What effect do higher deductibles have?

A new NBER working paper shows that higher deductibles serve as a blunt tool that does reduce health care use (~12-14% in a large, self insured plan), but that they don’t appear to lead to better decision making by consumers. Several nuggets that are not such good news: consumers don’t seem to learn to shop around in response to higher out of pocket costs, they reduce spending across the board (both in preventive care as well as care more likely to be wasteful, like imaging), and around half of the reductions in spending accrued to individuals who were sick.

We have both overuse and underuse, and need a way to address the one without making the other worse.

This group of patients (large, self insured employee plan) might be expected to be the group most likely to respond to more “skin in the game” in positive fashion, but it didn’t happen. Sobering info as we wrestle with how to reign in spending while maintaining quality, especially as there is a bipartisan rush to do away with the cadillac tax and not replace it with other changes to the tax treatment of employer sponsored insurance.

Update: Sarah Kliff has a much better post on this paper than what I had time for.

About Don Taylor
Professor of Public Policy (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute), and Chair of the Academic Council at Duke University https://academiccouncil.duke.edu/ . I am one of the founding faculty of the Margolis Center for Health Policy. My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

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