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Heritage Foundation: High-deductible health insurance plans are a success

By Maryalene LaPonsie on July 20th, 2012

High-deductible health insurance plans are living up to their promise when it comes to reducing premiums and overall health care costs. That is according to a recent report from The Heritage Foundation, a conservative public policy group.

The report compiled data from several sources to determine that greater use of high-deductible health insurance plans could result in significant savings for workers, employers and the government.

Indiana highlighted as a model of success

Within the report, the Heritage analysts point to Indiana as a successful example of the large scale use of high-deductible plans. A 2010 case study conducted by Mercer Health and Benefits, a human resource and financial consulting firm, found the state realized significant savings when it began offering high deductible plans to state workers.

A high-deductible plan was first offered to state workers as an option in their benefits package in 2006. A second plan was offered the following year. It is estimated that 70 percent of the state's 30,000 workers are now enrolled in one of the two plans.

Prices for high-deductible plans can be much lower than traditional policies. From 2006-2009, annual premiums for PPO plans offered to Indiana state workers were an average of $12,317. Meanwhile, the premiums for high-deductible plans were $5,462 for the plan with the highest deductible and $9,444 for the second plan.

Overall, the state of Indiana is estimated to have saved an average of 10.7 percent during the study period. Meanwhile, employee savings in 2010 were estimated at a combined $7-$8 million.

Quality of care maintained

Although some argue the higher deductible plans save money because they discourage individuals to seek out health care, the Heritage report disputes that claim. Instead, it says studies find the cost savings are a result of individuals becoming better health care consumers. For example, the high-deductible plans may encourage individuals to seek out generics instead of brand name drugs or avoid unnecessary emergency room visits.

While acknowledging that high-deductible health insurance plans may not be appropriate for every patient, The Heritage Foundation says research indicates they have the potential to help reduce health care costs nationwide. A study conducted by the RAND Corporation, Towers Watson and the University of Southern California projected annual savings of $57 billion should half of workers enrolled in employer-sponsored health insurance switch to high-deductible plans.

Maryalene LaPonsie
Maryalene LaPonsie has been writing professionally for more than a decade on topics including education, insurance and personal finance. She holds a Bachelor's Degree in Political Science from Western Michigan University.

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