Despite monthly premium savings, high-deductible health insurance plans may make health care less affordable for patients in the U.S., according to several researchers who say it may be better to move deductibles from an annual to a monthly cycle.

In a paper published in Health Affairs this month, researchers Steven Chen, Paul Shafer, Stacie Dusetzina and Michal Horný found that most commercially insured Americans incur at least half of their out-of-pocket health expenses in just one or two health care visits, with an average annual cost sharing of $954.

High deductibles generally help to offset monthly premium costs, but studies show that most Americans are unable to handle a sudden payment of over $400. That means high-deductible plans leave Americans, especially low-income individuals, more vulnerable to accruing sudden medical debt, explained Horný, the paper’s corresponding author and an assistant professor of health policy at Emory University.

One way insurers and sponsors of employee plans can mitigate this, the researchers said, is by splitting up annual deductibles — the amount patients pay each year before their insurance kicks in — into smaller, monthly installments that are easier to manage.

“There actually is not really a strong reason why deductibles would have to apply for the same amount of time it takes the earth to orbit around the sun,” Horný told The Academic Times.

“If deductibles were smaller, but reset more frequently, it would not necessarily increase premiums,” he added. “And at any given month, patients would be protected from thousands and thousands of dollars in health care costs.”

Other solutions, like a health care savings account in which depositors pay no taxes, may be ineffective at offsetting clustered medical costs for low-income patients who are particularly affected by this trend.

“The key thing that’s missing in this logic is that you have to have money to be able to put into your health savings account in the first place,” Horný said. “So it’s a very good tool for rich people. … But for people who are low-income, they have to decide whether to pay rent or buy food.”

The authors’ findings follow years of growth in high-deductible health plans, which gained traction among employers in recent years as a way of containing premium costs. Horný explained they do not believe a restructuring of deductibles would lead to large spikes in premiums as the changes would largely be administrative and are designed to spread out patients' contributions, rather than getting rid of them.

Additionally, a working paper released earlier this month by the National Bureau of Economic Research developed a model for health deductibles that are reset biannually, and estimated that such plans would generate consumer savings of 6% to 10% against their monthly premium cost.

The case for breaking up the annual deductible structure is fairly new and largely unexplored in academia, except in at least one paper that documented the number of months in which families incurred out-of-pocket expenses, Horný explained.

“Health care is not affordable for many. That’s not new,” Horný told The Academic Times. “But I really think this temporal clustering of out-of-pocket costs is one of the reasons why health care is so unaffordable. And we really want to start the conversation about how health care costs are accrued over time, and that it’s really just one bad week when most costs are accrued.”

For the most part, Horný and his colleagues suspect the solution they suggest is a "fairly easy" change in company policy with little financial impact, but did not provide any cost estimates Horný said insurers will likely have to reconfigure the technology through which health insurance plans are sold and managed.

In their paper, the researchers utilized the IBM MarketScan Commercial Claims and Encounters database to identify more than 18 million Americans between the ages of 0 to 64 who were commercially insured in 2017. About 83% of those enrolled had to pay at least a portion of their health care costs that year, and about 42% incurred at least $400 in annual out-of-pocket medical expenses.

More than 40% of the commercially insured incurred half of all their annual deductible in just one health care visit, while another 26% incurred 90% in one or two trips. Nearly half of all patients who paid at least $400 out of pocket incurred those costs in just one day, while 66% reached that milestone within 30 days.

Another 10% of all patients who incurred extra costs did so every month of the year, while 44% did so in at least six months. Patients who were hospitalized incurred much higher average costs of $3,347, versus $842 paid out-of-pocket. 

Out-of-pocket costs were heavily concentrated for a large number of healthy individuals, as well as those with high demand for health care. About 44% of the former reached half of their annual deductibles in a single day, while 32% of the latter did so; 13% of high-demand patients took 30 days to reach 90% of their out-of-pocket costs that year.

The authors suggest this may be a sign that patients are clustering their care and putting off expensive medical services they cannot pay for, reinforcing earlier findings that high-deductible health plans lead to delayed medical care.

Another way insurers may be able to offset out-of-pocket costs for patients under high deductible plans is through a “value-based” model in which certain high-demand services and products, such as insulin for the diabetic, may be offered for free or at a discount cost, since they provide a lot of value to the patient for relatively low cost. Conversely, companies could raise prices for lower-value services that are expensive but less urgent, such as getting an X-ray scan for minor back pain, Horný said.

The paper, “Annual Out-Of-Pocket Spending Clusters Within Short Time Intervals: Implications For Health Care Affordability,” was published online Feb. 1 by Health Affairs. It was authored by Steven Chen, a data analytics fellow at the Alliance of Community Health Plans and former graduate research assistant at Emory University; Paul Shafer, an assistant professor in the Department of Health, Law, Policy and management at Boston University; Stacie Dusetzina, the Ingram associate professor of cancer research at the Vanderbilt University School of Medicine; and Michael Horný, an assistant professor in the Department of Radiology and Imaging Sciences and Department of Health Policy and Management at Emory University.