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Is a High-Deductible Health Plan a Silver Bullet -- or Snake Oil?

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Those accustomed to obtaining health insurance through the workplace and choosing among different types of policies may be in for a rude surprise.

Increasingly, employers of all sizes are eliminating choice and offering only high-deductible plans -- euphemistically referred to in the insurance world as consumer-directed health plans or HDHPs.

The looming shift has nothing to do with Obamacare or even the widely held belief that certain types of health plans will encourage people to give up costly bad habits like smoking. It is about profit.

The trend appears to be irreversible. Within the next few years, most Americans not only will find that the plans they've been enrolled in for years are no longer available, but that they will also have to pay much more out-of-pocket for medical care.

There were many reasons why I left my job in the insurance industry, but near the top of the list was the expectation that I be, for all practical purposes, a snake oil salesman. If I were still in the business, I would be part of an industry-wide campaign to persuade employers, policy makers and the general public that high-deductible plans are the new silver bullet.

Not only will HDHPs reduce health care costs, according to the campaign propaganda, forcing people into them will cause them to lead healthier lifestyles.

That's the hype. And the hype is necessary to obscure the real reason insurers and employers are herding more and more of us into HDHPs: they're perfect vehicles to shift more of the cost of care from them to us.

Even in 2008, the last year I worked for an insurance company, my colleagues in the sales division were encouraging employers to go "total replacement," which means eliminating all choices except high-deductible plans. Insurers have long used proprietary "studies" supposedly proving that making people pay more out of pocket for medical care will "incentivize" them to lead healthier lives.

As a new survey of employers by the benefits consulting firm Towers Watson shows, my former colleagues have been very successful.

Of the large employers surveyed by Towers Watson, 15 percent already offer nothing but account-based high-deductible plans. That's nearly double the number of employers that had gone total replacement just three years ago. Towers Watson predicts that by this time next year, one of every four big employers will have dumped everything but HDHPs.

In a report about its most recent survey, Towers Watson contends "account-based health plans can be an important strategy for... facilitating the shift toward greater accountability from employees and more consumer-like behavior in their purchase of health care."

Translation: forcing employees to shell out more of their hard-earned pay for medical care will make them switch from cigarettes to carrot sticks.

So, is there any evidence that's really happening at companies that have gone total replacement?

No, according to a recent peer-reviewed study funded by the U.S. Department of Veterans Affairs and the Robert Wood Johnson Foundation.

As lead researcher Jeffrey T. Kullgren of the University of Michigan told me, he and his research colleagues wondered if it might be possible that associations between HDHP enrollment and healthy behavior could be due to healthier people volunteering to enroll in HDHPs because of the lower premiums and their lower likelihood of needing health care services.

"If this were the case," Kullgren said, "then associations between HDHP enrollment and healthier behaviors should exist only among people who could self-select into that type of plan, and not among those who were less able to choose their plan."

Kullgren and his research colleagues used nationally representative data to explore the relationship between HDHP enrollment and smoking among U.S. adults. After controlling for other factors, they found that associations between HDHP enrollment and smoking are only found among adults who could choose an HDHP, and not among adults who could not choose their plan.

Yes, it is true, as insurance companies contend, people in HDHPs smoke less, but it is not because they were forced into more-skin-in-the-game HDHPs. It is because HDHPs attract more nonsmokers than smokers to start with.

Kullgren's research shows that when a company goes total replacement, smokers continue to puff away. The results are also consistent with findings from the RAND Health Insurance Experiment of several years ago that showed there were no lower rates of unhealthy behaviors among individuals who had been randomly assigned to plans with high levels of cost-sharing.

"Our findings suggest that offering only an HDHP to employees with the expectation that this will reduce rates of unhealthy behaviors like smoking -- as a growing number of employers are now doing -- may not have its intended effects," Kullgren and his colleagues wrote.

If, despite Kullgren's findings, the trend toward total replacement continues unabated, as it most assuredly will, it will not be because HDHPs make us behave any differently. It will be because insurers and employers know they can use them to shift more of the cost of care to us.