High deductible health insurance is bankrupting Americans [PODCAST]

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“Regulators should push health savings accounts (HSA) and businesses should offer them. While HSAs are growing, they are still only available to 30 percent of workers — more likely for larger companies than smaller ones. This, of course, is a way to help pay for extra medical costs almost always incurred under a high deductible health plan.

Perhaps a better option is to require all health insurance plans come with free primary care office visits. That can encourage patients to seek care earlier at lower costs (especially when compared to hospital emergency rooms or urgent care facilities, sites of choice if patients wait). One compelling example of this is when plans build in access to direct primary care.

In addition, we should advocate for price transparency at all levels and guide patients better on the “total cost” of their health care on an annual basis and not just the monthly premium cost.

High deductible health plans are not going away, but we can guide our community better to make costs transparent for better decision making.”

Ben Aiken is a family physician and health care executive.

He shares his story and discusses his KevinMD article, “High deductible health insurance is bankrupting Americans.”

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Hosted by Kevin Pho, MD, The Podcast by KevinMD shares the stories of the many who intersect with our health care system but are rarely heard from.

Transcript

Kevin Pho: Hi, and welcome to the show, where we share the stories of the many who intersect with our health care system but are rarely heard from. My name is Kevin Pho, founder and editor of KevinMD. Today on the show we have Ben Aiken. He is a family physician and health care executive, and he wrote the KevinMD article “High deductible health insurance is bankrupting Americans.” Ben, welcome to the show.

Ben Aiken: Thank you. Good to be here.

Kevin Pho: So we’ll get into the article a little bit, but first off, can you share your story and journey to where you are today?

Ben Aiken: Yeah, I’d be happy to. So I’m a family physician by training. I have a background in public health as well. I have a direct primary care practice, so I do practice clinically; about 25 to 30 percent of my time is now clinical. I launched that practice actually as part of a big integrative health system, which is a little bit atypical for that model. But then that health system was bought by a much bigger health system, and so I bought the practice from the much bigger health system, which was not interested in our approach, at the beginning of 2020, just prior to the pandemic, and I have been operating it for the last couple of years.

About 75 percent of my time is now working for, in essence, a startup insurance company called Decent Health, on the side. Decent Health builds its insurance offering around direct primary care, which is how I got connected to them, but I love the entrepreneurial and more system-level thinking, and I have been in that role since October of 2021.

Kevin Pho: So for those listeners who aren’t familiar with a direct primary care model, can you give a brief description of what that is?

Ben Aiken: Indeed. Yeah, think of it as just an alternative payment form for primary care, more or less. It is a membership model. A lot of people think of it as, “Hey, it’s a gym-membership-type approach to primary care.” So our patients pay us a monthly fee, and for that monthly fee they get unlimited access to us, and we just basically take insurance out for that component.

Kevin Pho: So I’ve had several direct primary care physicians on the show, and one thing that you mentioned struck me. You said that the large integrative health system that you were previously involved in didn’t want a direct primary care practice being part of them. Why do you think large systems are hesitant to include direct primary care models?

Ben Aiken: Yeah, it’s a good question. I think some feel it is a bit threatening to them longer term. Health systems generally are driven by volume, even with all of the value-based care initiatives, and if primary care does a really good job at what it’s supposed to do, theoretically there’s less downstream revenue in the health system model. I think forward-thinking health systems around the country, and those that are becoming integrated, have the primary care component and they have the hospital and specialty component, and there can be a way for that to work well together. But certainly that potential downstream, that is one reason, I think.

The second is that most are really used to living in an insurance-driven world, and this idea of taking that out, one, feels perhaps a little threatening to their insurance contracts, which are really, really important to them as health systems. And it also feels a little bit unproven. Primary care is very low margin, if there’s a margin at all, generally, for health systems, and so taking a risk on trying a new model or testing it just doesn’t seem to be a particular driver for health systems.

The regional health system that I was a part of, I feel, was one of the more forward-thinking health systems. It was called Mission Health. Think of Kaiser and Intermountain and Geisinger, some of these health systems that people look to around the country that are really pushing the envelope in primary care. And then the system that purchased it is called HCA. It’s massive, one of the biggest in the country, and they just don’t actually do primary care. So their lack of interest in us at that point was really because primary care is not a focus for them, and that led to us transitioning out of the system.

Kevin Pho: So right now direct primary care plays a relatively niche role in our country. It’s a minority of practices, clearly. So what will it take for direct primary care to gain a better foothold in mainstream primary care?

