Could multi-year health plans help prioritize prevention?
By Pranav Mehta, managing director, Deloitte Consulting LLP
The Department of Health and Human Services (HHS) has proposed the development of multi-year catastrophic health plans in the individual market. The plans would offer low premiums in exchange for high deductibles and limited coverage.i Extending the coverage-period over years—instead of 12 months—could give health insurers a financial incentive to invest in the long-term health of their members. But the plans or benefit packages should be structured in a way that gives enrollees a financial incentive to stay with plan for the duration of the policy. (See Is the future of health care financing closer than we think?)
The proposal would combine a high-deductible, multi-year (up to 10 consecutive terms) catastrophic policy that includes full coverage for up to three primary care visits a year. It also would broaden access to no-cost preventive services beyond what is currently required under the Affordable Care Act (ACA). Monthly premiums could be as low as $100—substantially less than the premiums for a more comprehensive silver-tier plan, which can range from $500 to more than $700 a monthii. A primary tradeoff for consumers is the out-of-pocket maximum, which could be as high as $15,600 a year (more than $27,000 for family coverage). The current out-of-pocket max for catastrophic plans is $10,600 ($21,200 for family coverage). Health plans could structure the proposed plans so that deductibles don’t reset every 12 months, like traditional health plans.iii The plans might also be structured so that out-of-pocket maximums decrease the longer the policy is in place.iv Given the short-term financial risk, such health plans might be most attractive to young and healthy consumers. Older consumers, and those who have a chronic condition, might avoid such limited coverage and high out-of-pocket costs.v
HHS is exploring the expansion of multi-year health insurance plan designs beyond catastrophic coverage to include metal-level plans (bronze, silver, gold, and platinum).vi Outside of the exchanges, some health plans might consider multi-year health plans for their employer clients, particularly employers that have low turnover rates.
The ROI on preventive care
Each year, about 20% of the commercially insured population switches health coverage due to a change in employment, an active selection during open enrollment, or aging into Medicare.vii This high churn rate means health insurers don’t necessarily see the impact of their investments in prevention and the long-term health of their members. Consider this: While GLP-1s might help slow the progression of cardiovascular disease, kidney disease, dementia, and some types of cancer,viii a health plan is unlikely to see a return on investment if the member switches coverage after a couple years (see Prioritizing prevention: a GP’s perspective). The drugs can cost between $700 and $800 a month without rebates from the manufacturer. ix
Some insurance carriers in Massachusetts have decided not to cover GLP-1s for weight loss.x Similarly, Delaware is considering increasing GLP-1 copayments for state employees or dropping coverage altogether. This misalignment between the annual pricing cycle and the long-term financial benefits of chronic care management and disease prevention can cause challenges in the traditional health insurance model (see The future of health care financing: pathways to sustainable models). An actuarial analysis of claims data estimated that an increased focus on the prevention and early detection of disease would save the US health care system $2.2 trillion a year by 2040 (see Disease-prevention investments could cut US medical and drug spending by $2.2T a year).
How multi-year plans could affect stakeholders
Individual health plans are often viewed as a temporary solution. People who purchase individual coverage might be between jobs or lack access to affordable employer-sponsored insurance. If that employment situation changes, people might drop the individual coverage and enroll in an employer-sponsored plan. For multi-year health insurance plans to succeed, enrollees would need a financial incentive to remain in the plan for the full term. That would require portability as people move between jobs. Creating such portability would likely require a pathway that allows employers to support employees who are already enrolled in a multi-year plan.
A multi-year health insurance model would likely involve a significant change in behavior for all stakeholders. But there also could be some benefits.
- Health plans: Multi-year policies could give health insurers a financial incentive to invest in the long-term health of members. Keeping members healthy and out of the hospital could translate to fewer medical claims and lower costs. Such policies also could help reduce administrative costs if health insurers don’t have to invest as much in sales and retention activities.
- Health systems and clinicians: The idea of value-based care (VBC) has been around for years, but it has yet to gain much traction over the traditional fee-for-service model. Multi-year plans could help promote a VBC model if health plans can incentivize clinicians to keep members healthy and out of the hospital over a long duration. Health care providers would likely need to work with health plans to educate consumers about the benefits of prevention and make them more accountable for their well-being.
- Employers: Increased focus on well-being could lead to a potentially healthier workforce and lower costs associated with absenteeism and presenteeism. The ability to offer a fixed-contribution Individual Coverage Health Reimbursement Arrangement (ICHRA) alongside traditional coverage options with longer duration policies could help employers manage their long-term benefits costs.
- Consumers: A multi-year health plan would involve consumers focusing more on early detection and prevention. But the savings for health plans and consumers could be significant. Deloitte’s actuaries estimate that individual health care costs for Americans could drop by $7,000 a year— from $23,000 to $16,000—with increased focus on the early detection and prevention of disease.
Multi-year health plans could help align incentives across insurers, providers, employers, and consumers by rewarding prevention and long-term health outcomes rather than short-term cost management. But for these plans to succeed, policymakers and insurers will need to design them with strong portability and enrollment incentives while ensuring affordability and protection for older adults and people with chronic conditions.
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Endnotes:
iThe Patient Protection and Affordable Cara Act (PPACA) Notice of Benefits and Payment Parameters for 2027
ii2026 brings sharp 21% spike in health insurance premiums, Yahoo! Finance, December 16, 2025; Best health insurance companies of 2026, Forbes, March 3, 2026
iiiCMS issues 2027 HHS Notice of Benefit and Payment Parameters proposed rule, Groom Law Group, February 11, 2026
ivTrump team’s planned ACA rule offers its answer to rising premium costs: catastrophic coverage, the Lund Report, February 17, 2026
vCatastrophic health plans, Forbes, March 2, 2026
viHHS notice of benefit and payment parameters for 2027, Centers for Medicare and Medicaid, February 9, 2026.
viiTrends in disenrollment and reenrollment within US commercial health insurance plans, JAMA, February 24, 2022
viiiHow do GLP-1 medications impact heart health?, Minneapolis Heart Institute Foundation, December 18, 2025; The influence of GLP-1 receptor agonists on five-year mortality in colon cancer, Cancer Investigation, December 13, 2024; GLP-1 receptor agonists may modestly reduce risk of 14 obesity-related cancers, American Society of Clinical Oncology, May 22, 2025; GLP-1 medications may lower dementia risk, JAMA Network, May 2, 2025
ixPatients face new barriers for GLP-1 drugs, University of Pennsylvania, Leonard Davis Institute of Health Economics, January 21, 2026
xMassachusetts joins insurers cutting coverage for popular weight-loss drugs, Boston Globe, March 2, 2026
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