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California Employers, Workers Cool To High-Deductible Health Plans, Although Firms Consider Them As Option, Health Affairs Article Says  

Survey Offers Snapshot Of Enrollment Trends Before Federal Government Began Promoting Catastrophic And Consumer-Directed Coverage


BETHESDA, MD—Few California employers were offering high-deductible preferred-provider organization (PPO) coverage options or consumer-driven health plans in the period immediately before the federal government implicitly endorsed such plans in the Medicare Prescription Drug, Improvement, and Modernization Act, according to a new analysis published today on the Health Affairs Web site.

Funded by the California HealthCare Foundation, the survey of health benefits officers at California firms covering more than 3 million enrollees indicates that 12 percent of private employers and 5 percent of public employers are offering high-deductible PPO plans, defined as plans with a deductible greater than $1,000 for individual coverage and $2,000 for family coverage.

The median enrollment in the high-deductible PPOs was 15 percent at private firms and 18 percent at public employers, according to James Maxwell, director of health policy and management research at JSI Research &Training Institute, and three colleagues.

Five percent of private firms and 2 percent of public employers were offering consumer-driven plans, which often are structured as high-deductible PPOs with a health reimbursement account that gives enrollees more control on the use of their health care dollars. Median enrollment in consumer-driven plans was 14 percent at private firms and 12 percent among public employers.

Of those not yet offering a high-deductible PPO, 22 percent among private employers and 10 percent among public employers said they were considering it in the next two years.

The authors say their survey offers a snapshot of trends in catastrophic and consumer-directed health insurance coverage before the MMA “implicitly endorsed” those insurance products by similarly structuring the Medicare drug benefit, and a later explicit endorsement from President Bush. Under these proposals, workers would have to pay very high deductibles before they were covered for their medical expenses.

“After these recent developments, one might expect a swift rise in the implementation of consumer-driven health plans,” Maxwell says. “A few employers are experimenting with these plans to gain early experience, but most have adopted a wait-and-see approach, closely monitoring the innovators’ experiences. Our survey and supplementary interviews conducted after MMA found that most employers were in this category.”

Maxwell’s co-authors were Peter Temin, economics professor at Massachusetts Institute of Technology; Saminaz Zaman, research associate at JSI Research &Training Institute; and Tanaz Petigara, a doctoral student at the Johns Hopkins Bloomberg School of Public Health.

You can read the article at content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.233.

Health Affairs, published by Project HOPE, is the leading journal of health policy. Peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at www.healthaffairs.org. The full text of this Health Affairs Web Exclusive is available free of charge to all Web site visitors for a two-week period following posting, after which it will revert to pay-per-view for nonsubscribers. The abstracts of all articles are free in perpetuity. Support for the publication of this Web Exclusive was provided by the California HealthCare Foundation; Web Exclusives are also supported in part by a grant from the Commonwealth Fund.

Address inquiries to Jon Gardner at Health Affairs , 301-347-3930, or via e-mail, press@healthaffairs.org . Selected articles from the May/June 2005 issue are available free on the journal’s Web site, www.healthaffairs.org .

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©2005 Project HOPE–The People-to-People Health Foundation, Inc.