Ben Aiken: Yeah, it’s a good question. I want to say last I heard it’s maybe 5 percent of family physicians who are in a direct primary care model. There has been good traction in it. Maybe three-ish years ago or something, it was 2.5, so there is clear growth and interest, especially as all the systemic forces are putting pressure on fee-for-service primary care providers that just make the experience really pretty poor. So I think that if those forces continue, then there will be continued interest among physicians themselves in looking at alternatives.

I think that we’re probably in what I would call phase 2.0 for direct primary care. The original phase 1.0 were really the vanguards, the folks who pushed the envelope at the beginning and said, “Hey, we’re so fed up with the system, we’re going to hang up our own shingle. Don’t measure us, don’t track us. We don’t want to engage at all. We just want to stay out of the system.” And I think there’s a place for that in a long-term capacity. I think phase 2.0 is, I guess, the phase that I’ve been a part of, where we’ve been monitoring this for several years. We’re perhaps a little more risk-averse than the original vanguards, but we were also raised in a system where there were some metrics and a little bit more emphasis on a connection to the system, and we still really feel for now that being outside of it is appropriate.

I think phase 3.0 is going to be basically what we see probably in the next five to 10 years, where insurance companies and systems and various other folks that are still in, I guess, what we would call the broader status quo system start to say, “Hey, this just makes a whole lot more sense,” whether you call it a capitated payment, or whether you call it direct primary care or advanced primary care. You know, there are various different terms out there. I think there is enough data out there to prove the value of the approach and the alternative payment structure. I don’t know exactly where it will play out, but I think as that becomes more mainstream, and more and more providers are fed up, it will become more of a norm.

Medicare is piloting paying for this now in over 10 states. I’m not in one of them, but a lot of folks also follow what CMS and what Medicare are doing. And so there’s a lot of debate in the direct primary care space about whether or not direct primary care physicians should engage with Medicare and actually allow them to pay that monthly fee on behalf of the patient. So I don’t know where that will necessarily play out, but I think that there’s a chance, as those bigger players like Medicare and CMS start to pay for things in this way, that this will be the tipping point where this could potentially be much more than just a niche.

Kevin Pho: All right, let’s transition into the KevinMD article that you wrote. It’s titled “High deductible health insurance is bankrupting Americans.” Now, for those who didn’t get a chance to read your article, can you just walk my audience through it and share the story of why you decided to write it?

Ben Aiken: Yeah, sure. So I think that, you know, high-deductible health plans are becoming much more of a norm. They’ve grown exponentially over the last many years, and I think that in general there’s just an acceptance that, “Hey, these are good things.” They actually are designed around allowing patients to save money, in a way, through health savings accounts and other things that can serve them well in the long term.

But as I’ve learned more and more about the insurance space and really tried to think a little bit about this movement toward high-deductible health plans, underneath the surface I actually found quite a few concerns that these aren’t actually playing out the way that they were originally intended to, or benefiting the majority of folks in a way that we would have expected. Rather, they’re actually a reflection of the fact that over the last 20 to 30 years, individual beneficiaries of insurance, so individuals in our country, and businesses who pay for it (over 50 percent of Americans get their health insurance through employers), are the ones the burden has increasingly been shifted to, more or less, the people who are paying for the benefits. And high-deductible health plans are just another manifestation, or a pathway, in which that has happened.

Kevin Pho: So give us a case study or an example of, say, a typical patient or family that has a high-deductible health plan and shoulders a disproportionate burden of costs, and how that can be financially crippling.

Ben Aiken: Sure. Let’s say that you have a family of four, and they are now in a high-deductible plan, with each individual in that family having a deductible of around, let’s say, $5,000. We’ll just focus on that, not even focus on the out-of-pocket maximum. Let’s say that that’s a middle-class American family, and they have, let’s say, two needs as a family over the course of the year, and they’re basically out $10,000 that they otherwise would not have paid.

For most American families, that amount of money is actually quite significant, and hard, you know, whether it’s paying for their mortgage or their lease or keeping food on the table and that sort of thing. That amount of money in any given year, for most American families in the middle class, actually is not a small amount. So there’s that potential risk if they have something that happens. Of course, the benefit is they still have insurance, and so most can figure out a way to try to wrangle up, I guess, the $10,000 to get that paid for, and hopefully they don’t go bankrupt as a result of that $5,000 or $10,000 expense to cover the cost of their deductible. People go bankrupt every day in our country because of health care expenses, so hopefully that is avoided. So there is a purpose and there is a function as it relates to that insurance plan, even though there’s that big initial hit that a lot of people have difficulty getting over.

