Flipping the title on high deductible/ low premium insurance
Scott Shreeve has an interesting marketing take on CDHP plans, and a good one. Rather than emphasizing the high deductible (more relevant to insurance thinking), he emphasizes the low premium (certainly changes the dynamic of the conversation with consumers)
The whole notion of “high-deductible” is a misconception – why not change the paradigm by saying “Low-Premium” Health Plan (LPHP). The point is that the we are talking about insurance – you are buying risk protection from someone who is willing to assume it in exchange for your money. The more risk you want to avert, and the lower co-payments you want, the higher your monthly premium is going to be. If you are willing to go at risk, up to a defined level ($5,000 my case), you can save dramatically on your monthly insurance premiums. In addition, as you play the numbers out, your overall spending can also be 15-20% less with a LPHP over a traditional plan. This doesn’t even account for the behavior change that occurs when you are spending your own money and therefore become engaged in the decision making process.
As I posted before, the sticker shock of medical items is not financially worse than watching all the premium money previously being paid go “poof” every month. And, as I mention in my metrics article, what is being rewarded today certainly isn’t working– why shouldn’t we look to reduce excess premiums being paid as opposed to overall cost of healthcare? After all, people aren’t looking to reduce overall cost of consumer and high tech sectors despite outsized gains in those industries the past few years.
For most people (estimated 80-90% of employees), a CDHP plan will put them out ahead if most of premium savings (at least on for at-risk insurance) are given back in the form of HSA contributions (zero-sum balance).
The math gets a little hairier where employers are self-insured, as “premiums” are only equivalents and the cash outflows go to pay for medical expenses of employees– and so the company is less likely to realize positive cash flow from such a move in the short-term. But more on that in my “jobs healthcare performs” series…
