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Health Affairs This Week places listeners at the center of health policy’s proverbial water cooler. Join editors from Health Affairs, the leading journal of health policy research, and special guests as they discuss this week’s most pressing health policy news. All in 15 minutes or less.
Hello, and welcome to Health Affairs This Week. I'm your host, Jeff Beyers. We are recording on 03/31/2026. For some quick plugs, the Insider Program recently released a trend report on prior authorization. And on the event side for Insiders, we have an event titled The Evolution of Medicare Advantage and the Market Implications.
Jeff Byers:Speakers include Grace McElbee and David Myers, and the event will be moderated by Sachin Jain. That is on April 20. Don't miss that. So today on the pod to talk about health spending accounts, we have Jeanne Lambrew from the Century Foundation. Jeanne wrote an article for Forefront titled Abandon, Don't Expand, High Deductible Plans Linked to Spending Accounts.
Jeff Byers:Jeanne, welcome to the program.
Jeanne Lambrew:Thanks Jeff for having me.
Jeff Byers:You wrote in the title to abandon, not expand, high deductible plans linked to spending accounts. Can you give a generally quick history on deductibles for people who haven't or won't read the article?
Jeanne Lambrew:Sure. Well, as most of your listeners probably know, health insurance in The US is relatively young, less than a century old. It emerged during the great depression and afterwards during World War II when employers were trying to attract workers and the original Blue Cross Blue Shield plan basically just covered hospitals for a certain amount of money that was capped. However, over time during the 50s and 60s, we saw this emergence of so called major medical insurance, which did cover more services at a higher level. But we began to see this concept of a deductible in health insurance.
Jeanne Lambrew:A deductible is the amount that a person has to pay before insurance kicks in. It is common in other types of insurance like homeowners insurance or car insurance. And deductibles remained relatively low over the years until we began to see ideas in the 90s after the failed Clinton health reform effort for conservatives to say, hey, why don't we link high deductible health plans with some type of health spending account? Just to level set definitions, a health spending account could be a health savings account, flexible savings account. There's lots of different varieties of them.
Jeanne Lambrew:But mostly what happened was they were out there, didn't go anywhere until law started changing.
Jeff Byers:Are you saying that the expansion of health spending accounts to high deductible plans is a 1990s idea?
Jeanne Lambrew:It began from some conservative think tanks in 1990s and then expanded with three different laws. One was in 2003, Medicare Modernization Act put money behind them. Second, the Affordable Care Act clarified them, didn't eliminate them. But as we'll see in the coming years, last year, the One Big Beautiful Bill Act provided a bunch of incentives to expand different types of high deductible plans with health savings accounts.
Jeff Byers:So you're saying we still haven't escaped the culture of 1990s?
Jeanne Lambrew:No. There are some ideas that come around and come around again, and here's another one.
Jeff Byers:How is that history trending out for high deductibles?
Jeanne Lambrew:In 2025, the average deductible for people with employer coverage was about $1,900 For people buying on their own, it was higher, about $2,800 Yet the amount and the percentage of people paying deductibles like that have been growing over time. Now the use of accounts hasn't really shifted significantly. It is up from 2014, but only about one out of three covered workers in employer based insurance has some sort of account.
Jeff Byers:Okay. So to me, high deductible health plans assumes decent access to health services. But we know getting an appointment can be easier said than done. So when looking at the expansion argument, is there anything missing in current arguments, you know, taking into account the reality of access of healthcare?
Jeanne Lambrew:Well, unlike other types of services, health providers may or may not accept patients due to their insurance and ability to pay. For example, we're seeing a big growth in direct primary care, formerly called concierge medicine, where providers only see people who pay a monthly fee. Additionally, we know that most health spending is not a choice. It's urgent care, treatment for cancer or chronic illness. And in fact, 20%, one out of five of every healthcare dollar is for the sickest people.
