Sunday, November 15, 2015

ObamaCare , the Health Care Balloon, and the Ineluctible Deductible

My wife went to her hairdresser recently, and she heard a group of women talking. All agreed they could no longer afford to see a doctor because of unaffordable deductibles. The women said they could no longer afford yearly physicals, much less care for routine or vexing health care problems.

What’s going on here?

Think of health care costs as a balloon. You’re a government or a business. You want to keep costs or the balloon volume constant. If you blow my costs into the balloon with more Medicare, Medicaid, and ObamaCare recipients, or obey government mandates to cover all full-time employees, you have to let air out for health care for the rest of us.

The balloon’s volume is growing with the government mandate that all Americans must pay a fine of $695 or 2% of income, if they do not have a health plan.

But how do you keep the balloon size the same without angering your voting constituencies if you’re a politician or your workers if you’re an employer?

You lower premiums, for that is something people pay monthly and identify as the true cost of care. And if you’re an employer, you throw in a sweetener called non-taxable Health Savings Accounts, which reward you for not seeking care and which can be transferred to next year or your retirement.

Deductibles are fast becoming inescapable or unavoidable. Robert Pear captures the essence of the problem high deductibles pose for consumers in this article “Many Say High Deductible Make Their Health Law Insurance All but Useless” (New York Times, November 15, 2015).

People asking: What good is health insurance if you can’t afford to see the doctor because of high deductibles?

Not to worry, President Obama says, “Most Americans will find an option that costs less than $75 a month.”

Sylvia Mathews Burwell, soothes recipients by saying,” Eight of 10 returning consumers will be able to buy a plan with premiums less than $100 a month.”

That’s fine on the front end, premiums, but what about the back end, deductibles?

In more than half the states plans offered for sale through have deductibles of $3,000 or more. In Miami, the medium deductible is $5,000; in Jackson, Mississippi, $5,500, In Chicago, $3,400; in Phoenix, $4,000; in Houston and Des Moines, $3,000.

For employers, the average annual deductible is $1,320 for individuals. For a family of four the deductible often runs $10,000 to $13,000.

The result of high deductibles is that most are paying for most of their medical expenses out-of-pocket. Most consider their policy only for emergencies and basic wellness appointments.

Much of what is happening to consumers fall into the category of health reform known as “Unintended Consequences of Well-Intended Health Reform.” Or, to paraphrase Abraham Lincoln, You can help and fool some of the people some of the time, but you can’t help or fool all of the people all of the time.

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