever since their inception back in 2004, Health Savings Accounts (HSAs) have been characterized as the ultimate consumer-driven product. People spend their own money differently than they spend somebody else’s money, proponents say, and having some “skin in the game” encourages people to act with discretion when spending their health care dollars. Ultimately, being responsible for the cost of up-front expenses like doctor visits and prescriptions, instead of having those costs covered by a flat-dollar copayment, creates better health care consumers by encouraging them to “shop around” for health care services and only engage the health care system when truly necessary.

It’s a nice theory, and there is some evidence that it works. Over the past two decades, countless studies have been published showing that spending is indeed lower on HSA-qualified plans.

Recently, though, there’s a lot of discussion about why spending is lower. 

Are health plan members really becoming better health care consumers, or are they simply going without needed care because they can’t afford it? A recent article in Insurance Newsnet, citing a study from Texas A&M University's Health Science Center, suggests it may be the latter. 

The study “found that lower-salary employees enrolled in an employer-sponsored high deductible health plan (HDHP) have higher rates of acute care utilization and spending but lower rates of primary care spending compared to high-salary employees at the same employer.”

What, exactly, does this mean? Well, it seems to indicate that lower-income employees who are covered by health plans without up-front copayments tend to avoid routine care, presumably because of cost, and this sometimes leads to a worsening of conditions and an increased need for acute care in urgent care centers and emergency rooms. Higher income earners, on the other hand, can afford to receive the routine care they need before their conditions become more serious. As the article says, the results “suggest that HDHPs discourage routine physician-patient care among low-salary employees.”

Here are the three main findings from the study:

• Workers “earning less than $75,000 had lower health care utilization and spending than higher-salaried employees.”
• These same employees “utilized and spent less on preventive measures such as outpatient visits and prescription drugs.”
• Low-income employees, however, “have significantly higher rates of utilization on preventable and avoidable emergency department visits and inpatient stays.”

As brokers, what can we conclude from these results? 

First, it appears that HSA-qualified plans may not be right for all of our clients. It is true that the lower premiums may make high deductible health plans more attractive, but not everyone can afford the higher out-of-pocket costs for services usually covered by a copayment, and that could cause them to forego care. 

Second, we need to find a way to replace the missing copayments. Because an HSA plan may be the only option that some consumers can afford, the above statement should read “HSA-qualified plans alone may not be right for all of our clients.” When a lower-income client purchases an HSA-qualified plan, we as advisors need to have an honest discussion with the client and ask whether they truly believe they will be able to deposit funds on a regular basis into the Health Savings Account. If not, then they may not have the money they need to access care when something comes up.

The good news is that there are multiple products in the market that can be paired with a high deductible health plan to lower the member’s claim exposure and/or increase access to necessary care.

The first is supplemental products like accident and critical illness policies. We talk about these products a lot because the deductibles and out-of-pockets are so high on today’s health plans that most people need something more than health insurance alone. Supplemental coverage can help offset these high out-of-pocket costs in the event of a serious illness or injury. See the carrier page of our website for more information.

What supplemental products don’t do, however, is increase access to routine care like doctor visits and prescription drugs. To help solve these problems for a client who is moving to a plan without copayments, consider installing a telehealth benefit, preferably one with no charge to pick up the phone and call a doctor. When the number one barrier to primary care—cost—is removed, people can get early treatment, before a condition worsens. 

As for prescriptions, members will receive a discounted rate from their health plan, but often the insurance company’s negotiated rate can be beat. It’s foolish to think that the carrier will have the very lowest negotiated rate at every pharmacy or for every drug. Introducing an additional discount plan with telemedicine and prescription assistance is a viable option for helping your clients with alternatives to paying the full cost of physician consults or prescriptions before meeting their deductibles.

To summarize, the plans we’ve been selling do provide catastrophic coverage to cap our clients’ costs if they have a big medical event, but these plans may still leave the member with thousands of dollars of exposure and a reduced ability to access routine care. Because more comprehensive plans are not in most people’s budgets, we can piece together a solution that helps people get the up-front care they need and limits their exposure to big medical claims. Yes, it takes a little extra work, but our clients will be better protected, we’ll be able to sleep at night knowing we’ve provided them with a comprehensive solution, and we may be rewarded with a higher commission for our efforts.