Jeanne Lambrew:And importantly, we know that deductibles really are paid for by people who are sick. They're like a surcharge for people with preexisting conditions. So it really is a challenge to think how traditional shopping that we do in different sectors works in health policy.
Jeff Byers:Okay. I guess like one of the arguments for such plans is that they can increase price shopping in health care. So we know people search for health service are likely in a vulnerable state, and they might not be in the best mindset to price shop. So what are the current price shopping trends, and how do your high deductible plans fit into these trends?
Jeanne Lambrew:There are some services that one could argue are shoppable, like prescription drugs. But for example, if you look at what's been going on with that Trump Rx, the new government website, a number of studies have found that you can find lower prices in different private sites like GoodRx. So unclear whether even the shoppable services are able to be shopped. I think we know in reality that few studies have found that people shop more for services when they have a high deductible plan. We even know that employers who promote shopping find that their employees don't use the tools that they give them.
Jeanne Lambrew:And look, I think we all know healthcare is complicated to begin with, right? So if you, on top of trying to figure out where to get your care, have to track how many dollars you spent towards your deductible. If you have an account, have to track how many dollars have come from that account and what happens when they're exhausted. And this is why surveys have found that less than half of high deductible health plan enrollees were very or extremely satisfied with their plans compared to 62% of enrollees in traditional coverage.
Jeff Byers:I guess like there's this question I'm trying to think of. If we know that most of the health spending or most of the sick populations are driving the health spending. Is that right?
Jeanne Lambrew:Yes. Again, like, go back to our dollars. 50% of people account for only 3% of costs. The rest of the costs are with the few people who need it. And, you know, one year you need it, one year you don't.
Jeanne Lambrew:It's not even a predictable group.
Jeff Byers:So when looking at health spending accounts in those plans and high deductible plans, so a lot of people are on them not driving up spending. Is that correct to assume?
Jeanne Lambrew:Well, the interesting part about this is is that we know that high deductibles, high cost sharing will lower utilization of healthcare, whether it's needed or not. That's just a given, we know that. We also know that if you have an account, it doesn't really change your spending very much. We see roughly the same expenditures of people with and without accounts. But we do know if you have one of those use it or lose it accounts, like a flexible savings account, people actually may spend more.
Jeanne Lambrew:Because at the end of the year, they're like, Oh my gosh, I have a balance. Let me get some glasses or other types of like equipment that I otherwise couldn't buy. And we've actually seen some evidence that it may increase whether they decrease spending.
Jeff Byers:And so we'll get to you, you know, your arguments about abandoning health spending accounts. But I guess like when we look at what you just said about not changing spending too much if or without it, like, I guess I'm kinda wondering, like, how big of a deal is this of, like, this idea of expanding health spending accounts to high deductible plans?
Jeanne Lambrew:You know, the president has said for years, he's trying to find the concept of a plan. This is his concept. He announced in his great American health plan, this concept of saying the best way to get at the high cost of health care in this country is shifting into consumers, shifting the responsibility away from insurance companies and to consumers. And that is playing out as we speak. You know, we know with the individual marketplace as the premium tax credits that have been in place for a while, the so called enhanced premium tax credits ended, we have seen just in the past few days new information that says we've gone from 30% of people with high deductible health plans or bronze plans in the marketplace to 40%.
Jeanne Lambrew:Because of policy changes, that same report from March 30 found that the percent of people selecting plans that could qualify for a health savings account went from two percent last year to forty three percent this year. So this is not theoretical. We see a proposal from the administration to expand so called catastrophic plans. Those plans have a family deductible of 31,000 So this is becoming the new reality in a world in which this president and this Congress have decided that the answer is consumer behavior.
Jeff Byers:And so what you're saying, again, me if I'm wrong, with the spending doesn't change whether too much if you have a health if you have a health spending account or not. Is that correct?
Jeanne Lambrew:We've seen that for kind of equal cost sharing, there's not a difference in expenditures. People don't necessarily shop for lower prices.
