Healthcare Deductibles Rising -- Why This is GOOD News

Things like Obamacare cannot be discussed, it seems, in anything but a political context.  So if you don't like Obamacare, everything that happens has to be bad. But I actually think this is good news, and goes against my fears in advance of Obamacare.  I had been worried that Obamacare would just increase the trends of more and more health care spending being by third-party payers.  And my guess is that this is happening, when you consider how many people have gone from paying cash to having a policy, either a regular policy or expanded Medicaid.

A report out today puts numbers behind what hit many workers when they signed up for health insurance during open enrollment last year: deductible shock.

Premiums for employer-paid insurance are up 3% this year, but deductibles are up nearly 50% since 2009, the report by the Kaiser Family Foundation shows.

The average deductible this year is $1,217, up from $826 five years ago, Nearly 20% of workers overall have to pay at least $2,000 before their insurance kicks in, while workers at firms with 199 or fewer employees are feeling the pain of out-of-pocket costs even more: A third of these employees at small companies pay at least $2,000 deductibles.

“Skin-in-the-game insurance” is becoming the norm,says Kaiser Family Foundation CEO Drew Altman, referring to the higher percentage of health care costs employees have to share.

Honestly, this is good news, sort of.  I don't like the coercion and lack of choice, but the main problem with health care is that the person receiving the benefits is not the person paying the bills, which means there is no incentive to shop or make care tradeoffs.  Higher deductibles mean more people are going to be actively shopping and caring what health services cost, and that is a good thing for prices and health care inflation.

  • frankensteingovernment

    I tend to agree with the "skin in the game" premise. However, Obamacare is a pending disaster. Three things are occurring right now. The young and healthy don't have the money and aren't buying in, the fully subsidized are taking full advantage with pent up demand, and many people are delaying purchases until they have a pending medical issue.

    I expect low double digit premium increases in the 15% range for the next 3 years. That is inflation you can count on.

  • bluegrass

    I agree that this is a good trend. My fear, however, is that the high deductibles will be identified as "unaffordable." If that is true the best solution would be a direct subsidy to those who cannot afford them. However, the politically preferred solution will be to 1) have HHS force a drop in deductibles, 2) raise premiums, and 3) increase the subsidy to insurance companies. Bad incentives for health care costs but best incentives for moving toward single payer.

  • http://www.grouchyconservativepundits.org/ Rusty Bill

    $2,000 deductible, eh? I don't think I've spent $2,000 total for medical care in the last thirty years (I'm 57; I work in retail shipping/receiving/stock). I keep a relatively complete first-aid kit on hand, plus extra band-aids and Ibuprofen. That takes care of my medical needs. I do not have medical insurance through my employer and I can't afford it on my own. As far as I am concerned, this whole Obamacare clusterfark is nothing less than government-mandated extortion.

  • me

    True; this is somewhat beneficial. Then again, non-witchhunt criticism of obama care does focus on what it promised to be but definitely wasn't - an improvement in the known huge problems with American care. I'd say it's far outweighed by the utter lack of a market (cf. http://annfammed.org/content/12/5/470.full) and an obscure and inflated pricing system geared towards milking patients come hell or high water (Simple blood test? well, that's at least two appointments, one to draw and one to discuss results; no way to simply share results, and of course the doctor must step by when the nurse is drawing blood to as "everything okay?")

  • jdgalt

    You assume that the people buying the insurance are actually capable of paying the deductibles. I'm not, but had to buy it anyway or pay a tax penalty.

  • mesocyclone

    I think this depends on whether you believe the "insurance" is insurance or payment for routine care. If the former, raising the deductible is reducing the protection against unforseen costs that insurance provides, and that's bad. If the later, it shouldn't be from this source in the first place.