The second thing I’d just touch on as it relates to that is that the premiums that family is paying haven’t gone down. I mean, in some ways you’d think, “OK, hey, if we’re doing this higher and higher deductible health plan, it should be cheaper.” But what we’re still seeing is that the premiums for that health plan are still increasing at quite a significant rate. So not only are people paying more for this on a monthly basis, whether they’re utilizing services or not, there is that, so it’s kind of a double whammy. So one, they’re paying more for it, and that is an increasing percentage of their regular monthly spend, and then if something happens, they are out $5,000 to $10,000, basically $5,000 per individual in that family. So those two things combine in a way that really has an influence.

The third and the final, which is part of what I was really trying to get at in the article as well, is that there’s a lot of emphasis on this idea of, “OK, well, hey, even if you have a high deductible, we’re going to give you a path to plan for that. We’re going to give you what’s called a health savings account,” most commonly. There are flex savings accounts and health reimbursement accounts, those different approaches, but health savings accounts, or HSAs, are probably the most commonly talked about and seen. And so, “Hey, middle-class American family, yes, you’ve got this high deductible now, but we’re going to help you plan for that. We’re going to give you an HSA for you to basically put money in.”

And the intention around that makes good sense. If you don’t spend that money, you’ve got savings. You can build it up over years. It’s actually a mechanism to have an alternative retirement account. There are lots of good-seeming incentives to utilize this HSA. But if you’re a middle-class American family that’s having to pay more for your premium, so you have less disposable income on a monthly basis, realistically what we’re seeing is that people aren’t utilizing the HSA. They don’t actually have enough money to put into that HSA, so there’s not room for them to save for that potential expense. If that expense happens, it’s a queer burden. Yes, they’re not going bankrupt, but it’s still a very queer burden, and on a monthly basis they’re paying more for it anyway. So it’s not actually playing out in reality as it was intended to play out.

Kevin Pho: So I see high-deductible health plans as kind of at the crux, or intersection, between different ideological approaches to how we can solve our health care problem, right? On one hand, you do get access, but on the other hand, you also have that sense of personal responsibility and self-direction that some people like to see more of in our health care system. So I was wondering, what kind of paths forward do you see from the issues that you described?

Ben Aiken: Yeah, it’s a really good question, and I would agree with you that having some skin in the game, if you will, or being on the hook, so that that responsibility piece is there, is a very reasonable thing to desire. So I would say that I don’t think that high-deductible health plans are going away, but I think that there could be some focus on trying to cap those at a more reasonable number. So rather than having the deductible hit $7,000 next year, what if we actually thought about trying to keep it closer to $2,000 a year, so that yes, there is some skin in the game, if you will, so that there’s some incentive for you to try to stay healthy?

I mean, that’s what I think. And underneath that question is really how we actually incentivize health across the spectrum of society. There are a lot of inputs and environmental influences, the social determinants, all those things, but how we utilize health insurance and pay for care is certainly one. So some emphasis on having a stake, but making that more realistic for middle-class folks, I think is an important one.

I think thinking about, and I don’t have this one figured out, but thinking about in some ways either a mechanism to really actually better allow for or incentivize something like an HSA is something to consider. Or perhaps we just shift away from that as a realistic path and refocus our health plans around more just serving what their purpose is, rather than being some kind of an alternative retirement vehicle or savings path or tax break, that type of thing.

The place that I’m probably most interested in is decreasing the overall deductible. I spoke to thinking about alternatives, or basically shifting away from this idea of an HSA as being a realistic path, but what’s the actual nature of the health plan itself? So that’s where I would say that I’m the most interested, and it’s part of why I was attracted to the work at Decent, which is: Can we in some ways actually build a health plan to look different, where the core foundational things, let’s say the 80 percent of needs that most people have, the primary care aspect, are really done in a way that’s much more consumer-focused, much more accessible, and not disincentivized in any way at all?

Right, so think of it, basically, in a basic way: 100 percent free primary care, physical therapy, and mental health support, and these foundational elements that really help. You know, all that stuff should just be easy, and you shouldn’t have to think about it. You shouldn’t have to think about copays. It should just be covered. And if we allow that to happen, can we then have a health plan that is actually more affordable, and that longer term is built around hedging on the savings that you would get from incentivizing those things? So I think that would then facilitate you having, one, a health insurance plan that doesn’t go up 8 to 10 percent in cost every year with premiums, where the deductible is actually more tolerable and doable for a middle-class American. So that’s where I’m most interested.

