Underinsurance: What's offsetting the rise in deductibles?

On the weekend, I posed a few questions raised by the Commonwealth Fund survey of underinsurance released this week. I've since heard from Commonwealth's Sara Collins, VP of health care coverage and access, the lead researcher in the study. Her answers highlight some significant unknowns about what's going on in employer-sponsored insurance.*

To recap, Commonwealth found that among those American adults under age 65 who were insured for a full twelve months, 23 percent were underinsured – that is, their deductibles and copays were high enough to cause severe financial strain. That top line is almost unchanged since 2010; the real damage on this front was done from 2005 to 2010, when employers started shifting costs en masse to employees. Among those who get insurance from an employer, the Commonwealth found an underinsurance rate of 20%, unchanged since 2012 and up from 17% in 2010.

Commonwealth's defines underinsured as follows: 1) total out-of-pocket costs exceed 10% of annual income, or 5% if the person's household income is under 200% of the Federal Poverty Level (FPL), or 2) the plan deductible exceeds 5% of the beneficiary's annual income. Here again is the first question from my weekend post regarding ESI:

While deductibles in employer-sponsored plans continue to rise, most notably among those with less than 100 employees, the underinsurance rate actually dropped among large employers from 2012 to 2014, from 16% to 14% (statistically insignificant, according to Collins - basically unchanged).  In the same period, the percentage of large-firm employees whose deductible exceeded 5% of annual income rose from 6% to 8%.  What's offsetting that rise in the ranks of those whose deductibles alone classify them as underinsured? Do the free preventive services mandated by the ACA play a role? Or rather, since "the out-of-pocket cost component of the measure is only triggered if a person uses his or her plan," could reluctance to use (and pay for) any medical services be inhibiting the underinsured total?

Asked what might be offsetting the rise in deductibles, Collins cited a range of possibilities, starting with the possibility that "higher deductibles may be inducing people to seek less care," as may "the lingering effects of the sluggish economy, or the overall slowdown in the rate of health care cost growth." Those factors point to a bit of a paradox in the Commonwealth definition of "underinsured": if people use less care, they are less likely to be deemed underinsured unless their deductible qualifies them automatically.**

Commonwealth does ask all respondents -- including the not-underinsured -- if they went without needed care because of costs. If reluctance to spend is holding underinsurance numbers down, it might be expected that the percentage of not-underinsured respondents who skip needed care would rise over time. Not to make too much of one data point, but that is not the case since 2010. In that year, 28% of those deemed not-underinsured said they went without needed care because of costs; in 2014, 23% did. Among the underinsured, 46% said they did without needed care in 2010; 44% said so in 2014.

Also flat-to-improved since 2010 are the percentages of respondents in the two categories who say they had at least one medical problem or had incurred medical debt. In 2010, 52% of the underinsured and 27% of the adequately insured reported such problems; in 2014, the spread was 51-22%.

Those figures are for those insured in all markets (ESI, individual, Medicaid and disability Medicare). I wish I had them for ESI specifically. Still, very broadly, something seems to be offsetting a rise in deductibles.  Collins also acknowledged that free preventive care mandated by the ACA could also be a factor. She may be right about spending inhibition too: maybe people are skipping unneeded care, or maybe the 2010-2014 comparisons cited above just aren't statistically significant.

Commonwealth does not have an answer to my second ESI-related question:

A lot of companies ease the sting of high deductibles by partly or fully funding employees' Health reimbursement Arrangements (HRAs)  or Health Savings Accounts (HSAs).  Does the Commonwealth survey take these offsets into account?

The survey does not track whether respondents have these tax-sheltered accounts. Brokers have told me that their use is rising among small businesses, and that it's moving down the food chain -- that is, they're being used more to offset higher deductibles for lower income workers.

In its annual employment insurance survey, the Kaiser Family Foundation does track the prevalence and growth in these accounts -- albeit with a hole in the data. Kaiser tracks the percentage of employers (large and small) that pair an HRA or HSA with health plans that qualify as High Deductible Health Plans (HDHPs) -- i.e., meet very specific criteria, including providing no benefits at all, except the ACA's mandatory free preventive services, until the deductible (a minimum of $1300 per individual or $2600 per family) is reached.  In 2014, according to Kaiser, the percentage of firms that offered a savings account paired with HDHP was actually down a bit from 2012, from 31% to 27%. Just 4% of firms paired an HDHP with an HRA, an account in which the funds belong to the company, versus 24% that paired and HDHP with an HSA, which belongs to the individual (who can also contribute to it, unlike with an HRA) and can accumulate over time.

Here's the data gap: Kaiser does not track how many firms pair an HRA with a plan that is not a qualified HDHP, regardless of its deductible.  It's possible that their use is growing.  It's also possible that employer contributions to such accounts are partly offsetting growing deductibles. I don't know of any studies that hone in specifically on use and funding of these accounts.

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* In fact, since the survey did not capture the experience of people newly insured in the individual market or in Medicaid via the ACA, there's even more

**Collins explains: "The definition is a conservative measure of underinsurance in that it captures people that have actually used health care and had high out of pocket costs.  The deductible component of the measure is the only aspect that measures how many people may be at risk of having high out of pocket costs, in other words, the design of the plans."