  • Franco

    Skin in the game? I think my $500 per month is plenty skin. High deductibles just keep me from getting the care I need. This year I waited to get my stress test since I had to pay out of pocket for it until my deductible was met. Guess what? I don't have the $500 to pay it and I am far from reaching my number. So I start having problems and have to have a cathorization. This thousands of dollars and more intrusive. I have take out a loan to pay my deductable. Thanks for nothing Obama care. You are an idiot ideiolog

  • TeleprompterOTUS

    I think there's many people like my wife and I that never meet their deductibles so in a sense we have only catastrophic insurance which is all we would want anyway. The govvy mandated costs of this are now far in excess of what we would pay without Obama - care. Mandating everyone have such a policy is simply a wealth transfer tax from us to a bloated government and their cronies in health administration and insurance all of whom benefit from the new regulatory/state expansion. A good next step that will never come would be to advance to a system where each person is responsible for managing their own health and their own illness-insurance expenses in private systems.

  • http://thegameiam.wordpress.com David

    High premium + high deductible is not my definition of a good deal.

    I'm okay with a high deductible, but then the premiums should be relatively low, shouldn't they?

  • Tom Nally

    I don't see rising deductibles as necessarily a good sign. The federal and state costs associated with the administration of this gargantuan program are sucking up money that citizens would otherwise spend on actual healthcare services. In addition, the healthcare recipient has to somehow pay for the cost of compliance born by the healthcare entity that delivers the services. That's two additional cost areas that have to be covered which, incidentally, add no value to the actual unit of service delivered. So, increasing deductibles is a net loser in my view.

  • Nehemiah

    The big problem on the horizon will be on the supply side. Yes, making healthcare consumers the buyers of service is a good thing. However, a lot of factors could push doctors out of the profession and close hospitals. The regulatory requirements are substantial. Obamacare will result in lower margins and there has been no meaningful relief on the medical malpractice side. How do you competitively shop for a service that may will be rationed soon?

  • Mike Powers

    I'll take a different tack than the "MAH MONEYS" crowd.

    There are always two assumptions in the "skin-in-the-game" criticism of health insurance. First, that consumers who have to pay their own way will choose the option that represents, to them, the best value; but second, that the providers will charge market prices.

    The issue we have today is that providers are used to the insurance companies refusing to pay more than a percentage of the bill, so they just jack up the price they initially charge so that the "negotiated" price is what they wanted all along. However, if you walk in off the street and want to pay out of pocket--which is what the "skin-in-the-game" advocates want to happen--you don't get charged a reduced price, you get charge the initial wildly-inflated costs.

    You can go on about how "pay for it yourself" will lead to reduced costs, but I kind of think that it will end up working more like buying a car--sure, if I negotiate for three hours I can theoretically get a deal that's sort-of fair, but more likely I end up paying for the healthcare equivalent of undercarriage rustproofing and paintless dent repair.

  • Anita

    In principle, I agree with high deductibles. But in practice, it is hard to get good information. I had to go to the ER after I fell off my bike and had a cut on my eyebrow. (My doctor's office sent me to the ER.) I knew to refuse the chest x-ray and the IV - all I needed were stitches! - but didn't know how to argue about the CT scan. I asked several times how much it would cost, but nobody would tell me. I didn't have the sense to ask if I really needed one - if you are in the ER, you are mostly trusting that you are being treated by people who know more than you do - and now am facing a $1,500 bill for the scan. If I had known 1. that I probably didn't really need a scan and 2. that it would be so expensive, I would have refused it. But how do you get that information while you are sitting half dressed in a cold ER and nobody will answer your questions?

  • Not Rick

    My bill went from 400 to 640/mo and my deductible went from 3500 to 5000 which basically means, unless it's catastrophic I don't have insurance - I simply have the bill. I don't shop around because there is no point, either it's an emergency and there is no time to shop, or it's not in which case, I can't afford it, short of maybe a trip to Mexico. Unless you're planning something like a knee replacement, what is it that you think anyone is going to have time to shop around for? Sure I could shop around for something like a colonoscopy - or I could just not bother with it.

    So, no, not a good thing.

  • bambino33

    What would you choose eventual single payer and malpractice suits telling you this is what you get and like it and still get sued as before or plan B be a lawyer, call the insurance company tell them pay this much or else, settle then pick up 40% of the take and never leave your desk.....jeopardy theme.....I'll take plan B Alex for 50,000

  • Nehemiah

    Actually I choose neither. Market based solutions and tort reform for me. The problem, as stated, is preserving the marketplace in the face of Obamacare.