Kevin Pho: Talk to me about some of the headwinds that are preventing your vision from coming true. So why don’t more health insurance plans focus on primary care and make deductibles for primary care-related services much lower? Why isn’t this happening?

Ben Aiken: Yeah, it’s a good question. I don’t have all the answers; I’m trying to learn as much as I can on this stuff. As you all know, you don’t necessarily learn a whole lot about medical insurance and how it functions, health insurance, through the medical school process. The status quo is hard to shift. And even with nonprofit providers of health insurance plans, there are margins that need to happen, and the way that a lot of those folks think is built around this 80/20 rule, where basically you’re boxed into only taking a margin on 20 percent. And so there’s this inherent incentive for the overall size of the pie to continue to grow, because if you can only take 20 percent, or glean a margin from 20 percent of the pie, really the only way to do that is to make the pie bigger.

And the Affordable Care Act had some influence on that. Even though it also tried to solve some things, and I think did a decent job in some ways there, one negative consequence of it is basically that that pie equation started to happen. So most insurance companies are clearly incentivized for the size of the pie to just grow on a yearly basis, no matter what. So even if you’re doing a really forward-thinking job incentivizing value and changing the structure of how primary care is paid and that sort of thing, you just want costs to continue to go up. So that’s one thing that I think needs to be thought through thoroughly, and it will require some legislative shifts that really probably regulate and deregulate certain aspects of how insurance functions, especially on the fully insured side.

And businesses around the country are really probably the most forward, the most innovative, as it relates to examples of how this is done, and that is done through what’s called self-insurance, where a company of a certain size says, “You know what? We’re going to take the risk and basically, in essence, create our own insurance plan, and then we’re going to put the elements that we want to put in there to incentivize things like really open access to primary care.” There are quite a few examples of companies around the country that have been doing this for 25, 30 years. One that comes to mind is Rosen Hotels, R-O-S-E-N.

And there are folks on the benefits broker administration side who are really trying to drive some of this. There’s a group called Health Rosetta that is a real leader at a national level on that front, and they’re basically saying, “Hey, we’ve learned some lessons about how this can be done. You, individual business, here’s your broker advisor, here are the components that you need, here’s how you basically build out your own self-insurance plan that’s designed to function well.”

There is inherent complexity in running your own insurance. So I think part of the reason why, I mean, we see this. If you look at Walmart and the big employers, Amazon, they’ve been doing this for years and years and years, and they have economies of scale where it just makes complete sense to do it. But what about a business with 50 employees, or a business with 200 employees, who are interested in this? Maybe they have a partner to help them navigate some of the complexity, but, hey, if it doesn’t go well, they’re on the hook, and they could potentially bankrupt their business, right, if they’re taking all that risk on internally. So there’s some inherent skepticism that I think businesses have, and ultimately what we’re asking them to do is run two businesses, so run your own business, but run a health care business too.

And so there are various players out there trying to navigate and help businesses get there, but we’re seeing an increasing number of examples. And as the premiums go up and that burden is more and more on the businesses, ultimately businesses actually don’t have a choice, increasingly, and so they’re saying, “OK, we have to do this. We have to try.” And I think there are a lot of folks increasingly out there who have the skills to help them get there. So part of what we’re trying to solve at Decent is that, to really bring to small businesses some of these solutions that have been figured out with much larger businesses, but bring them at the same price points that those larger businesses are able to access. And so there’s a lot of interesting and exciting stuff. Direct primary care is a part of that. I mean, businesses have been leveraging direct primary care to decrease their cost in partnership with the forward-thinking insurance product. I’ll pause there.

Kevin Pho: We’re talking to Dr. Ben Aiken. He’s a family physician and health care executive. He wrote the KevinMD article “High deductible health insurance is bankrupting Americans.” Ben, what are some of your take-home messages that you want to leave with the KevinMD audience?

Ben Aiken: Well, I would say a couple of things. One, if you haven’t heard of direct primary care, take some time to think about it and look into it. It’s really an emerging and very exciting solution on the primary care side. Two, note that high-deductible health plans aren’t necessarily this great solution that we once thought they were, with the burden of them increasingly falling on patients themselves. And three, there are a lot of interesting folks and people out there trying to work to change our relatively complex and messy health insurance system, and there’s some exciting stuff on the horizon.

Kevin Pho: Well, thank you so much for sharing your time and insight, and thanks again for being on the show.

Ben Aiken: Thank you, Kevin.

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