Monday, July 9, 2007

High Deductible Health Plans and ER Visits

A recent paper in the Journal of the American Medical Association studied the effect of so-called "high deductible" health plans on patients' use of the emergency room. These plans are often part of the combination of HSA's (health savings accounts) and catastrophic insurance (with high deductible), favored by many free market advocates. The first component covers routine small medical expenses, whereas the second component covers the rare-but-expensive medical disasters.

The JAMA paper showed that patients with the high deductible plans used the ER less, primarily by not going there for low-to-medium severity conditions. There was no evidence of adverse effect on overall health, and no evidence of patients failing to go to the ER for the high-severity (serious) problems that really needed the full services of an ER.

In other words, when people are given the choice of how to spend their own health care dollars, they do so responsibly and prudently. Given that uncompensated emergency care is often cited as a major cause of rising health costs, free market measures that reduce this amount without adversely affecting patient outcome (while encouraging individual responsibility) are to be applauded.

In contrast, some health care reform plans limit out-of-pocket spending and deductibles to small amounts, in the $100-$500 range. They claim that this will save money because "people won't have to go to the ER". If the JAMA paper is true, this will have the exact opposite effect.

The full paper is only available to subscribers, but here is the abstract. A popular press version of the story is available here.