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Glied On High-Deductible Plans And Cost-Sharing



May 27th, 2010
by Chris Fleming

A Health Affairs Blog post yesterday discussed material on mental health and mandates that Sherry Glied, President Obama’s nominee to be the Assistant Secretary for Planning and Evaluation at the Department of Health and Human Services, has published in Health Affairs. Glied, a professor and chair of the Department of Health Policy and Management at Columbia University’s Mailman School of Public Health, also teamed with Dahlia Remler on a 2006 Health Affairs article regarding cost-sharing under high-deductible (HD) health plans.

Proponents of HD plans tended to argue that they would restrain health care expenditures by giving consumers some “skin in the game.” However, typical non-HD plans already contained substantial cost sharing, Remler and Glied noted.  In fact, HD plans coupled with tax-favored health savings accounts “would actually reduce cost sharing for many groups. In particular, the group responsible for half of all medical spending would see no change or a decline in cost sharing at the margin and on average.”

Remler and Glied’s article prompted a Health Affairs Blog response from Uwe Reinhardt, the James Madison Professor of Political Economy and Professor of Economics and Public Affairs at Princeton’s Woodrow Wilson School, who noted that Remler and Glied’s findings were being touted by advocates of HD plans. The trouble with Remler and Glied’s argument, Reinhardt said, “is that it rests largely on one illustrative case, namely, for a family in a high marginal tax bracket and for an HSA with a relatively low annual deductible. … If one assumes lower marginal tax rates or higher deductibles, or both, Remler and Glied’s conclusions no longer hold as a general proposition.” 

In their own Health Affairs Blog response to Reinhardt, Remler and Glied agreed with him that “if HSAs with high deductibles were imposed on the entire population, they would lead (on average) to increased cost-sharing.” But they pointed out that “the individuals most likely to choose HSAs (coupled with HD plans) are those who are, as in our paper, in high marginal tax brackets” and that “people who switch to HD plans only to take advantage of the new HSA tax savings are likely to prefer the least onerous HD plans available, like those we model in our paper. In this context – the situation that currently exists in the market – our findings show that HSAs may, perversely, have the opposite effect than their proponents intend. Rather than lowering the nation’s health care costs, the availability of HSAs may raise them.”

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