How to Persuade the Young and the Healthy to Sign Up for Health Insurance

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One of the big challenges in both expanding the number of Americans with health care coverage and keeping premiums affordable for people with chronic or serious illnesses has been persuading young and healthy adults to obtain policies. Critics argue that the new U.S. tax law has made this task even harder with its elimination of the individual mandate for health insurance, a part of the Affordable Care Act that requires individuals to buy insurance or risk having to pay a tax penalty. But the effect of the mandate on coverage was never particularly impressive.

In 2014 only 28% of exchange members were between 18 and 34 years of age. That percentage stayed level into 2016, and with a shorter enrollment period in 2017, this year’s percentage may be lower. These numbers are well below the 40% enrollment rate that actuaries estimated was needed to allow for stable premiums.

There is an alternative solution: a modified form of high-deductible health plans (HDHP) — whose annual deductibles often are more than $2,000 per family — one that pays for high-value services such as primary care visits and evidence-based medications without subjecting them to a deductible. The Access to Better Care Act of 2016 (H.R. 5652), a bipartisan bill introduced in 2016 and tied up in committee, would give health savings account–qualified HDHPs the flexibility to provide coverage for services that manage chronic diseases on a pre-deductible basis.

High-deductible plans are increasingly being coupled with tax-deductible health savings accounts that are used to pay for medical expenses incurred by the individual or family before reaching the deductible limit. Moreover, HDHPs’ low annual premiums (typically at least 10% cheaper than traditional plans) being coupled with the tax-advantaged health savings accounts have made it an exceedingly attractive offering to the young and healthy: There were over 20 million subscribers in 2016, and only 3% of enrollees were 65 and older.

One of the central arguments for HDHPs is that by ensuring that consumers have skin in the game, they would become more cost-conscious consumers of health care. But a problem observed in empirical analyses is that the high deductible dissuades people from obtaining both essential and nonessential clinical services. Analyses have shown that patients enrolled in HDHPs were significantly more likely than those subscribing to traditional plans to delay or forgo visits for acute and chronic conditions, checkups, and tests. This is especially true of low-income adults and children.

We believe that a modified approach to HDHPs — one that uses value-based insurance design (V-BID) — can both bolster HDHP enrollment and encourage people not to skip essential care. It would retain the best of HDHP principles (choice, spending discretion) with coverage protection for high-value services that would serve to limit the harms of HDHPs (delayed or forgone care).

The first step to creating such a plan is to define high- and low-value services. Guidelines developed by professional societies and promoted by the U.S. Preventive Services Task Force can help insurance companies weigh coverage decisions even in the absence of economic data on future cost savings. (Insurers are concerned that the payoffs for good decisions made today can take years to reap, and by the time the payoffs materialize, the subscribers may have switched to another insurer. But the latest research suggests that, due to a variety of reasons, including inertia, the amount of switching is modest.)

A second step is tailoring the benefits of the plans to individual enrollees. This might mean subjecting all or part of the charge for eye exams to the deductible for most people but making it free for those with diabetes, who are at higher risk for diabetic retinopathy, glaucoma, and cataracts. Or it could mean offering statins, which lower cholesterol levels, to those with documented heart disease at a steep discount.

One counterargument that we anticipate to this approach is that previous thinking has leaned toward simplifying and standardizing health plans to allow for the fact most consumers don’t have sufficient health insurance literacy to make the best and most-rational choices for themselves. It’s true that most individuals find the challenge of understanding and making choices about annual deductibles, coinsurance rates, copayments, out-of-pocket maximums, and coverage provisions to be overwhelming. Since V-BID’s additional choices would only add to the complexity, it could be too much for individuals shopping for an insurance plan. But we bet that for people who have already signed up for an insurance plan, these principles will engender deep loyalty and trust as they begin to see how their insurance plan serves their best interests.

Recently, the U.S. Centers for Medicare and Medicaid Services finalized a rule that gives state Medicaid programs flexibility to vary cost-sharing for drugs, outpatient, emergency department, and inpatient visits. For example, Michigan’s Medicaid expansion program, the Healthy Michigan Plan, can now waive copays for drugs on preferred formularies and impose an $8 copay on those on non-preferred lists. Similarly, the plan can impose a copayment on the use of the emergency department for nonemergencies, while waiving cost-sharing on outpatient visits for chronic-disease management.

Such smart benefits plans keep patients healthy and out of the hospital and promote fewer disability days, less absenteeism, and greater worker productivity.