Health insurance with an associated plan deductible has become increasingly commonplace; three-fourths of US adults with employer-sponsored health insurance have to meet some deductible before their insurance begins to pay for care received.1 Given the financial shortfalls thrust on public and private payers by the coronavirus disease 2019 (COVID-19) pandemic, it is likely that the prevalence of these lower premium, high-deductible health plans (HDHPs) will continue to grow. Theoretically, the aim of requiring consumers to put some skin in the game is to promote more active health care purchasers. However, the cost-sharing associated with deductibles is blunt, in that consumers have to pay full price for both high- and low-value care prior to meeting the plan deductible. Moreover, deductibles shift costs only to enrollees who use medical care, which can be viewed as a tax on the sick.
The current minimum deductibles in HDHPs are $1350 for individuals and $2700 for families.2 Many plans have substantially higher deductibles; in 2019, the average deductible was $1655 for individual plans and $4779 for family plans.2 This financial burden is not limited to those with commercial insurance. In 2016, the average out-of-pocket spending by Medicare enrollees was $5460.3 One-half of Medicare beneficiaries have annual incomes less than $26 200, making these payments an extreme financial hardship. A recent Federal Reserve study4 reported that 40% of Americans do not even have $400 to cover unexpected expenses, intimating that high deductibles limit access to services that are deemed critical for patients’ well-being.
Driven in part by increasing health plan deductibles, 1 in 3 US adults reported not receiving medical care because of cost in 2019.5 During the 2020 COVID-19 pandemic, 68% of adults said that out-of-pocket costs would be very or somewhat important in their decision to get care if they had symptoms of the coronavirus.6
Policy solutions are available to quickly mitigate this problem that has been acutely exacerbated by the COVID-19 pandemic.7 Under current law, HDHPs are required to cover certain preventive care on a predeductible basis. The definition of preventive was typically limited to care such as vaccines, counseling services, or screenings. Predeductible coverage of essential services used for most chronic disease management was not included in federal regulations. High-deductible plans do not need to expose people with COVID-19 and chronic diseases to unaffordable out-of-pocket costs for essential clinical services. In a study reported elsewhere in JAMA Network Open, Wharam and colleagues8 report that HDHPs that incorporated value-based insurance design principles, specifically predeductible coverage of high-value cardiovascular services, mitigate cost-related adverse patient outcomes. In this cohort study, 156 962 individuals with cardiovascular disease risk factors who experienced mandated enrollment in health insurance plans with high deductibles but relatively low medication costs. Members with high-deductible health plans did not have increases in major adverse cardiovascular events compared with a matched group of nearly 1.5 million individuals with low-deductible health plans.8
A 2019 notice from the Internal Revenue Service allows high-deductible health plans to cover certain services used to manage chronic diseases—such as heart disease, asthma and diabetes—before patients meet their deductible.7 Using the criteria established in the Internal Revenue Service guidance, in January 2020, the bipartisan, The Chronic Disease Management Act of 2020 was introduced in the US Senate, permitting HDHPs with health savings accounts the flexibility to cover a broader set of chronic disease prevention services on a predeductible basis.7 In March 2020, Internal Revenue Service Notice 2020-15, “HDHPs and Expenses Related to Co-VID 19,” allowed all health plans—including HDHPs—to reduce or eliminate cost-sharing for COVID-19 testing and treatment.9 The Families First Coronavirus Response Act enabling private plans to provide first dollar coverage of telehealth services for COVID-19 care was signed into law on March 18, 2020.7 On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted, further extending coverage to any in-person visits for COVID-19 testing or screening, allowing all telemedicine services to be covered on a predeductible basis (ie, not limited to COVID-19 visits) until the end of 2021, and requiring all plans to cover COVID-19 vaccines, when available, without cost sharing.7 Several private plans have gone further and waived out-of-pocket costs for COVID-related hospitalizations, whereas others have temporarily waived cost sharing for in-network primary care and behavioral health care visits for Medicare Advantage members.
The cost of predeductible coverage is minimal; an actuarial analysis of providing predeductible coverage for more than 50 common drug classes estimated a less than 2% increase in premiums.9 Instead of using blunt strategies such as increasing premiums or deductibles to enhance coverage generosity for high-value services, plan sponsors could use savings that result from deterred access to low-value services, the use of which has been dramatically reduced during the pandemic. A novel benefit design template using value-based insurance design principles, referred to as V-BID X, targets low-value care and increases access to high-value services without increasing premiums or deductibles.10 The 2021 Notice of Benefit and Payment Parameters final rule strongly recommended that federally qualified health plans incorporate V-BID X.
A substantial number of US individuals report not following clinicians’ recommendations because of cost. The reduced use of evidence-based services often leads to inferior patient-centered outcomes, worsening disparities, and, in some clinical circumstances, higher total medical expenditures. These undesirable effects are likely to be magnified by the COVID-19 pandemic as payers face financial pressure and seek solutions to lower medical spending. As budgets tighten, plan deductibles are likely to become more common, and amounts increase further, imparting an additional burden on those who require medical care.
Moving forward, health benefit designers must ensure that people with COVID-19 and other chronic conditions can manage to pay for evidence-based medical services. Enhanced coverage of essential services prior to meeting the plan deductible is fiscally feasible and can be paid entirely by reducing a small portion of the billions of dollars spent annually in the US on low-value or wasteful clinical services.
The COVID-19 pandemic has brought heightened attention to the shortcoming that many health insurance plans do not provide affordable coverage for critical services to treat many chronic conditions and COVID-19–related illness. Now that this flaw has been broadly exposed, public and private health insurers should redesign their benefit packages to cover essential medical services more generously and implement payment and benefit reforms that prevent the resurgence of medical care that does not provide clinical benefit. Replacing blunt cost-sharing strategies with clinically driven alternatives could markedly reduce the worsening physical, financial, and emotional stress faced by millions in the US with chronic conditions.
Published: July 24, 2020. doi:10.1001/jamanetworkopen.2020.9456
Open Access: This is an open access article distributed under the terms of the CC-BY License. © 2020 Fendrick AM. JAMA Network Open.
Corresponding Author: A. Mark Fendrick, MD, Center for Value-Based Insurance Design, Division of General Medicine, Department of Internal Medicine, University of Michigan, 2800 Plymouth Rd, Bldg 15, Floor 4, Ann Arbor, MI 48109 (email@example.com).
Conflict of Interest Disclosures: Dr Fendrick reported having been a consultant for AbbVie, Amgen, Centivo, Community Oncology Association, Covered California, EmblemHealth, Exact Sciences, Freedman Health, GRAIL, Harvard University, Health & Wellness Innovations, Health at Scale Technologies, MedZed, Penguin Pay, Risalto, Sempre Health, the State of Minnesota, US Department of Defense, Virginia Center for Health Innovation, Wellth, and Zansors and receiving research support from the Agency for Healthcare Research and Quality, Gary and Mary West Health Policy Center, Arnold Ventures, National Pharmaceutical Council, Patient-Centered Outcomes Research Institute, Pharmaceutical Research and Manufacturers of America, the Robert Wood Johnson Foundation, the State of Michigan, and the Centers for Medicare & Medicaid Services.
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Fendrick AM. The Need to Expand Coverage and Enhance Access to Essential Services on a Predeductible Basis Following COVID-19. JAMA Netw Open. 2020;3(7):e209456. doi:10.1001/jamanetworkopen.2020.9456
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