High-deductible health plans exacerbate health disparities

High-deductible health plans may contribute to racial and ethnic wealth disparities, according to a new study published in Health Affairs.

“A high-deductible plan design is more likely to rely on enrollees’ wealth to facilitate health care use, whereas copayments may draw on households’ income, simply because smaller copayment charges are more likely to fit within the typical household budget,” the report said.

Researchers evaluated the net worth and financial assets of families with private insurance and those in high-deductible health plans with and without an associated health savings account. White households consistently held significantly more wealth than did Black and Hispanic households across income levels. In the lowest income quartile, white privately insured families had more than 350% more in financial assets than their Black counterparts.

“Study findings highlight the role of systemic racial wealth disparities, beyond that of income, to establish a unique pathway whereby high deductibles can exacerbate health care inequities,” the report said.

Related: Health disparities exist in every state: Stark racial divide in premature deaths

The study cited the example of the average cost of a hospital visit, which last year ranged from $200 to $400 for enrollees in plans charging a fixed copayment. By contrast, the average deductible in an HDHP amounted to $2,500 for single or $5,000 for family coverage, requiring thousands of dollars’ expense on a comparable visit before an insurer begins to contribute. That same hospital visit would require most U.S. households to spend down assets if they were enrolled in an HDHP. About 2% of household spending typically is allocated to out-of-pocket medical expenses, amounting to $1,800 in 2022, and at least 60% of the income distribution spends more than it makes, leaving little room to absorb the higher spending.

Low-income Black and Hispanic families with HDHPs and without a health care savings account are particularly financially vulnerable. Although HDHP enrollees have higher incomes and more assets than conventional-plan enrollees, Black and Hispanic families with HDHPs and no health savings account in the first quartile of income had approximately $2,000 in median financial assets. Even if these assets were entirely liquidated, this amount would fall just below the average HDHP deductible for single coverage or half the deductible for family coverage in 2018.

“Policymakers should consider policy actions aimed at reducing the role of financial wealth in access to care,” the report concluded. “For example, policymakers could reconsider the rules governing HSAs, which currently incentivize employers to adopt HDHPs. Changes in the rules might include reductions in the minimum deductibles required in such plans; caps on the amounts of tax-protected savings that participants could accumulate; or requirements that only employer contributions to plans would be permitted.

“Racial and ethnic wealth gaps are large and persistent. Health policymakers, however, have opportunities to act to mitigate the effects of these wealth gaps on access to care,” the report said.