Monday, December 9, 2013

High Deductibles = Unaffordable Care

“If you have to pay $5000 up front, you might as well have no insurance at all.”

Health Care Consumer

The obvious, which is not so obvious, and the simple, which is not so simple.

The Practical Cogitator, 1959

First,  the definition, in an insurance policy,  the  deductible is the amount of expenses that must be paid out-of-pocket before the insurer will pay any expense.

Next,  the obvious,  many Americans,  beset by joblessness and falling incomes,  cannot afford to pay the deductible, even for low premium policies. Under Obamacare, the most allowed deductible is $6,350 for an individual and $12,700 for a family.  In California,  the deductible for a low premium policy is $5000, in Rhode Island it is $5,800, in seven states it averages 26% higher than before.

Finally, the not-so-obvious, insurers have raised the deductible to compensate for provisions in the ObamaCare law – covering people  with pre-existing illnesses and young adults up to 26 under their parents’ policies,  offering “free” preventive services to 105 million Americans,  and providing  plans that must have those ten essential benefits as a minimum.  High deductibles are a not-so-obvious manifestation of the Milton Friedman’a  maxim, “There is no such thing as a free lunch.”  Lunch is now being served to the American people.

Today’s Wall Street Journal describes the health care consumer’s  problem this way, “As enrollment picks up on the website, many people with modest incomes are confronting a trouble element in the federal health law: deductibles are so steep they may not be able to afford the portion of medical expense that insurance doesn’t cover (“High Deductibles Fuel New Worries of Health-Law Sticker Shock,” December 9, 2013,  WSJ).

On a Bronze plan,  the Obama-endorsed plan with the lowest premiums,   the average deductible is $5081 in 34 states. That’s 42% higher than in 2013.   High deductible  may cause  reduced use of medical services, delays in seeking needed treatment for enrollees who don’t qualify for subsidies, and increases in bad debt for physicians and hospitals.

High unaffordable deductibles have consequences;  People who are above four times the federal poverty level who do not qualify for federal subsidies are likely to think twice before visiting their doctor,  going to the emergency room, or enrolling  in health care exchanges.

Tweet:  The rising average high deductible for low premium plans, now $5081 in 34 states, is unaffordable for many health consumers.

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