The increasing number of people enrolled in high-deductible health plans will likely lead to lower utilization of hospital services, negatively affecting provider finances in the short term, according to a report from Fitch Ratings.
Enrollment in high-deductible, or consumer-directed, plans has grown in recent years, according to the report. The number of people covered by an employer-sponsored high-deductible plan skyrocketed from just 4 percent in 2005 to 31 percent in 2011, according to the Kaiser Family Foundation. Fitch expects that percentage to keep rising, especially as people sign up for bronze and silver plans (which are typically classified as high-deductible plans) through the Patient Protection and Affordable Care Act exchanges.
Federal law required a deductible of at least $1,250 for single coverage and $2,500 for family coverage for high-deductible plans with health savings accounts in 2013, according to the Kaiser Family Foundation. There is no legal requirement for a minimum deductible in a plan offered with a health reimbursement account. Both HSAs and HRAs are tax-exempt accounts people can use to pay for current or future qualified healthcare costs.
The growth in high-deductible plan enrollment is a key driver of the shift to a value-based, consumer-driven healthcare market and has contributed to softening in utilization, particularly concerning inpatient admissions and surgeries, according to the report. A Health Affairs study estimated that if 50 percent of workers with employer-sponsored coverage moved to high-deductible plans, healthcare spending would go down by about $57 billion because of lower utilization.
In 2013, patients facing greater upfront costs due to high-deductible plans used fewer healthcare services, a trend that Fitch predicts will continue as consumer-driven coverage becomes even more prevalent.
The shift to more consumer responsibility for healthcare costs will also likely mean a rise in bad debt as patients who don't understand their plans end up facing bills they can't pay. Hospitals have already been reporting an increase in bad debt associated with high-deductible plans, and Fitch predicts providers will need to cope by adjusting billing and collection practices, focusing more on point-of-service collection, developing installment plans and providing health plan counseling.
Overall, combined with other challenges hospitals and health systems face, growth in high-deductible health plan enrollment will likely hurt financial performance in the short term and lead to a higher number of negative rating actions, according to Fitch.
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