You might want to take a look at an interesting op-ed from S. Lawrence Kocot, writing at RealClearMarkets. In the op-ed Mr. Kocot outlines some of the factors to keep an eye on in determining how smoothly the implementation of the PPACA, “ObamaCare”, is going. Among the factors he identifies are, broadly, affordability, availability, and outreach.
I think that many of things that people are worried about in the implementation of ObamaCare are the unknowns, both what have been referred to as the known unknowns and the unknown unknowns. Let’s consider just one of those unknowns. How will the plan affect high deductible healthcare plans?
The two fastest-growing forms of healthcare insurance are self-insurance, having no insurance which will essentially be banned under the new order of things, and high deductible healthcare insurance, also known as catastrophic healthcare insurance, in which most of the healthcare that people consume is paid out-of-pocket and insurance covers only amounts over some fairly large amount, $5,000 per year, $7,000, something like that.
About a sixth of all of those with employer-provided healthcare insurance are in high deductible plans.
In the individual insurance market high deductible plans almost certainly will not qualify as having healthcare insurance under the new requirement. The plans just don’t cover enough things. Additionally, the guaranteed cover and community rating provisions of ObamaCare (no disqualification for pre-existing conditions and a provision that everybody in a given area pay roughly the same rates) may cause insurers to stop offering high deductible plans.
Finally, under the new requirements for insurance companies to maintain a high medical loss ratio, most premiums must go to paying for healthcare. It’s not really clear how medical loss ratio requirements may fit in with high deductible plans.
If high deductible plans go the way of the dodo, quite a few employers and individuals who pay for their own insurance may be forced into significantly more expensive plans, not even taking into account the higher premiums for all plans that the CBO has pointed out. Paying more for healthcare insurance means that people have less money available to spend on other things which in turn will reduce general economic activity, a further depressant on employment.
Individuals will be able to buy HSAs and high deductible plans, at least up to $6000.
http://theincidentaleconomist.com/wordpress/health-reform-how-it-happened-what-it-means/
Somewhere in my archives I have tucked away the deductible limits for families. For a bronze plan, I think it topped out between $8k-$10k. The deductible should just be factored into the cost of the plan. Not sure why it would affect MLR.
Steve
High deductible plans would only be allowable for individuals under 30 and those who qualify under “hardship”. If a sixth of all employer-provided insurance is high deductible, presumably quite a few of those covered are over 30 and don’t qualify under hardship. That suggests more will be paid for their insurance.
Additionally, I think that assumes that such policies will continue to be offered. I don’t think that’s certain.
Please explain how this mitigates the point Dave raised about how higher cost health care reduces consumption spending in other areas, please.
Then you need to define high deductible. The bronze plan will cover just 60% of the actuarial value of the plan. The deductible maxes out at 6k, depending upon income, 12k for families. 40% of actuarial value seems like a pretty decent deductible. For the HSAs, IIRC, the deductible tops at about 6k also. Should HSAs be offered for over the age of 30? Sure.
http://www.samefacts.com/2012/05/health-care/more-on-high-deductible-health-plans-and-the-aca/
Steve
Steve V- I was just pointing out that the ACA has plans with pretty significant deductibles. If you read Dave’s link, high deductible is not very well defined, meaning anywhere from $1000 to $7000 or higher according to the article. In health policy literature it usually means deductibles over $1000, or $2000 for a family. The ACA provides these. Your question is now irrelevant as it pertains to the ACA. As a general rule, yes, more spending on health care means less spent elsewhere. Not 100% true as clearly there is a positive ROI on things like vaccinations, but close enough.
Steve
Still seem to be a lot of unknown unknowns with the ACA. We’ll soon find out if the confidence of its supporters was warranted.