Jeff Byers:So it's taking more out of a consumer's household budget is what you're saying?
Jeanne Lambrew:Well, if you think about it this way, if you can choose a high deductible health plan with a lower premium or a low deductible plan with a higher premium. Yet if you are a person who's chronically ill, you're going to pay more under the one with the lower premium and the higher deductible because you're going to use the deductible. If you're a healthy person, you might be fine with that high deductible, low premium plan. But we really do see that people who need care are disadvantaged by these high deductible health plans all else equal. And look, if you look at any survey in this country these days, high costs of healthcare are already a problem.
Jeanne Lambrew:I think there's a real concern that they will become a bigger problem when these deductibles keep rising, people can't afford their premiums and end up skipping medications, skipping their care.
Jeff Byers:You brought up consumer behavior. So your work has largely focused on health reform, at the Century Foundation and at the White House under President Obama. So in your view, is it possible to lower health prices in healthcare via consumer behavior?
Jeanne Lambrew:You know, we do know that a large part of our own health relates to behavior like what we eat and whether we exercise and how we manage stress, for example. We also know that low value or unnecessary care can be lowered by targeted cost sharing because people are price sensitive when it comes to healthcare. But note that that kind of high deductible cost sharing approach lowers utilization, use of care, not the price of care necessarily. But there really is no research that supports this shifting responsibility for lowering the highest prices of healthcare in the world to consumers' work. In fact, I think the research shows the opposite.
Jeanne Lambrew:It will reduce access to care and if anything we need more government involvement, not less.
Jeff Byers:So in Forefront you ultimately make the argument to eliminate deductibles in health insurance. So how did you come to that conclusion?
Jeanne Lambrew:Look, think when we look at what we know about lowering prices, the program in this country with the lowest healthcare prices happens to be one where there's no cost sharing or very limited cost sharing and a very high percentage of government involvement, that's Medicaid. So we do know where we have low prices in our healthcare system. And that would argue that we need more government involvement. But I think there are some steps that policymakers could take to get there. One is start where the debate has been the Affordable Care Act marketplaces.
Jeanne Lambrew:Without any sort of price tag, you could say that the gold and silver, the generous plans in the marketplace shouldn't have deductibles. You can just do that through, you know, federal policy, through state policy. In fact, California and a number of the state based marketplaces have already done that. Second approach is that you actually take the premium tax credit in the ACA and link it to a more generous plan, like a goal plan and say no deductibles in that plan. That's a possibility.
Jeanne Lambrew:For employer coverage, we already have what's called like a minimum value, like the percent of expenditures that employer plans have to cover. That could be raised. And again, the higher value of that coverage with the deductibles. Now, some of those policies come with a cost. There are many ways to lower prices to pay for that increase in spending, but it is trying to shift, you know, the costs away from being borne by consumers to being borne by the government with trade offs, lowering prices to pay for more access.
Jeff Byers:Yeah. So you have these ideas to move forward with the the overall argument, so how much of a real possibility could these options be?
Jeanne Lambrew:Look, I think we're coming to a point where there is a cost crisis in healthcare. Policymakers at the state level, the federal level are talking about it, thinking about what to do about it. And I do think that states will take the lead. We've already seen this with some of our state based marketplaces. We're seeing this across the state houses this year as they are trying to grapple with the high price of health care to try to pay for those basic needs.
Jeanne Lambrew:And I do think as we go into the future, we're gonna learn more about high deductible plans linked to accounts because that is going to be increasing with the Trump administration and this congress's push. So I think we'll have a natural experiment to figure out does this shoppable health service model work.
Jeff Byers:Well, a natural experiment sounds like an opportunity for researchers, if I've ever heard of one, for better or for worse, depending on your outlook. Well, again, Jeanne Lambrew, thanks again for joining us today on Health Affairs This Week. If you, the listener, enjoyed this episode, please send it to the secret shopper in your life, and we'll see you next week. Good