There’s an interesting article at Bloomberg on the effects of high-deductible health care insurance. Here’s the kernel of the article:
“High-deductible plans do reduce health-care costs, but they don’t seem to be doing it in smart ways,†said Neeraj Sood, director of research at the Leonard D. Schaeffer Center for Health Policy and Economics at the University of Southern California.
Some big companies are sitting up and taking notice. “We all thought high deductibles are going to drive people to get involved—‘skin in the game,’†Jamie Dimon, the chief executive officer of JPMorgan, said in early June. Instead, “they didn’t get the surgery they needed, when they needed it, because they can’t afford the high deductible in one shot.” JPMorgan is effectively eliminating deductibles for workers making less than $60,000 a year.
Dimon has teamed up with the top executives of Amazon.com Inc. and Berkshire Hathaway Inc. to improve the health care they provide for their workers. The incoming CEO of that venture, surgeon and journalist Atul Gawande, has also noticed the plight of such families as the Jordans. “I had one friend who was bankrupted with a health plan,†Gawande said at the Spotlight Health event in Aspen, Colorado, on Saturday. “He had a $3,000 deductible and couldn’t meet it.â€
which is completely unsurprising to anyone who’d actually looked into the issue rather than merely mouthing free market nostrums. There have been multiple studies which all found the same thing: high-deductible plans cause people to economize but they don’t necessarily economize on the right things. They’re as likely to economize on things that can reasonably be postponed as they are on care that should not be postponed.
Increasing deductibles does not lower the cost of health care.
Higher payments from the government does not lower the cost of health care.
As the late Uwe Reinhardt put it, it’s the prices, stupid.
I would just amend this to say that it decreases spending in the short run, which is the focus of most American business. In the long run, it probably increases them. Besides surgery, people don’t take the meds that they cannot feel makes a difference, like blood pressure meds, in order to save money on their deductibles.
Steve
Nor does soothing evening news sound bites or twitter stream of consciousness rants.
“He had a $3,000 deductible and couldn’t meet it.â€
But, then, that’s what bankruptcy is for. In some countries, he wouldn’t have gotten the surgery, and his coffin would have bankrupted his widow.
IMO deductibles work for normal insurance scenarios – coverage for rare, high cost events. Health care coverage doesn’t work like that however.
In my own case we have a $3k “deductible†but it works on a per year, not a per event basis. So we pay for the first $3k of our health care and after that, insurance kicks in but it still doesn’t cover 100%of everything. To me that’s a bad model With bad incentives for most people.
“But, then, that’s what bankruptcy is for. In some countries, he wouldn’t have gotten the surgery, and his coffin would have bankrupted his widow.”
Probably not in any other first world country. Somalia? Sure. Say this was for chemo. That tis not emergency care, so he probably would not receive it. When the tumor spreads and his kidneys shut down? Then he gets admitted for (expensive) emergency care. He can then file for bankruptcy. (if he lives.)
Andy- A high deductible is the same as no insurance for people w/o savings. That rare, high cost event, unless emergent, may not happen if they can’t pay for it.
Steve
But you can’t force people to work for free, even health care professionals. You can blame insurance companies, but if they were making a killing, they wouldn’t be leaving markets. I believe all we have left here is Humana, so much for competition.
The last time my wife was in ICU, an R N confided to me that fully half of patients in ICU have NO method of payment. NO Medicare, no Medicaid, no private insurance, no savings, ergo, no payment, no matter how high or low the bill, except what the collection agency will give them. Now, that’s ICU, they, (patients), didn’t expect to be there.
I know I’m just restating the problem, so here’s a proposal: Make debtor patients go through the Medicaid qualifying process. liquidate all assets, home, auto, savings down to $2,000. Sign over future pensions, SSI payments, less$50./mo. for toothpaste, ect., then reimburse the healthcare provider under Medicaid.
This is exactly the process used to qualify for long term care at a skilled facility, no running up a tab, then having the estate file for bankruptcy.
Steve,
True, in which case such people should choose high deductible options. Unfortunately I also understand that the high cost means many cannot afford a low deductible. It comes full circle to Dave’s concluding sentence.
There’s a two-part answer to that. The first is that at least I’m not asking them to work for free. I’m asking them to work for less than the government subsidy enables them to earn.
The second part is that, at least in theory, physicians are ethically obligated to work for free in some cases. Maybe I’m wrong about this but I see more physicians driving Ferraris and living in multi-million dollar homes than I do in danger of starvation. The very nice Chicago neighborhood in which I live used to have a few physicians in it. No more. They’ve all moved to the priciest suburbs. That doesn’t suggest that they’re working for free.
Make debtor patients go through the Medicaid qualifying process. liquidate all assets, home, auto, savings down to $2,000. Sign over future pensions, SSI payments, less$50./mo. for toothpaste, ect., then reimburse the healthcare provider under Medicaid.
And even fewer patients will seek treatment. Harshing on the sick doesn’t fix anything, it drives the sickness into the shadows so we can pretend we don’t see it.
The linked piece seems to be a string of anecdotes, so I feel comfortable stating that we switched to a high-deductible option a few years ago because the difference in the monthly premiums was large. The change reduced our overall healthcare costs by thousands of dollars.
As someone who could pay an unexpected bill of $400 and has a choice of health care options, I no doubt am highlighting a privileged position. But the gist of the piece appears to be directed at limiting or barring high-deductible plans, which would cost us thousands of dollars a year with no apparent economic benefit. For people who don’t have $400, it wouldn’t help.
I also think there are studies that have shown that the wellness visits encouraged by the ACA are not improving healthcare either and I think it might have been because people discovered that “wellness visits” is a legal term which doesn’t apply to everything, particularly resulting referrals to specialists. That is, if people cannot afford a $400, high deductibles aren’t necessarily the problem.
“High-Deductible Health Care Insurance”
My comment did stray from the premise. Recently, we were purchasing a health supplemental plan and the young, self employed agent revealed that he and his wife were paying $1100./month for a plan with a $16,000. deductible.
I commented I’d be tempted to just put $13,300/year into savings and take my chances. He retorted that the A.C.A penalty was now too high to risk that. My real point is that high deductible plans were written as a reaction to the Affordable Care Act, so that there would be an option for all to comply.
” Maybe I’m wrong about this but I see more physicians driving Ferraris and living in multi-million dollar homes than I do in danger of starvation. ”
Definitely true. In our entire network we have one doc who drives a Ferrari (his father was a senior VP at GM) and none are starving. What our network does is look at the finances of anyone who says they cannot afford care. If they cannot they don’t have to pay. My group uses the same numbers they do.
“I’m asking them to work for less than the government subsidy enables them to earn.
Private insurers pay better than does the government.
Steve
PD,
I’m in the same situation as you. High deductible options are not for everyone but they shouldn’t be banned because they are very useful to some.
I also agree that wellness visits just create referrals. Steve, I’m sure, knows better than I do, but I think due diligence is driving a lot of it. If someone says they have some issue or pain, or symptom, doctors, in my experience, are going to send them for tests at least.
My point is that they’re not the solution, as is claimed by many of those advocating pro-market reforms for health care.
If you can afford to pay the high deductible if you ever get sick, then they are a useful way to keep premiums down.
Andy-Yes, but then the prices, among other things, matter a lot.
Steve